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Today’s question goes like this:
Q. How is the closing balance on A/Cs Receivable entered in the SOFP?
A By a debit to the SOFP and a credit to the A/Cs Rec.
B By writing the total in the SOFP. The balance on the A/Cs Rec. remains unaffected.This is basic, but I don’t understand if there are even entries like these for assets, liabilities and capital etc. Shouldn’t the ‘writing off’ entries only exist for expenses and income as they are written off to the SOPL? And accounts like assets etc carried down from one period to the other… However, now I’m unsure…
Some guidance, sir?
Hold on…..option B says “writing the total in the SOFP”. It does not say “writing OFF the total”
In the SOFP we simply list (write) the balances on the accounts. There is no double entry involved.
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