Question

Which of the following shall have effect on the creditors of the business?

• A. Goods purchased from Mr. Ram Rs 20,000 for cash
• B. Goods purchased from Mr. Ram Rs 20,000 for which payment is due next month
• C. Furniture for use in office, purchased on credit
• D. Goods sold for Rs 20,000 for which the payment shall be received next month

Answer 1

The correct option is B

Goods purchased from Mr. Ram Rs 20,000 for which payment is due next month

Goods purchased from Mr. Ram Rs 20,000 for which payment is due next month is the only transaction that will have effect on the creditors of the company. Furniture purchased on credit is a liability but it wont effect creditors because furniture has been purchased for office use & not for resale in the course of business.