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

A sports club's Receipts and Payments Account shows payment of ₹50,000 for salaries. Salaries outstanding were ₹8,000 at the beginning and ₹5,000 at the end of the year. What amount of salaries is charged to the Income and Expenditure Account?

Salaries charged to the Income and Expenditure Account are ₹47,000. Payment of ₹50,000 is reduced by the ₹8,000 opening outstanding, which belongs to last year, and increased by the ₹5,000 closing outstanding, which belongs to this year.

  1. A₹47,000Correct
  2. B₹53,000
  3. C₹50,000
  4. D₹63,000

Explanation

Expense = Paid 50,000 − opening outstanding 8,000 + closing outstanding 5,000 = ₹47,000. Check: opening liability 8,000 + expense 47,000 − paid 50,000 = 5,000 closing. ₹53,000 comes from reversing the adjustments.

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