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CSEET · Fundamentals of Accounting · Accounting for Non-Profit Organizations

A library trust had stock of stationery of Rs 8,000 at the start of the year and Rs 6,000 at the end. It paid Rs 30,000 for stationery during the year, and Rs 4,000 was still payable at the year end (nothing was payable at the start). What stationery expense is debited to the Income and Expenditure Account?

The stationery expense is Rs 36,000. It equals opening stock plus payments plus the outstanding amount less closing stock: 8,000 + 30,000 + 4,000 - 6,000. Leaving out the outstanding liability would understate the expense at Rs 32,000.

  1. ARs 36,000Correct
  2. BRs 32,000
  3. CRs 28,000
  4. DRs 34,000

Explanation

Expense = opening stock 8,000 + payments 30,000 + outstanding 4,000 - closing stock 6,000 = 36,000. Omitting the outstanding amount gives 32,000, and ignoring stock changes gives 34,000.

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