Multiple choice

A charitable trust decided to maintain a sports fund to organise matches. The donations received in the fund during the year amounted to Rs. 30,000. An interest of Rs. 2000 was received for placing these funds in a bank account. An amount of Rs. 35,000 was paid for organising various matches. Which of the following statements is correct?

  1. Rs. 30,000 will be shown in sports fund on the liabilities side in the balance sheet and nothing will be shown in the income and expenditure account.

  2. Only Rs. 3000 will be debited from the income and expenditure account.

  3. Rs. 35,000 will be debited from the income and expenditure account.

  4. Rs. 35,000 will be debited from the income and expenditure account and Rs. 2000 will be credited to it.

  5. Rs. 33,000 will be debited from the income and expenditure account.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Receipts on account of funds including interest are Rs. 32,000 (Rs. 30,000 donations and Rs. 2000 interest), whereas Rs. 35,000 are the expenses. Thus, an excess of Rs. 3000 paid will be debited from the income and expenditure account.

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