Accounts Receivable Debit Or Credit

Here we will study about the very basic question Regarding Accounts Receivable that is “Accounts Receivable Debit Or Credit In Accounting”?

You may also be interested in "Accounts Payable Debit Or Credit"

Accounts Receivable is the amount of debts due from customers for the goods sold on Credit Basis or Services rendered by the business to its customers on account. Accounts Receivable is a Current Asset which is convertible into Cash Very Quickly. As the Normal Balance for Assets is Debit, so Accounts Receivable (Debtor) has Debit Balance and not Credit Balance.

What Is The Normal Balance For Accounts Receivable?

The General Rule of Debit or Credit for Accounts Receivable is that when it increases it is debited and if it decreases, then it is credited but the favourable or normal balance is Debit that is the closing balance in Control Ledger and this closing balance is transferred to Balance Sheet.

Credit Balance is negative for the Accounts Receivable because it is decreased from the positive level and creates so may uncertainties for the business. There are some circumstances, when Accounts Receivable has Credit Balance due to excess payment received from customers, due to wrong Accounting Treatment of Accounts, Sales Return (Return Goods From Customers due To Defective Goods), etc.

If Accounts Receivable has Credit Balance due to excess payment received from out customers, then Rectifying Accounting Journal Entry is passed with the excess amount received from Customers. For Example, the excess amount is received is Rs. 5000, then following Rectifying Accounting Journal Entry is passed in the book of Company by the Accountant:

             Accounts Receivable / Debtor a/c 5000


                                          Cash a/c 5000
 

(Excess Amount Received From Customers, Now Rectified)

So, it is all about Accounts Receivable (Debtor) Debit Or Credit Balance In Accounting.