Question

Which Reserve has debit balance?

• A. General Reserve
• B. Contingency Reserve
• C. Joint Life Policy Reserve
• D. Investment Fluctuation Reserve
• E. Reserve for Discount on Creditors

Answer 1

The correct option is E Reserve for Discount on Creditors

Reserve for discount on creditors is created on a certain percentage of the creditors for which the firm is certain that it is no longer to be paid. The business may also receive discount for timely payments. It is a kind of saving and is credited to the profit and loss account. It has a debit balance which is deducted from the creditors balance in balance sheet.