• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

What is the meaning of refund of debit balance or refund of credit balance

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › What is the meaning of refund of debit balance or refund of credit balance

  • This topic has 5 replies, 3 voices, and was last updated 5 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • August 30, 2014 at 12:11 pm #193041
    Amir
    Member
    • Topics: 2
    • Replies: 1
    • ☆

    The concept is in chapter 14 contrl account reconciliation. If possible provision of example would be greate.

    August 30, 2014 at 12:32 pm #193045
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54665
    • ☆☆☆☆☆

    A refund is simply another word for a repayment.

    Suppose you sell goods on credit for $100.
    We debit receivables with $100.

    Suppose the customer accidentally pays us twice (so they pay us $200).

    We debit cash and credit receivables with $200.

    So…..we now have a credit balance on receivables of $100.

    Obviously, we will not keep the extra – we need to repay the $100 to the customer.
    We make a refund of $100.

    So….credit cash and debit receivables with $100. Now there is zero balance on receivables and all is correct.

    All a refund is, is a repayment of cash. Maybe it is because the customer paid too much (as above); maybe it is because the customer returned goods that they had already paid for. The reason is not relevant – if we make a refund then we repay cash.

    (In the above example, we could say that we are refunding a credit balance, but all we are every actually doing is repaying cash.
    If we buy goods and pay to much (so the supplier refunds/repays cash to us) then it is exactly the same in reverse.)

    Hope that helps 🙂

    August 30, 2014 at 6:36 pm #193076
    Amir
    Member
    • Topics: 2
    • Replies: 1
    • ☆

    Thanks a lot. I really appreciate your prompt and comprehensive response.

    @johnmoffat said:
    A refund is simply another word for a repayment.

    Suppose you sell goods on credit for $100.
    We debit receivables with $100.

    Suppose the customer accidentally pays us twice (so they pay us $200).

    We debit cash and credit receivables with $200.

    So…..we now have a credit balance on receivables of $100.

    Obviously, we will not keep the extra – we need to repay the $100 to the customer.
    We make a refund of $100.

    So….credit cash and debit receivables with $100. Now there is zero balance on receivables and all is correct.

    All a refund is, is a repayment of cash. Maybe it is because the customer paid too much (as above); maybe it is because the customer returned goods that they had already paid for. The reason is not relevant – if we make a refund then we repay cash.

    (In the above example, we could say that we are refunding a credit balance, but all we are every actually doing is repaying cash.
    If we buy goods and pay to much (so the supplier refunds/repays cash to us) then it is exactly the same in reverse.)

    Hope that helps 🙂

    August 30, 2014 at 7:58 pm #193079
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54665
    • ☆☆☆☆☆

    You are very welcome 🙂

    February 13, 2020 at 7:23 am #561607
    chiefexecutive
    Participant
    • Topics: 0
    • Replies: 1
    • ☆

    Thank you very much sir )

    February 13, 2020 at 8:38 am #561626
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54665
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘What is the meaning of refund of debit balance or refund of credit balance’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • bpop on Risk and uncertainty (part 2) – ACCA (AFM) lectures
  • kamo7293 on Financial performance – Example 2 – ACCA Financial Reporting (FR)
  • nevertoolate on CIMA BA2 – Regression analysis
  • Ken Garrett on The nature and structure of organisations – ACCA Paper BT
  • Ark1 on The nature and structure of organisations – ACCA Paper BT

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in