What is the correct accounting treatment for the transfer of a debit balance from the trade payables ledger to the trade receivables ledger?
|Trade receivables control||Trade payables control|
What Are Trade Receivables:
A company's Trade Receivables is reported as part of Accounts receivable on the balance sheet as assets. Trade Receivables initially arise when a company makes a sale to a customer and, instead of paying cash immediately, the customer promises to pay in the future.
Answer and Explanation:
We have to credit payables since we need to bring it back to $0, while we need to debit receivables since we are transferring over a balance.
- The answer is thus #4.
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Learn more about this topic:
from Finance 101: Principles of FinanceChapter 19 / Lesson 1