Advance paid to creditors

1. in accounts it will be shown as trade advances

2.in case of drawing power advance from Debtors should be deducted from other debtors and Advance from creditors should be deducted from other creditors

ADVANCE TO CREDITORS UNDER LOAN AND ADVANCES

AND ADVANCE FROM DEBTOR UNDER HEAD ADVANCE AGAINST SUPPLY

advance from debtors - its part of liability side - head "advance from customers"

advance to creditors - its part of asset side - head " loans and advances"

for bank's drawing power, advance from debtors are liabilities, and advance to creditors are assets.

I agree with Mr.Pramod Kumar

 (1) Advance from debtors - it is the  part of liability side of balance sheet  -under  head "
       Advance from customers"

           Advance to creditors - it is th part of asset side of balance sheet - under head                "Loans and advances"

Originally posted by : Pramod Kumar B.K.
	Dear CAclubindia users,   Please solve the following query How to treat advance paid to creditors and advance received from debtors ? In the following conditions: 1) In accounts i.e. (how to show in balance sheet) 2) In case of calculating 'Drawing Power'  when banks providing Cash credit or Over draft facility or renewal of the same. Thanking you in advance.

Thanks to one and all for solving my previous query.

Here I have another query which is continuation of my previous question No. 2^nd.

Which of the following will have better presentation while calculating DP?

Whether advance paid to creditors should be deducted from total 'Creditors' of a company

                               Or

 Should be added to total debtors

Since while calculating DP there are only chances of Stock, debtors, Creditors, whatever we adjust, it should be adjusted within above said.  

                           And

Also for ‘advance received form ‘debtors’

Thanks in Advance !!

while calculating DP, Debtors less than 90 days are taken in accounts, and creditors balance is negative effect on DP.

as dedcucting the advance from suppliers from debtors does not make any change in creditablity . so the presentation should be in proper way, for all departments, not only for bank credit limits.

Dear Sir

In DP Calculation, in a case, the Debtors are becoming negative after adjusting advance. Where as the Company has considered the value as ZERO (but not negative). In my view, its wrong. Let me know your views.

negative values are liability and should be shown under advance from customers 

So in DP calculation, the Debtors showing credit balance and creditors showing the debit balances shall also be considered. Correct me if I am wrong.

Yes both should be considered. Its not correct to take them as zero.