CIMA BA3 · Chapter 5 · Question 6 of 10
A business both buys from and sells to another company. It agrees to set off the amount owed to it by that company against the amount it owes to that company. What is the entry in the control accounts?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Debit Payables ledger control, Credit Receivables ledger control
Explanation
A contra reduces both the amount owed to the supplier (debit payables) and the amount owed by the customer (credit receivables) by the amount set off. No cash changes hands.
More Receivables and payables control accounts MCQs
- Q8How might a credit balance arise on an individual customer's account in the receivables ledger?
- Q9A business decides to write off a customer's balance as irrecoverable. What is the double entry?
- Q10The receivables ledger control account agrees with the total of the list of customer balances. Which of the following is true?
- Q1What is the main purpose of a receivables ledger control account?
- Q2Which of the following items would NOT appear in the receivables ledger control account?