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CMA Intermediate · Financial Accounting · Financial Statements of Not-for-Profit Organisations

A sports club's Receipts and Payments Account shows subscriptions received during the year of ₹2,40,000. Subscriptions outstanding at the beginning were ₹20,000 and at the end ₹30,000. Subscriptions received in advance at the beginning were ₹10,000 and at the end ₹15,000. What is the subscription income to be credited to the Income and Expenditure Account?

Subscription income is ₹2,45,000. Take cash received of ₹2,40,000, subtract opening outstanding of ₹20,000, add closing outstanding of ₹30,000, add opening advance of ₹10,000 and subtract closing advance of ₹15,000 to arrive at the accrual-based income for the year.

  1. A₹2,35,000Correct
  2. B₹2,45,000
  3. C₹2,55,000
  4. D₹2,25,000

Explanation

Start with cash received ₹2,40,000. Less opening outstanding ₹20,000 (belongs to the prior year) gives ₹2,20,000. Add closing outstanding ₹30,000 gives ₹2,50,000. Add opening advance ₹10,000 (now earned) gives ₹2,60,000. Less closing advance ₹15,000 gives ₹2,45,000. Check: the 2,35,000 option arises from reversing the advance adjustments, and is wrong.

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