Liabilities no longer written back

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This discussion clarifies the accounting treatment for liabilities that are no longer payable. When a creditor waives a debt or a liability is otherwise no longer required, the correct journal entry involves debiting the Sundry Creditors account and crediting the Profit & Loss Adjustment account. This reflects the income generated from the unneeded liability.

Daya

Daya (Querist)
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16 September 2025 Liabilities that is no longer require to pay , can i pass journal entry of
Sundry creditors A/C Dr.
To Liabilities No Longer written Back ( Indirect Income)

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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16 September 2025 Yes, when a liability such as sundry creditors is no longer required to be paid (for example, if the creditor waives the amount or it is written back), the correct journal entry is:

Sundry Creditors A/C Dr.
To Profit & Loss Adjustment A/C

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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19 September 2025 Good Luck...

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