Impact of having Creditor balance in debtor accounts?

[ange88]

Hi to all,

While i was doing some accounts i realized Some debtor accounts having credit balances and Creditors having Debit Balances..
The reasons were Invoices had not been recorded in those debtor accounts and good receive notes are not recorded in creditor accounts.

Can you please explain the impact of above mistakes to P&L and to the Balance sheet??

 

[Triest123]

Hi to all,

While i was doing some accounts i realized Some debtor accounts having credit balances and Creditors having Debit Balances..
The reasons were Invoices had not been recorded in those debtor accounts and good receive notes are not recorded in creditor accounts.

Can you please explain the impact of above mistakes to P&L and to the Balance sheet??

=>Invoices had not been recorded in those debtor accounts result in understating
the sales (revenue), hence understating the profit.
The current asset is understated.

=> Goods receive notes are not recorded in creditor accounts result in understating
the purchase, hence overstating the profit.

The current liabilities is also understated.

 

[ange88]

=>Invoices had not been recorded in those debtor accounts result in understating
the sales (revenue), hence understating the profit.
The current asset is understated.

=> Goods receive notes are not recorded in creditor accounts result in understating
the purchase, hence overstating the profit.

The current liabilities is also understated.

Can u explain how its understating the profit?

 

[ange88]

Can u explain how its understating the profit?

In case of Debtors.Money received from them have been recorded so how it would have created an impact on P&L?

 

[Triest123]

Can u explain how its understating the profit?

=> you're saying that the Invoices had not been recorded in those debtor accounts, that means the entire sales transaction is omitted on the accounting record, right?

 

[ange88]

=> you're saying that the Invoices had not been recorded in those debtor accounts, that means the entire sales transaction is omitted on the accounting record, right?

yes.........................

 

[Triest123]

yes.........................

=> so, you need to take up this transaction by the following entry
Dr Debtor
Cr Sales / Revenue

To record the sales / revenue which is omitted in the current month (or year)