Question 3 OR (c)
Stationery in a not-for-profit body's final accounts
6 marks
- Time to write
- About 12 minutes
- Notes
- Crux notes
Question
Question 3 OR (c) · 6 marksIn what way will you treat the items given below when drawing up the Income and Expenditure Account for the year ended 31st December, 2024 and the Balance Sheet on that date:
| Particulars | As at 31st December 2024 (Rs.) | As at 31st December 2025 (Rs.) |
|---|---|---|
| Creditors for Stationery | 18,000 | 30,000 |
| Stock of Stationery | 50,000 | 40,000 |
During 2024, payments made to the creditors for Stationery amounted Rs. 1,80,000 and cash purchases of Stationery amounted to 25% of the total purchase.
Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
What the paper leaves open
The paper asks for the accounts for the year ended 31 December 2022, with payments "During 2022", but gives balances at 31 December 2022 and 31 December 2023 (in our version 2024, and 2024 and 2025). Taken literally, the first column is the closing balance of the year asked for, and the second is a date after that year, which leaves no opening balance. Either the year should read 2023, or the column dates should read 2021 and 2022. Under both repairs the first column is the opening balance and the second the closing balance of the year being accounted for, and that is the reading we use; the figures are the same under either repair. The paper also says "the total purchase"; we read it as the year's total purchases of stationery.
Write it in this order
- Read the data; note exactly what is asked 1 min
- 1 Credit purchases from the creditors account 1½ marks 3 min
- 2 Total and cash purchases from the 25% condition 1½ marks 2 min
- 3 Stationery consumed shown in the Income & Expenditure Account 2 marks 3 min
- 4 Balance Sheet: creditors (liability), stock asset 1 mark 2 min
- Check: arithmetic, units (₹, %), final answer underlined 1 min
Try it first. About 12 minutes for 6 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Stationery is a consumable. The Income and Expenditure Account takes the stationery consumed in the year, whether paid for or not, because it records all of the year's expenses, paid or outstanding. The cash paid is not that figure, so the year's purchases are rebuilt from the creditors, and consumption from the stock. The marking scheme works the same question in this order: a creditors account with credit purchases as the balancing figure, then the amount consumed.
Working 1: Creditors for Stationery Account (to find credit purchases)
| Dr | ₹ | Cr | ₹ |
|---|---|---|---|
| To Bank (paid to creditors) | 1,80,000 | By Balance b/d (opening) | 18,000 |
| To Balance c/d (closing) | 30,000 | By Purchases on credit (balancing figure) | 1,92,000 |
| Total | 2,10,000 | Total | 2,10,000 |
| Dr | ₹ |
|---|---|
| To Bank (paid to creditors) | 1,80,000 |
| To Balance c/d (closing) | 30,000 |
| Total | 2,10,000 |
| Cr | ₹ |
| By Balance b/d (opening) | 18,000 |
| By Purchases on credit (balancing figure) | 1,92,000 |
| Total | 2,10,000 |
Working 2: Total purchases
Cash purchases are 25% of total purchases, so credit purchases are the other 75%:
- Total purchases = ₹1,92,000 ÷ 75% = ₹2,56,000
- Cash purchases = 25% of ₹2,56,000 = ₹64,000
Working 3: Stock of Stationery Account (to find stationery consumed)
| Dr | ₹ | Cr | ₹ |
|---|---|---|---|
| To Balance b/d (opening stock) | 50,000 | By Income & Expenditure A/c (consumed, balancing figure) | 2,66,000 |
| To Cash purchases | 64,000 | By Balance c/d (closing stock) | 40,000 |
| To Credit purchases | 1,92,000 | ||
| Total | 3,06,000 | Total | 3,06,000 |
| Dr | ₹ |
|---|---|
| To Balance b/d (opening stock) | 50,000 |
| To Cash purchases | 64,000 |
| To Credit purchases | 1,92,000 |
| Total | 3,06,000 |
| Cr | ₹ |
| By Income & Expenditure A/c (consumed, balancing figure) | 2,66,000 |
| By Balance c/d (closing stock) | 40,000 |
| Total | 3,06,000 |
Treatment in the final statements
Income and Expenditure Account for the year ended 31st December, 2024 (extract)
| Expenditure | ₹ | Income | ₹ |
|---|---|---|---|
| To Stationery consumed (W3) | 2,66,000 |
Balance Sheet as on that date (extract)
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors for stationery | 30,000 | Stock of stationery | 40,000 |
- The ₹30,000 still owed to stationery suppliers is a liability; amounts still to be paid at the year end go on the liabilities side of a non-trading body's Balance Sheet.
- The ₹40,000 of stationery unused at the year end is carried forward as an asset, which is why it is deducted in arriving at the amount consumed.
The dates on the two statements follow the paper's own wording (the year ended 31st December, 2024 in our version). Under the reading in the paper note, the figures are the same whichever date label in the paper is the misprint.
Where the 6 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Credit purchases from the creditors account (₹1,92,000) | 1.5 |
| 2 | Total and cash purchases from the 25% condition (₹2,56,000; ₹64,000) | 1.5 |
| 3 | Stationery consumed (₹2,66,000) shown in the Income & Expenditure Account | 2 |
| 4 | Balance Sheet: creditors ₹30,000 (liability), stock ₹40,000 (asset) | 1 |
| Total | 6 |
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