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How is the consumption of sports materials for the year computed?
AOpening stock plus purchases minus closing stock
BClosing stock plus purchases minus opening stock
CPurchases minus opening stock minus closing stock
DOpening stock plus closing stock minus purchases
Answer & Solution
Correct answer: A. Opening stock plus purchases minus closing stock
1. Sports materials, stationery and medicines are consumable items rather than fixed assets.
2. Only the portion consumed during the year is an expense of that year.
3. The formula the textbook prints is consumption equals opening stock plus purchases during the current year minus closing stock.
4. The amount consumed goes to the debit side of the income and expenditure account.
5. The closing stock that remains appears on the assets side of the balance sheet.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 2 "Accounts of Not-for-Profit Organisation", §2.5.4(b)_
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