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CMA Foundation · Fundamentals of Financial and Cost Accounting · Financial Statements of a Not-for-Profit Organisation

A club's Receipts and Payments Account shows: subscriptions received Rs 1,20,000; life membership fees Rs 30,000 (to be capitalised); donations for building Rs 50,000; sale of old newspapers Rs 2,000; salaries paid Rs 60,000; purchase of furniture Rs 25,000. Adjustments: subscriptions outstanding at the end Rs 10,000 (none at the start); salaries outstanding Rs 5,000; depreciation on furniture Rs 4,000. What is the surplus for the year?

Surplus is Rs 63,000. Revenue income is subscriptions of Rs 1,30,000 including outstanding plus Rs 2,000 from newspapers. Expenses are salaries of Rs 65,000 and depreciation of Rs 4,000. Life membership fees, the building donation and furniture purchase are capital items and are excluded.

  1. ARs 63,000Correct
  2. BRs 53,000
  3. CRs 73,000
  4. DRs 58,000

Explanation

Income: subscriptions 1,20,000+10,000=1,30,000; newspapers 2,000; total 1,32,000. Expenditure: salaries 60,000+5,000=65,000; depreciation 4,000; total 69,000. Surplus = 1,32,000-69,000 = 63,000. Life membership fees and building donation are capital; furniture purchase is capital expenditure. Including donation would wrongly give Rs 1,13,000.

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