my 1st friend gave me 1000 and 2nd gave me 500 i have loos
1000 rupees then i purchase some thing with the cost of 300
and gave 100 100 both friends 1st friend remaining 900 and
2nd remaining 400 900+400+300=1600 why
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Answer Posted / sindhu.t
Firstly, the total outgoing funds are not 1600 it is 1800 i.e., 200(debt), 1300(debt), 300(Expense). There are two interpretations for outgoing funds:
1. Debt Repayment (Liabilities)
2. Expenditure made (Expense)
People from accounts background can understand that one reflect Balance sheet and the other reflect Profit & Loss A/c.
Here the question was misleaded saying that we used only debt to meet our expense, where the expenses are to met by our money but not with other's money i.e., though we use others funds later we have to borne the expense (from our pocket). So total payment from our side is 1800 (1500 debt pymt and 300 expense)not 1600.
Other way to understand 'total outgoing funds 1800 not 1600' is whenever you take loan of 1500 from anyone and if you pay from that money you'll treat it as payment, similarly here payment of 200 is also included in outgoing funds and totals to 1800.
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