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CMA Foundation · Fundamentals of Financial and Cost Accounting · Financial Statements of a Not-for-Profit Organisation

Anand Library had stock of books of ₹80,000 on 1 April 2023. During the year it purchased books worth ₹30,000 and wrote off ₹10,000 as depreciation. Books are to be shown at cost less depreciation. What is the value of books in the Balance Sheet on 31 March 2024?

Books appear at ₹1,00,000 in the Balance Sheet. Opening books of ₹80,000 are increased by the ₹30,000 purchases, which are capital in nature, and reduced by depreciation of ₹10,000, which is also charged to Income and Expenditure Account.

  1. A₹1,00,000Correct
  2. B₹1,20,000
  3. C₹1,10,000
  4. D₹90,000

Explanation

Book value = 80,000 + 30,000 - 10,000 = ₹1,00,000. Purchase of books is capital expenditure and goes to the asset, while depreciation is charged to Income and Expenditure Account and reduces the asset. ₹1,10,000 ignores depreciation.

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