Question

Payment of donation is .............. .

• A. debited to Costing Profit and Loss Account
• B. credited to Costing Profit and Loss Account
• C. debited to Financial Profit and Loss Account
• D. credited to Financial Profit and Loss Account

Hint:

Non-production expenses like donations belong only in financial accounts.

Answer 1

The Correct Option is C

Donations are not related to the production of goods or provision of services.
They are purely financial expenditures made for charitable, social, or promotional purposes.
As a result, donations are never charged to the Costing Profit and Loss Account because they do not affect cost control or cost computation.
Instead, they are debited to the Financial Profit and Loss Account as a non-operating expense.
This ensures that the cost data remains pure and only includes production-related costs.
So, the correct answer is that donations are debited to the Financial Profit and Loss Account.