Question

Mr. Mahesh has assets of Rs.10,00,000 and capital of Rs.6,00,000. Calculate the amount of creditors using the accounting equation.

a) Rs. 4,00,000
b) Rs. 10,00,000
c) Rs. 6,00,000
d) Rs. 16,00,000

Answer 1

The amount of creditors for Mr. Mahesh, given the assets of Rs.10,00,000 and capital of Rs.6,00,000, is calculated to be Rs.4,00,000 using the accounting equation.

Step-by-step explanation:

The fundamental accounting equation is Assets = Liabilities + Owner's Equity. Mr. Mahesh has assets worth Rs.10,00,000 and capital (Owner's Equity) of Rs.6,00,000. To find the amount of creditors or liabilities, we rearrange the equation to Liabilities = Assets - Owner's Equity. So, creditors equal Rs.10,00,000 (Assets) - Rs.6,00,000 (Owner's Equity), which gives us Rs.4,00,000. Therefore, the amount of creditors is Rs.4,00,000.