A purchases ledger control account has a debit balance at the end of an accounting period. What does this balance normally indicate?
Correct answer: B. An amount owed by suppliers to the business
- A. An amount owed by the business to suppliers
- B. An amount owed by suppliers to the business
- C. The total value of credit purchases
- D. The total value of payments made to suppliers
Explanation
Suppliers' accounts normally have credit balances because the business owes them money. A debit balance in the purchases ledger control account usually indicates an overpayment, advance payment, or other amount recoverable from suppliers.
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About Bank Reconciliation and Control Accounts
Bank reconciliation explains differences between the cash book and bank statement through unpresented cheques, outstanding deposits, bank charges, direct payments, credited amounts and recording errors. Control accounts summarise receivables and payables ledgers, and their balances are reconciled with individual accounts to locate discrepancies.
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