GCEFinancial AccountingDouble Entry and Ledgers2021

Ade started a business with ₦500,000 cash and equipment worth ₦200,000. The correct double entry to record these transactions is

ADebit Cash ₦500,000; Debit Equipment ₦200,000; Credit Capital ₦700,000CORRECT
BDebit Capital ₦700,000; Credit Cash ₦500,000; Credit Equipment ₦200,000
CDebit Cash ₦500,000; Credit Capital ₦500,000; Debit Equipment ₦200,000; Credit Capital ₦200,000
DDebit Capital ₦700,000; Credit Cash ₦700,000
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Why the answer is A, and why the others tempt you.
When a business is started, assets introduced (Cash and Equipment) are debited because they increase, while Capital is credited to represent the owner's total investment of ₦700,000. Option B incorrectly debits Capital and credits assets, which reverses the correct treatment.
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