Question

Select the most appropriate alternatives from those given below and rewrite the sentence.

Purchase from Mr. Rakesh Ledger of Mr. Rakesh will come under __________ group.
a) a profit
b) a Loss
c) an expenses
d) an income

Answer 1

Purchase from Mr. Rakesh Ledger of Mr. Rakesh will come under Current Liability group.

Explanation:
Purchases were made from Mr. Rakesh. Thus, he becomes the creditor of the business and the ledger of Mr. Rakesh will come under the Current Liability group. It will not form a part of profit or loss. It comes under the Current Liability group because payment is to be made to him within a short period of time.

Note: Answer and options provided to this question are incorrect. When goods were purchased from Mr. Rakesh, he becomes the creditor of the business. Creditors are the Current Liability of the business. Thus, his ledger account should come under the group of Current Liability.