PRC-1 · Chapter 2 · Question 33 of 100
'Star Traders' owes Rs. 50,000 to 'Moon Supplies' for raw materials, and simultaneously 'Moon Supplies' owes Rs. 30,000 to 'Star Traders' for consulting services. They agree to offset the balances. In which book of prime entry is this contra settlement recorded?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) General Journal
Explanation
A contra settlement offsets a receivables balance against a payables balance without any actual cash changing hands. Because it is a non-cash, non-routine adjustment, it must be recorded in the General Journal.
More Books of Prime Entry MCQs
- Q35'Rapid Logistics' purchased a new delivery van on credit for Rs. 3 million from 'City Motors'. Where should 'Rapid Logistics' initially…
- Q36A customer returns defective goods that were originally purchased for physical cash from 'Neon Electronics'. The business refunds the…
- Q37'Galaxy Traders' received a cheque of Rs. 25,000 from a customer and entered it in the cash book. Three days later, the bank returned the…
- Q38'Oasis Furniture' uses a computerized voucher system that replaces traditional day books. Which type of voucher would the accountant…
- Q39In a three-column cash book maintained by 'Sapphire Merchants', what does the memorandum column on the payment (credit) side specifically…