Question ID :
44904
Netting off Creditors with Debtors
Hi Team,
We have come to a situation where the client has raised the GST invoices and purchased the goods from the same party which was reflecting as purchase and sales in one side. On the other side, there was no cash/ bank transactions involved for such purchases and sales made whereas it was adjusted by a journal by netting of creditors with Debtors. Is it allowed as per the accounting standards?
And in the other case, Creditor's "A" balance of Rs. 1,00,000 has been adjusted with the Debtors "B" by posting a journal entry which impacts understament of assets and liabilities by Rs. 1,00,000. "A" and "B" are the not the same person.
Posted by
MANOJ V
on
Aug 02, 2025
Filed Under
AUDIT
Obtain confirmation from both parties to adjust the same. Otherwise you cannot net off. You have to receive and pay the amount.
Posted by
VINAY BHARGAV KUMAR G on
Aug 16, 2025