• 4 Marks

BL – May 2022 – L1 – SB – Q5c – Company Law

State two situations that show netting has occurred in a company.

In a company, there may be a reason for netting.

Required:
State TWO situations that show that netting has occurred.

  1. Offsetting Receivables Against Payables: Netting occurs when a company offsets its accounts receivable against its accounts payable to the same party, resulting in a single net balance.
  2. Netting of Financial Derivatives: Netting can occur when a company offsets gains and losses from derivative contracts to determine the net amount owed or receivable from a counterparty.
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