Question

The creditors accounts, generally, have credit balance. Debit balance may be due to _________.

• A. advance paid against an order
• B. goods returned
• C. wrong debit to supplier account
• D. any of these

Answer 1

The correct option is D any of these

Following accounting will be passed when goods are purchased on credit:

Goods A/c Dr.

To Creditors

In such situation, creditors account will always shows the credit balance or nil balance if all the payments are done. Creditors account may have debit balance in the below cases:

• There are cases when goods is returned to the supplier after making the final payment. In such situation creditor account will show a debit balance.
  
• In case of advance payment is done to the creditor before supply of goods, in such situation also, there will be a debit balance in creditors account.
  
• Debit balance may also arise in creditors account if any wrong debit is done in the creditors account.