At the end of a year, the assets of a NPO are worth ₹20,000 while liabilities are worth ₹5,000. During the year there is debit balance of ₹4,000 in the Income and Expenditure account. How much is the accumulated fund at the beginning of the year?

₹19000

The correct answer is option 3- ₹19000.

Debit balance in Income and Expenditure account indicates a deficit i.e. Excess of expenditure over income while credit balance indicates surplus.

In the present case, it is given that there was a debit balance of rs 4,000 in the Income and Expenditure account. It means there was a deficit of Rs 4,000 during the year.

Thus, Capital in the Beginning= Capital at the end + deficit during the year

                                  = 15,000 + 4000

                                  =19,000

Note: In this case, since we have deficit during the year, therefore we have to add deficit to the capital at the end of the year to arrive at capital in the beginning. In case there was surplus, we would have to deduct the same from the amount of capital at the end of the year.