Advances from debtors

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Rahul Verma (Querist)

30 May 2016 Whether the advance received from debtors should be shown as liability or it should shown in Sundry debtors with negative value?
I know the net effect will same, but want to know the exact treatment in the books of accounts for better presentation. Many of the companies showing it in sundry debtors with negative value and other as current liabilities.

Rupesh Jain

Rupesh Jain (Expert)

30 May 2016 its remain the debtors, but if advance payment, not set with the sale then you have to show in Balance sheet seperately as advance from the debtors, under the current liability

Rahul Verma

Rahul Verma (Querist)

30 May 2016 Thanks for your reply. But I seen in audited Balance sheet of one company (Signed Balance sheet by CA), they showed it under sundry debtors with negative value. So they done a wrong treatment in that, or whether alternative is possible.

CA SUNIL K GARG

CA SUNIL K GARG (Expert)

30 May 2016 if the advance has been recd as advance for supply of goods or services , than it has to be shown as current laibility. but if the negative bal in debtor has arisen due to debit/credit note , than it can be shown as negative balnce

Rupesh Jain

Rupesh Jain (Expert)

31 May 2016 its better to show the dr. or creditors as bal. in books, in any law always tell that financial statement will be simple and understandable to any one.

Rupesh Jain

Rupesh Jain (Expert)

31 May 2016 its better to show the dr. or creditors as bal. in books, in any law always tell that financial statement will be simple and understandable to any one. so amount not be show in (-) ve.