In the link : **http://cbse.meritnation.com/study-online/ncert-solutions/accountancy/395/16265/accounting-for-not-for-profit-organisation/following-is-the-receipt-and-payment-account-of **, why are we calculating the amount of **Sale of sports equipment **as 2200 instead of 2500 in the **closing balance sheet.**

As we know that in the books of accounts, we record the financial items at their original costs. In the Receipt and Payment of the concerned question, we have been given the sale of sports equipments of Rs 2,500 along with its cost of Rs 2,200. This implies that the equipments worth Rs 2,200 were sold for Rs 2,500, from this we can infer that there is a profit of Rs 300.

Now, the answer to your question that why we have considered the cost price of Rs 2,200 and not the sale price is that due to the sale the balance of sport equipments is reduced by its cost that is Rs 2,200 and not by Rs 2,500. This is because the equipments worth Rs 2,200 have been sold. Now, think that instead of Rs 2,500 the equipments were sold for say Rs 1,700. In this case also, the balance of sports equipments will reduce by the cost price that is Rs 2,200 and not by 1,700.

Thus, based on this discussion, we can conclude that in any case, if the cost prices of the items are given to us, then irrespective of the fact that whether the items are sold at profit or at loss, in the closing balance sheet, we will reduce the balance only by the cost price and not by the sale price. However, if the cost price is not given then, we will assume that the sale price and the cost price are same and accordingly, we will deduct it from the balance.

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