ACCA FA · Chapter 10 · Question 12 of 12
A business sells goods to a customer who is also a supplier, and the two balances are set off against each other. What is the double entry for this contra?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Payables control; Credit Receivables control
Explanation
A contra reduces both the amount owed to the supplier and the amount owed by the customer. The payables balance (a credit) is reduced by debiting the payables control account, and the receivables balance (a debit) is reduced by crediting the receivables control account. No cash is involved.
More Trial balance, errors, control accounts and bank reconciliations MCQs
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- Q5A company's draft profit for the year is $48,200. The following errors are then discovered: 1. Closing inventory was understated by…
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