Material debit balances in accounts payable for amounts due from vendors should be reclassified as accounts receivable.

Question

Quizplus · Accepted Answer

Material debit balances in accounts payable represent amounts due to the company from vendors. These are not liabilities of the company, but assets in the form of accounts receivable. Therefore, they should be reclassified as accounts receivable on the balance sheet.

Material Debit Balances in Accounts Payable for Amounts Due from Vendors