Credit Balance in Purchases Ledger

Steps:

• Identify the purchases ledger tracks suppliers (creditors) and amounts owed by the business.
• Recall that in a supplier's account, credits record purchases (increasing liability), debits record payments (decreasing liability).
• Determine balance type: credit balance means credits exceed debits, so unpaid purchases remain.
• Conclude Shula (business) owes Yasmin (supplier) the balance amount.

Why the correct option is correct:

• In accounting, a credit balance in the purchases ledger indicates an outstanding liability to the supplier, per double-entry bookkeeping rules.

Why the others are wrong:

• A: Payment by Shula would debit the account, creating a debit balance if overpaid.
• C: Yasmin paying Shula would debit Yasmin's account, not credit it.
• D: Shula owing Yasmin is the liability; the reverse would be a debit balance.

Final answer: B