CUET Preparation Today
Read the following information provided by a school and attempt Question: The Trial Balance of a school as on 31.3.2017 is
Additional Information: The book value of the furniture sold was ₹50,000 on April 1, 2016 was sold for ₹20,000. |
Furniture of Book value ₹50,000 was sold for ₹20,000. Loss on Sale of Furniture of ₹30,000 will be _____. |
Credited to Receipt and Payment A/c Debited to Receipt and Payment A/c Credited to Income and Expenditure A/c Debited to Income and Expenditure A/c |
Debited to Income and Expenditure A/c |
The correct answer is Option (4) → Debited to Income and Expenditure A/c. Furniture of Book value ₹50,000 was sold for ₹20,000. Loss on Sale of Furniture of ₹30,000 will be Debited to Income and Expenditure A/c.
When an asset such as furniture is sold for less than its book value, the difference is recognized as a loss. In this case, the furniture's book value is ₹50,000, and it is sold for ₹20,000, resulting in a loss of ₹30,000. This loss needs to be debited to the Income and Expenditure Account, as it represents a reduction in the value of assets that impacts the overall financial performance. |
