Skip to content

CA Foundation · Accounting · Financial Statements of Not-for-Profit Organisations

Greenfield Library Society had opening stock of stationery ₹8,000. During the year it paid ₹36,000 for stationery. Creditors for stationery were ₹5,000 at the start and ₹9,000 at the end of the year. Closing stock of stationery was ₹6,000. What is the stationery expense to be debited to the Income and Expenditure Account?

Stationery expense is ₹42,000. Purchases are ₹36,000 paid less ₹5,000 opening creditors plus ₹9,000 closing creditors, giving ₹40,000. Adding opening stock ₹8,000 and deducting closing stock ₹6,000 gives consumption of ₹42,000.

  1. A₹36,000
  2. B₹38,000Correct
  3. C₹34,000
  4. D₹42,000

Explanation

Purchases = payments 36,000 − opening creditors 5,000 + closing creditors 9,000 = 40,000. Consumption = opening stock 8,000 + purchases 40,000 − closing stock 6,000 = 42,000. So the correct figure is ₹42,000, not ₹38,000 which ignores the creditors adjustment incorrectly.

Did you get it right without looking?

One question tells you little. A timed set on Financial Statements of Not-for-Profit Organisations shows your real accuracy, how long you take and where you lose marks.

Practise Financial Statements of Not-for-Profit OrganisationsFree diagnostic mock

More Financial Statements of Not-for-Profit Organisations questions