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CMA Foundation · Fundamentals of Financial and Cost Accounting · Financial Statements of a Not-for-Profit Organisation

A club's canteen creditors were ₹6,000 at the start of the year and ₹9,000 at the end. Cash paid to canteen suppliers during the year was ₹45,000. What purchases figure should go into the canteen trading account?

Canteen purchases are ₹48,000. Purchases equal cash paid to suppliers plus closing creditors minus opening creditors, because the rise in creditors means goods were bought on credit that has not yet been paid for in cash.

  1. A₹48,000Correct
  2. B₹42,000
  3. C₹54,000
  4. D₹45,000

Explanation

Purchases = payments to creditors + closing creditors − opening creditors = 45,000 + 9,000 − 6,000 = 48,000. Taking 45,000 − 9,000 + 6,000 gives 42,000, which reverses the creditor adjustment.

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