The purchases ledger control account showed a credit balance of ₦525 000 on April 30, 2006. This amount shows?

Assessment: JAMB UTME - Principles of Accounts - 2007 Subject: Financial Accounting

Question 1 Report

The purchases ledger control account showed a credit balance of ₦525 000 on April 30, 2006.

This amount shows?

Answer Details
The purchases ledger control account showed a credit balance of ₦525 000 on April 30, 2006. This amount shows what a business enterprise owed its creditors. A purchases ledger control account is used to record the total amount owed to all creditors by a business enterprise. The credit balance in this account indicates that the total amount owed to creditors is less than the total amount paid to them by the enterprise. This situation arises when the enterprise has made more payments to its creditors than the total amount owed to them.

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