I am preparing final account of a company. I found that there are debit balances in current liabilities accounts ( in fact they are suppliers of the company) and there are credit balances in the accounts of receivables (they are customers of the company). Should I take net effect of these on the balance sheet or what is the suitable procedure keeping in view the full disclosure principle or other legal implications. Kindly give prompt reply as I am engaged in preparing the final accounts of an unlisted public company for first the time.
Accountant From Pakistan
It may possible due to receiving of cash discount from payment to creditor or high provision of discount on creditor or giving advance to creditor relating to his account. At that time, supplier account may be debit and just opposite, if you take advance is taken by your company before providing any service. You just show the net balance of both supplier and debtors. I think, your balance sheet will be matched with this. In next period, you have to do some adjustments also.