Why can't we classify creditors under financing activity?
Hi Riya,
The creditors are the people to whom business owes ​money on account of purchases of goods. Now, since purchase of goods is an activity related to business operations, therefore creditors are included under 'Operating Activities'.
The creditors are the people to whom business owes ​money on account of purchases of goods. Now, since purchase of goods is an activity related to business operations, therefore creditors are included under 'Operating Activities'.