Question : Donations received for a special purpose:
Option 1: Should be shown on the Asset side of the Balance Sheet
Option 2: Should be shown on the Liability side of the Balance Sheet
Option 3: Should be shown on the credit side of the Income and Expenditure Account
Option 4: Should not be shown anywhere
Correct Answer: Should be shown on the Liability side of the Balance Sheet
Solution : The answer Should be shown on the Liability side of the Balance Sheet .
Donations received for special purposes are capital receipts; they should be shown on the liabilities side of the closing balance sheet. It represents an obligation to utilize funds for the specified purpose which the organization is accountable for.
Hence, the correct option is 2.
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