A review of the accounts receivable trial balance may reveal receivables with credit balances that should be reclassified as current liabilities.

Question

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Credit balances in accounts receivable typically indicate that a customer has overpaid or a return was processed after payment, which means the company owes money to the customer. These amounts should be reclassified as current liabilities since they are obligations the company needs to settle.

A Review of the Accounts Receivable Trial Balance May Reveal