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on which side of payables control account are refunds received from suppliers shown and WHY?
and on which side of receivables control account are cash refunds to customers shown and WHY?
I show the entries, and explain the reason, in my free lectures on control accounts.
Please don’t expect me to type out my lectures here 🙂
Sir, I have a question from Kaplan study text giving opening balances of receivables and payables control accounts and various transactions throughout the month, I am also given closing ledger (memorandum) balances with a Cr balance for receivables and a Dr balance for payables, Dr and Cr balances on ledger (memorandum) accounts are “to be calculated”. I am asked to determine closing debit and credit balances for both control accounts. The answer gives both a Dr and Cr closing balance for each account. My understanding is that every account only ever has one closing balance, Dr or Cr, not both. Please could you shed some light on this?
Although most receivables balances will be debit balances, it could be that (for example) one of the customers has overpaid and therefore for that customer there will be a credit balance.
The net total balance on the receivables accounts will be always be debit balance, but instead of showing just one net figure, we should show the debit and the credit balances separately.
For example, suppose we have hundreds of customers who owe us in total $200,000, and also one customer who has overpaid us and we therefore owe them $500.
The net total receivables will be $199,500, but on the receivables control account we should show a debit balance of 200,000 and a credit balance of 500.
(The same applies in reverse for payables. Most times there will a credit balance because we owe money. However if we have overpaid or returned goods to one supplier, then there will be a debit balance of the amount they owe back to us.)
Have you watched my free lectures on control accounts? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
If you are watching the lectures then you do not really need a Study Text. What you do need – however you choose to study – is a Revision Kit from one of the ACCA approved publishers, because they are full of exam standard questions from practice, and practice is vital to passing the exam.Many thanks. Yes I do use your lecures and find them very helpful. If I understand correctly are you saying that when there are credit entries in the receivables account or vice versa in the payables account, we would not just carry forward a reduced receivables balance but rather both a debit and credit balance?
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