Company A and Company B regularly trade between each other. They have agreed to offset their accounts receivable and accounts payable and settle them on a net basis. At 30 June Company A has accounts receivable of $40 000 owing from Company B but also has accounts payable of $10 000 owing to Company B. Which of the following statements is correct?
A) The net payable from Company A is $30 000.
B) The net receivable from Company B is $40 000.
C) Company A offsets the account payable of $10 000 against the account receivable and presents the net amount of $30 000 in their financial statements as accounts receivable.
D) Company B offsets the account payable of $10 000 against the account receivable and presents the net amount of $30 000 in their financial statements as accounts receivable.

Question

Quizplus · Accepted Answer

Company A offsets their accounts payable of $10,000 against their accounts receivable of $40,000 owed by Company B. The net receivable from Company B is now $30,000, which Company A presents in their financial statements as accounts receivable.

Company a and Company B Regularly Trade Between Each Other