Question
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
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. | 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. | |
B. | The net receivable from Company B is $40 000. | |
C. | The net payable from Company A is $30 000. | |
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. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started