What does creditors written back mean ? Is it a profit or loss , according to the answers of the previous question I asked it's a loss and the creditors would increase, but in the actual answer creditors are decreased and it's a profit

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The term write back when used in respect of creditors implies reduction in the amount of creditors. In other words, written back of creditors simply means to strike-off the name of the creditors from the books. This implies that the amount of creditors that has been written-back is not to be paid, which implicitly implies gain to a firm. This is why, the amount of creditors written-back is shown on the credit side of the Revaluation Account. You must also note that in this case, if instead of written-back, written-off is used for creditors, then also the same accounting treatment is to be followed (i.e. written-off => gain to the firm => to be shown on the credit side of the Revaluation Account).

 

Note- Although in the previous answer Rohit Makkar is correct, but it is correct only if we go by the literal sense. It is advisable that whenever, in a question, there is a point regarding written-back of liabilities, then always read the adjustment very carefully to derive the meaning.

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Hi,

Where, in that answer, is it written that write back of creditors means decrease in creditors?

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