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 (3)

your company is doing correct work dear...

 

its right 

 

you need not to pass any set of entry..

 

as the rule says clear that u can adjust amount of debtor with creditors and vice versa..

and its not about the same party ..

 

two different things are there one is debtor and one is creditor...

 

so look on vast points rather than simply ki party is same...

You can set off Debit & credit balace in B/s.

Thanks

ramanuj


 

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