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Hi sir,
Can you please explain for me why the Closing credit balances are on the debit side while Debit credit balances are on the credit side of the receivables control account? These are really confusing me.
And one more question, if there were no credit balances in the receivables ledger and no debit balances in the payables ledger (assuming that the statement was prepared for the year ended at 30/9/X9), why was the balance b/f on the credit side in 20X8 become the balance c/f on the debit side in 20X9 of the receivables control account?
Thank you for your support!
This is the standard way of closing off accounts at the end of the account period.
If there is a debit of 1,000 and a credit of 1,800, we balance the account by putting 800 on the debit side – that is the missing figure to make both sides add up to the same total. We then carry this forward to the opposite side (i.e. the credit side) and so end up with a credit balance (which is simply replacing the two original figures the with net result of 800 credit).
All of this is explained in detail in my free lectures working through Chapter 3 of our free lecture notes.
The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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