Which of the following transactions could not result in a credit balance in a debtor's account?
A) Receive a deposit from a debtor for goods ordered.
B) Customer returns a faulty product after they have paid the account in full.
C) Customer pays their account after the debt had been written off as a bad debt.
D) Goods are sold on credit with payment due in the next accounting period.

Question

Quizplus · Accepted Answer

A credit balance in a debtor's account typically indicates that the customer has overpaid or that a specific transaction has led to the customer having a credit position against the seller. Options A, B, and C could all lead to a credit balance due to overpayment, returns, or recovery of previously written-off debts. However, option D, which involves selling goods on credit with payment due in the next accounting period, would initially result in a debit balance in the debtor's account, reflecting the amount the customer owes the company for the goods purchased on credit.

Which of the Following Transactions Could Not Result in a Credit