Day: February 29, 2020

A credit balance brought down on a debtors control account cannot be explained by . . .

Select ONE answer:

1. a credit note issued to a debtor immediately after he had paid his account in full.
2. a debtor paying more than the amount owed by him.
3. unrecorded returns outwards.
4. discount allowed recorded twice in the debtors’ control account.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct – A credit note being issued to a debtor immediately after he had paid his account in full would result in a credit balance on that debtor’s account and therefore, possibly, a credit balance on the debtors’ control account.
2. Not correct – A debtor paying more than the amount owed by him on his account would result in a credit balance on that debtor’s account and therefore, possibly, a credit balance on the debtors’ control account.
3. Correct – Returns outwards (purchases returns) should be recorded in the creditor control account.
4. Not correct – Discount allowed being recorded twice in the debtor control account could, if the amount was large enough relative to the amount owed by debtors, result in a credit balance on the debtor control account.

 

 

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