Read the following information provided by a school and attempt Question:
The Trial Balance of a school as on 31.3.2017 is
|
Debit Balance |
Amount (₹) |
Credit Balance |
Amount (₹) |
|
Building |
6,25,000 |
Admission fees |
12,500 |
|
Furniture |
50,000 |
Tuition fees received |
5,00,000 |
|
Library books |
1,50,000 |
Creditors for supplies |
15,000 |
|
Investment @12% (1.4.16) |
5,00,000 |
Rent for the school hall |
10,000 |
|
Salaries |
5,00,000 |
Miscellaneous receipts |
30,000 |
|
Stationery |
40,000 |
Legacies (general) |
3,50,000 |
|
General expenses |
18,000 |
General fund |
10,00,000 |
|
Sports expenses |
15,000 |
Donation for library books |
62,500 |
|
Cash at bank |
1,00,000 |
Sale of old furniture |
20,000 |
|
Cash in hand |
2,000 |
|
|
|
|
20,00,000 |
|
20,00,000 |
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 _____.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Debited to Income and Expenditure A/c
Furniture with a book value of ₹50,000 was sold for ₹20,000:
Loss on sale = ₹50,000 − ₹20,000 = ₹30,000
A loss on sale of a fixed asset is a revenue loss of the year. It does not appear in the Receipt and Payment Account, but it must be taken into account while working out the surplus or deficit, so it goes to the expenditure (debit) side of the Income and Expenditure Account.
Option (1) Credited to Receipt and Payment A/c — Incorrect. The Receipt and Payment Account records only cash. It shows the ₹20,000 actually received, never the loss.
Option (2) Debited to Receipt and Payment A/c — Incorrect. No cash moves for a loss, so it has no place in a cash summary.
Option (3) Credited to Income and Expenditure A/c — Incorrect. Only a profit on sale would be credited; a loss reduces the surplus and is debited.
Note: This question is from the pre-rationalised NCERT book. The topic is not there in the latest NCERT book (2026-27), and it is also out of the CUET 2026 syllabus.
NCERT (Pre-rationalised edition): NCERT (Pre-rationalised edition):
|
