The correct answer is: A. Income and Expenditure Account.
Donations received for a special purpose are considered income and should be recorded in the Income and Expenditure Account. The Income and Expenditure Account is a statement of income and expenses for a specific period of time, such as a year. It is used to show how much money was earned and how much money was spent during that time.
The Assets side of the Balance Sheet shows the resources that a company owns, such as cash, land, and equipment. The Liabilities side of the Balance Sheet shows the debts that a company owes, such as loans and accounts payable. Donations received for a special purpose are not considered assets or liabilities, so they are not recorded on the Balance Sheet.
Here is a brief explanation of each option:
- A. Income and Expenditure Account. Donations received for a special purpose are considered income and should be recorded in the Income and Expenditure Account. The Income and Expenditure Account is a statement of income and expenses for a specific period of time, such as a year. It is used to show how much money was earned and how much money was spent during that time.
- B. Assets side of the Balance Sheet. The Assets side of the Balance Sheet shows the resources that a company owns, such as cash, land, and equipment. Donations received for a special purpose are not considered assets, so they are not recorded on the Assets side of the Balance Sheet.
- C. Liabilities side of the Balance Sheet. The Liabilities side of the Balance Sheet shows the debts that a company owes, such as loans and accounts payable. Donations received for a special purpose are not considered liabilities, so they are not recorded on the Liabilities side of the Balance Sheet.
- D. None of the above. Donations received for a special purpose are considered income and should be recorded in the Income and Expenditure Account.