Mr. Ram has a business of selling shoes. He bought goods worth Rs 50,000 on credit from Mr. Ajay. Also, he borrowed a sum of Rs 1,00,000 from his friend Mr.Shyam. What would be the amount of creditors which wil be recorded in his books?
Rs 50,000
A lender lends money to a person or institution but he is not a creditor. A creditor is a person to whom money is owed by the person or institution for the goods acquired for resale. Hence only Rs 50,000 shall be recognised as creditors.