Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

example, an institution may receive donation for construction of building or for giving prizes to best artist. The amount of such donation cannot, therefore, be

image text in transcribed

example, an institution may receive donation for construction of building or for giving prizes to best artist. The amount of such donation cannot, therefore, be used for general purpose. It should be taken to the Balance Sheet on the liabilities side and be used only for the purpose which it is meant, irrespective of the amount. r44 (b) General donation: A donation not received for a specific purpose is termed as general donation. In case, the general donation is of a big or large amount, it can fairly taken for granted that such donation is of a non-recurring nature and, therefore, should be taken to the Balance Sheet on the liabilities side. However, if the donation is of a small amount and not meant for a specific purpose, it can be taken to credit side of the Income and Expenditure Account. Whether the donation is of big amount or small amount would depend on the facts of each case. For example, in case of an educational institution, a sum of Rs. 11,000 can be taken as a small donation, but for a cricket club, a sum of Rs. 11,000 is quite substantial and, therefore, it will be proper to take the amount of such donation received to the Balance Sheet. Illustration: Following are the extracts from the Receipts and Payments Account of a sports club. You are required to show the different items in the Income and Expenditure Account and Balance Sheet of the club after taking into account the additional information given RECEIPTS AND PAYMENTS ACCOUNT FOR THE YEAR ENDING 31ST MARCH, 1999 Rs Rs. 5,000 To Donations for Pavilion To Subscriptions for Governor's Party To Donations 2,000 1,000 Additional Information (1) Amount spent on Pavilion Rs. 1,000. (1) Outstanding subscriptions for Governor's Party Rs. 500

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Auditing And Other Assurance Services

Authors: Ray Whittington, Kurt Pany

16th Edition

007352686X, 978-0073526867

More Books

Students also viewed these Accounting questions

Question

6. Identify seven types of hidden histories.

Answered: 1 week ago

Question

What is human nature?

Answered: 1 week ago