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Question
All donations received by non-trading concerns are entered in the liabilities side of the balance sheet. Justify either for or against.
Solution
Against:
- All donations received by non-trading concerns are not entered on the liabilities side of the balance sheet.
- Only specific types of donations, such as those received for a specific purpose or with certain conditions attached (restricted donations), are recorded as liabilities until the conditions are fulfilled.
- General donations, which are meant to support the organization's overall activities, are recorded as income in the Income and Expenditure Account and, if unspent, may appear on the assets side as part of the accumulated funds or reserves.
RELATED QUESTIONS
Justify either for or against by giving a reason for the following statement. ‘Income and Expenditure account shows the opening and closing balances of cash in hand and cash at bank.’
State any three points of difference between ‘Receipts and Payment Account’ and ‘Income and Expenditure Account’.
Explain any two features of Income and Expenditure account.
How will Income and Expenditure account benefit a non-trading sports organisation?
The closing balance of this Account shows surplus or deficit for the year.
It serves as the basis for preparing the Balance Sheet of a non-trading organisation.
If the total of ______ side is greater than the total of ______ side, it is called 'surplus' or 'excess of income over expenditure'.
Explain the term deficit in Income and Expenditure Account.
What is Income and Expenditure Account?
Mention any two features of the Income and Expenditure Account.
