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

A professional association received subscriptions of ₹1,20,000 in the year. Subscriptions outstanding were ₹8,000 at the start and ₹12,000 at the end. Subscriptions received in advance were ₹3,000 at the start and ₹5,000 at the end. What subscription income should be credited to the Income and Expenditure Account?

Subscription income is ₹1,22,000. From cash received, remove opening arrears and closing advances, then add closing arrears and opening advances, since the latter were received last year but belong to this year's income.

  1. A₹1,22,000Correct
  2. B₹1,26,000
  3. C₹1,18,000
  4. D₹1,20,000

Explanation

Income = 1,20,000 − 8,000 (old arrears) + 12,000 (closing outstanding) + 3,000 (opening advance) − 5,000 (closing advance) = 1,22,000. The figure 1,26,000 results from wrongly adding the closing advance and deducting the opening advance.

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