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Donations received for a special purpose ______ -

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Question

Donations received for a special purpose ______

Options

  • Should be credited to the Income and Expenditure Account.

  • Should be credited to a separate account and shown on the Balance Sheet.

  • Should be shown on the assets side of the Balance Sheet.

  • Should not be recorded at all.

MCQ
Fill in the Blanks

Solution

Donations received for a special purpose Should be credited to a separate account and shown on the Balance Sheet.

Explanation:

Donations received for a specific purpose must be used for a specific activity - this is a capital receipt. It should be recorded in a separate account, and expenses should be deducted solely from that account. The account's balance will be shown as a liability on the Balance Sheet.

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Receipts and Payments Account
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