Which of the following are not valid with regard to the creditors of any organisation?

Creditors are the assets of the company

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If the business buys goods/services on credit and amount is still to be paid to the persons and/or other entities, these are called creditors

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Creditors are the liabilities of the company

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Creditors are increased if the goods are bought on credit

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Solution

The correct option is A
Creditors are the assets of the company

If the business buys goods/services on credit and amount is still to be paid to people and/or other entities, these are called creditors. These are liabilities for the business. These are not assets.

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Similar questions

Rohit has the following transactions:

		Rs
(a)	Commenced business with cash	1,50,000
(b)	Purchased machinery on credit	40,000
(c)	Purchased goods for cash	20,000
(d)	Purchased car for personal use	80,000
(e)	Paid to creditors in full settlement	38,000
(f)	Sold goods for cash costing Rs 5,000	4,500
(g)	Paid rent	1,000
(h)	Commission received in advance	2,000

Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.

Mention the subsidiary books in which the following transactions are recorded with reason thereof.

(i) Purchase of furniture on credit for use in a shop.

(ii) Sale of goods on credit.

(iii) Goods returned by debtors

(iv) Purchase of stock on credit.

(v) Providing for interest on capital to a proprietor.

(vi) Goods returned to creditors.

(vii) Sale of goods for cash.

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