WAEC Accounting 2021 Paper

Concept:Payments to a creditor decrease both the liability and the cash balance.Explanation:In Lima's books, Dongo is a creditor because Lima owed Dongo money.When Lima pays $\mathrm{D}2{,}500$ in cash, the liability to Dongo is reduced.A decrease in a liability is recorded by debiting the creditor's account.Cash goes out of the business, so the cash account is credited.Therefore, the double entry is: debit Dongo with $\mathrm{D}2{,}500$ and credit cash with $\mathrm{D}2{,}500$.Answer:Debit Dongo $\mathrm{D}2{,}500$; credit cash $\mathrm{D}2{,}500$.