At Ask Me Help Desk you can ask questions in any topic and have them
answered for free by our experts. To ask questions or participate in
answering them you must register for a free account. By registering you
will be able to:
Get free answers from experts in any of our 300+
topics.
HI, Would like to ask is it okay to have a debit balance of payables in the current liability portion of the balance sheet? Or should I place it elsewhere? Appreciates your help. THanks
A debit in a payables account typically means you've overpaid a vendor or creditor. That means in turn that you have a receivable owed to you from that party.
As a practical matter, such items are usually infrequent, relatively minor in amount, and short-lived, as they tend to be settled up pretty quickly. If I were preparing a balance sheet of "lesser importance"--e.g., an internal-only statement--I'd be inclined to leave the debit parked in the liability section, knowing it'll disappear of natural causes soon enough.
But technically, that item is a receivable, and in preparing a balance sheet for external publication, and/or the important year-end financials, I'd wanna bump that debit balance up into the receivables area of the assets.
All the foregoing presumes the reason for the debit bal is the overpayment I mentioned at the beginning. If it's for something else--an accounting error, say--then the answer is to investigate and correct the error in the books accordingly.
Putting all these posts together, this is starting to sound suspiciously like homework. (Too many things that if you don't know what they are, you wouldn't even know to ask... unless it was listed in homework.)
In that case, you shouldn't have a debit balance in a liability.
Linear Mode
