Question

Loan taken for specific purpose will be shown in

• A. Income and Expenditure Account
• B. Liability side of Balance sheet
• C. Asset side of Balance sheet
• D. Both sides of Balance sheet

Hint:

Loans taken for specific purposes are recorded as liabilities on the balance sheet until they are repaid.

Answer 1

The Correct Option is B

Step 1: Understanding loans for specific purposes.
Loans taken for specific purposes, such as financing an asset or project, are recorded as liabilities on the balance sheet. They do not appear in the Income and Expenditure Account unless they are part of operational expenses.
Step 2: Analyzing the options.
- (A) Income and Expenditure Account: This is incorrect. Loans do not appear in the Income and Expenditure Account, as they are liabilities, not income or expenses.
- (B) Liability side of Balance sheet: This is correct. Loans are listed as liabilities on the balance sheet until they are repaid.
- (C) Asset side of Balance sheet: This is incorrect. Loans are not assets; they are obligations that must be repaid.
- (D) Both sides of Balance sheet: This is incorrect. Loans are shown only on the liability side, not both sides.
Step 3: Conclusion.
The correct answer is (B) Liability side of Balance sheet, as loans are listed as liabilities on the balance sheet.
Final Answer: The correct answer is (B) Liability side of Balance sheet.