PRC-1 · Chapter 3 · Question 76 of 100
If a customer's individual account in the Receivables Ledger displays a credit balance, what is the most likely reason?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The customer paid in advance for goods not yet delivered.
Explanation
A credit balance on a receivable account indicates that the business owes the customer. This usually occurs when a customer makes an advance payment or overpays their outstanding balance.
More Ledgers and Trial Balance MCQs
- Q78How is 'Unearned Commission Income' treated in a trial balance?
- Q79What is the specific accounting term for the process of transferring financial figures from the books of prime entry into the ledger…
- Q80In a standard manual ledger account, there is a column labeled 'Folio'. What is its primary purpose?
- Q81A business regularly buys from and sells to the same entity. To offset the balances owed to each other, a 'contra entry' is made. What is…
- Q82At the end of an accounting period, which of the following groups of accounts are 'closed off' (zeroed out) and NOT carried forward to the…