Albert,a supplier of goods,owes George $2000.00.Albert gives George a note for $2000.00 payable in 60 days.A couple of weeks later,George buys $800.00 worth of goods from Albert.If George has not paid Albert the $800.00 by the time the 60 days has expired and Albert claims payment of the $2000.00 note

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Albert can deduct, or set-off, the $800.00 owed by George against the $2000.00 that he owes and pay George $1200.00. This is known as the principle of set-off, where if two parties owe each other some money, they are allowed to cancel out their debts to each other so that only the balance is paid. In this case, Albert owes George $2000.00 and George owes Albert $800.00, so Albert can deduct the $800.00 from the $2000.00 and pay George $1200.00.

Albert,a Supplier of Goods,owes George $2000