A credit balance of $917 brought down on Y Ltd’s account in the books of X Ltd means that:<\/p>\n\n\n\n
(A) X Ltd owes Y Ltd $917.<\/p>\n\n\n\n
(B) Y Ltd owes X Ltd $917.<\/p>\n\n\n\n
(C) X Ltd has paid Y Ltd $917.<\/p>\n\n\n\n
(D) X Ltd is owed $917 by Y Ltd.<\/p>\n\n\n\n
The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n The correct answer is:<\/p>\n\n\n\n (A) X Ltd owes Y Ltd $917.<\/strong><\/p>\n\n\n\n In accounting, a credit balance<\/strong> in a company’s books for a specific account generally represents a liability (amount payable) or revenue. Conversely, a debit balance typically represents an asset or an expense.<\/p>\n\n\n\n In this case, Y Ltd\u2019s account has a credit balance of $917 in X Ltd\u2019s books.<\/strong> This means that X Ltd has recorded an amount payable to Y Ltd. A credit entry in an account payable indicates that the company (X Ltd) owes money to a creditor (Y Ltd). The phrase “brought down”<\/strong> means that this balance has been carried forward from the previous accounting period, confirming an ongoing liability.<\/p>\n\n\n\n Let\u2019s analyze the options:<\/p>\n\n\n\n If Y Ltd supplies goods to X Ltd on credit, X Ltd will record it as an account payable (credit entry). Until X Ltd settles the amount, Y Ltd\u2019s account will continue to show a credit balance<\/strong> in X Ltd\u2019s books.<\/p>\n","protected":false},"excerpt":{"rendered":" A credit balance of $917 brought down on Y Ltd’s account in the books of X Ltd means that: (A) X Ltd owes Y Ltd $917. (B) Y Ltd owes X Ltd $917. (C) X Ltd has paid Y Ltd $917. (D) X Ltd is owed $917 by Y Ltd. The correct answer and explanation […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-201857","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/201857","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=201857"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/201857\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=201857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=201857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=201857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Explanation:<\/h3>\n\n\n\n
\n
Practical Example:<\/h3>\n\n\n\n