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    Example balance sheet's creditors:
    - Credit card - £1,500
    - Supplier A - £500
    - Supplier B - £900
    - Supplier C - (£300)

    Is that possible? Can you have a negative creditor and if so, what does that mean?
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    (Original post by johnny-b-bad)
    Example balance sheet's creditors:
    - Credit card - £1,500
    - Supplier A - £500
    - Supplier B - £900
    - Supplier C - (£300)

    Is that possible? Can you have a negative creditor and if so, what does that mean?
    If you had overpaid the supplier by mistake, you could have a DR balance purchase ledger account.

    If, after you had paid supplier, he issued a credit note you could have a DR balance purchase ledger account.

    If each year your supplier gave you a credit note as a volume discount you could have a DR balance purchase ledger account.

    Think of position where you maybe pay a utility company a fixed monthly amount but your consumption is less than originally thought.


    There are hundreds of ways it could arise, faulty goods returned giving rise to a credit note, insurance paid at start of year but canceled part way through year (return premium)

    The most common, however, is human error, allocating a payment against the wrong account, this is why when auditing you might well focus on DR purchase ledger balances as part of your testing.

    Trust this helps
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    Thanks for the reply.
 
 
 
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