Multiple choice

Goods costing Rs. 1, 000 (Sale Price Rs. 1, 200) given as charity should be credited to

  1. sales account with Rs. 1, 200

  2. sales account with Rs. 1, 000

  3. purchase account with Rs. 1, 000

  4. loss by theft A/c
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When goods are given as charity, they are removed from purchases. The entry is: Charity Account debited and Purchases Account credited. The credit is always at COST PRICE (Rs. 1000), not selling price, because we are removing the goods from our inventory.

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