A business has the following items in it:
Land Rs. 1,500,000
Machinery Rs. 80,000
Cash Rs. 20,000
Owners equity Rs. 900,000
Loan Rs. 500,000
Creditors?
A. Rs. 200,000
B. Rs. 700,000
C. Rs. 800,000
D. Rs. 1,100,000
Answer: Option A
Solution (By Examveda Team)
The accounting equation is Assets = Liabilities + Owners' Equity.In this case:
Assets = Land + Machinery + Cash = 1,500,000 + 80,000 + 20,000 = Rs. 1,600,000
Liabilities + Owners' Equity = Loan + Creditors + Owners' Equity
1,600,000 = 500,000 + Creditors + 900,000
Solving for Creditors:
1,600,000 - 500,000 - 900,000 = Creditors
Creditors = 200,000
Therefore, the amount for Creditors is Rs. 200,000.
This Question Belongs to Commerce >> Miscellaneous In Commerce
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