Credit And Debit Balance In Creditors Account Mean What

What Is Debit Balance In Accounts Payable / Sundry Creditors? | Reasons For Debit Balance In Vendor Account

Debit balance in Creditors or Accounts Payable Account or Creditors / Accounts Payable Control Account means that the company paid more amount to the suppliers / vendors than the amount due from them. It may happen when the vendor received advances from the company during the accounting period. It may also be occurred due to the mistake in the vendor invoice i.e., sending wrong amount figures, missing items, etc., or the company returned some items purchased from vendors, etc.

In that case, the supplier or vendor will refund that amount to the company exceeding the limit of amount payable by the company to him.

Credit Balance In Sundry Creditors / Accounts Payable Account

Credit balance in creditors or accounts payable account means that the business is liable to pay to creditor or accounts payable or suppliers or vendors for goods or merchandise purchased on credit or account. It is a favorable balance for accounts payable account, so it is increased with credit amount and shown as a current liability on liabilities & equity side of balance sheet or Statement of Financial Position.

Why Accounts Payable Can Never Have A Debit Balance? Is It Possible?

No, it is not possible to avoid debit balance as there are some reasons due to which the negative balance appeared  in ledger account and theses reasons  are occurred or caused to happen due to unavoidable circumstances. However, these reasons are often to happen as there are very few chances that will happen so these will happen but these are very often.

How To Show Debit Balance of Creditors In Balance Sheet

In such case, we show the debit balance under Current Assets Section as Advances To Suppliers Account, as the company made advance payments to suppliers / vendors and as a result the negative or debit balance is removed from creditors / accounts payable account.