Set off of debtor and creditor

While working on accounts finalisation I found that our client company has both purchase and sale transactions in a number of instances with the same party. Therefore the same party is both Debtor and Creditor for the Company. In all the cases, both the parties ie. our client company and the external third party are maintaining two separate ledgers namely 1. Debtors Ledger and 2. Creditors Ledger. However for the year, my client company is not passing a set-off entry between the Debtors and Creditors ledger and keeping both the ledger balances as it is. My question is what is the point in maintaining 2 separate ledger balances with the same party as this ultimately will be adding weight to the Balance Sheet and make it unnecessarily heavy.

Replies (1)

Yes it would make books a li'l hefty but this practice will show the exact figures of debtors and creditors because debtors represent the outstanding amount towards sale and creditors shows outstanding payment of purchases.

However u may recommend them to set off these balances with each other, which is also not wrong.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
16 July 2026
Manager - Finance & Accounts

Aliens Group

Hyderabad

CA Final

View Details
Company
Featured 16 July 2026
Semi Qualified Company Secretary

Vakilsearch.com

Chennai

CS

View Details
Company
ARTICLESHIP 17 July 2026
Article Assistant and B.com pass

BANSAL YOGESH AND CO

Gautam Budh Nagar

B.Com

View Details
Company
Featured 18 July 2026
Senior Manager- Finance & Accounts

apricus india

Ahmedabad

CA

View Details
Company
Featured 16 July 2026
CA Inter, CA Intermediate, CA IPCC, CA CPT, CA SemiQualified

Vakilsearch.com

Chennai

CA Inter

View Details
Company
13 July 2026
AVP / VP - PCG Advisory

Workforce Connect

Mumbai

MBA

View Details
Company
ARTICLESHIP 16 July 2026
Article Assistant

G A R U D & Associates

New Delhi

CA Inter

View Details
Company
23 July 2026
Senior Accountant

Felicity Adobe LLP

Bengaluru

CA Inter

View Details
Follow