Which of the following is true when a debtor pays his dues?
A. The asset side of the balance sheet will decrease
B. The asset side of the balance sheet will increase
C. The liability side of the balance sheet will increase
D. There is no change in total assets or total liabilities
Answer: Option D
Solution (By Examveda Team)
When a debtor pays his dues there is no change in total assets or total liabilities because debtor in current assets decrease and cash & bank in current assets increase.This Question Belongs to Commerce >> Accounting
and what about if the debtors have been given a discount or there is a write-off in the total payment, the discount will be treated as expenses, so the value of Debtors will not be the same with the value of amount received in the bank
A Debtor is a current Asset under Accounts Receivable in a Balance Sheet. When an organization collected money from the debtor it's impacting in Balance Sheet Increase Cash/ Bank (CA) and decreases in Acc. Receivable (debtor) a/c. In the above MCQ option :D is wrong.
Why that happened explain me