alleryStart learning →The purchase of sports materials such as balls and nets is treated as:
ARevenue expenditure to the extent consumed
BCapital expenditure, shown in the balance sheet
CA capital receipt of the whole organisation
DAn item excluded from the final accounts
Answer & Solution
Correct answer: A. Revenue expenditure to the extent consumed
1. The textbook separates sports materials from sports equipment.
2. Sports materials such as balls, bats and nets are consumable items.
3. The amount of sports materials consumed is taken as revenue expenditure in the income and expenditure account.
4. The value of unconsumed sports materials is shown as an asset in the balance sheet.
5. Sports equipment, such as a table tennis table or a billiards table, is capital expenditure instead, so a single word decides the treatment.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 2 "Accounts of Not-for-Profit Organisation", §2.4_
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