Setting off the balance of debtors and creditors.

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This query is : Resolved

Prachetas (Querist)

20 December 2014 Dear Sir/Madam,

I have came across a query during audit regarding which I wants to take an opinion.

My question is:-

When we are dealing with the party which is our Debtor as well as Creditor, then whether we can set off the balance of Debtors against Creditors or vice versa?

Please reply as early as possible.

Thanking you,
Prachetas

Rupesh Jain

Rupesh Jain (Expert)

20 December 2014 yes your setoff the bal. of the same party.

but you cannot sett off the loan amount against the sale or purchase transaction.

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CA Kumar Mukesh

CA Kumar Mukesh (Expert)

21 December 2014 yes setting of purchase and sales ledger bal of same person can be set off against each other.

but Sales and purhcase of same party cannot be set off even from same party

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Prachetas

Prachetas (Querist)

21 December 2014 Mr. Kumar Mukesh, sorry. I didn't understand what you are trying to explain. You have given two replies. But both seems to be contradictory. Can you please elaborate?

CA Kumar Mukesh

CA Kumar Mukesh (Expert)

21 December 2014 Its means that Separate ledger of sales and purchases ledger of same person which has Dr and Cr. balance, these two balances are adjusted against each other.

Further, SALE AND PURCHASES cannot be set off

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Prachetas

Prachetas (Querist)

21 December 2014 ohkey.... got it. Thank you sir....