Why payment to creditors is not debited to income and expenditure account in the solution of this sum?
Solution
Payment to creditors is an capital expenditure that why it is not shown in income and expenditure account.
IN income and expenditure account we show items related to revenue nature.
Capital expenditure are those expenses which leads to creation of assets or reduce the liabilities. As payment to creditors reduces the liabilities. Therefore , it is not shown in income and expenditure account.
Note: Solution is provided as per your requirement.
Payment to creditors is an capital expenditure that why it is not shown in income and expenditure account.
IN income and expenditure account we show items related to revenue nature.
Capital expenditure are those expenses which leads to creation of assets or reduce the liabilities. As payment to creditors reduces the liabilities. Therefore , it is not shown in income and expenditure account.
Note: Solution is provided as per your requirement.