A credit balance in a supplier’s personal ledger account usually represents what?
Correct answer: B. An amount owed by the business to the supplier
- A. An amount owed by the supplier to the business
- B. An amount owed by the business to the supplier
- C. An expense paid in advance by the business
- D. A loss transferred to the supplier
Explanation
A supplier normally has a credit balance because the supplier is a creditor of the business. The balance represents the amount payable by the business to that supplier.
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About Ledger Accounts and the Trial Balance
Ledger accounts collect transactions under individual headings and use debit and credit sides to determine balances. The trial balance lists those balances to check arithmetical agreement before financial statements are prepared, but it does not reveal every error, such as complete omission, compensating errors or entries made in the wrong account.
Practise Ledger Accounts and the Trial Balance
34 free Ledger Accounts and the Trial Balance MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
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More Ledger Accounts and the Trial Balance questions
Under the traditional rules of accounting, which entry is made for an increase in an asset account?
When the totals of a trial balance do not agree, which account may be opened temporarily to locate the difference?
Which item is generally excluded from a trial balance prepared from ledger balances?
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