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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.
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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
Income and expenditure contain only ______ items.
State any three points of difference between ‘Receipts and Payment Account’ and ‘Income and Expenditure Account’.
Give any two uses of Income and Expenditure Account.
The closing balance of this account shows surplus/deficit ______.
______ account is prepared to ascertain surplus or deficit at the end of an accounting year.
If the total of ______ side is greater than the total of ______ side, it is called 'surplus' or 'excess of income over expenditure'.
On the other hand, if the total of ______ side is greater than the total of ______ side, it is known as 'deficit' or 'excess of expenditure over income'.
Explain the term surplus in Income and Expenditure Account.
What is Income and Expenditure Account?
Mention any two features of the Income and Expenditure Account.
