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CA Foundation · Accounting · Financial Statements of Not-for-Profit Organisations

Anand Residents Welfare Association paid ₹2,70,000 as salaries during 2024-25. Outstanding salaries were ₹30,000 on 1 April 2024 and ₹45,000 on 31 March 2025. What amount of salaries is debited to the Income and Expenditure Account for 2024-25?

The salaries charged are ₹2,85,000. Cash paid of ₹2,70,000 is increased by closing outstanding of ₹45,000 and reduced by opening outstanding of ₹30,000, because the opening amount relates to the previous year and the closing amount relates to the current year.

  1. A₹2,85,000Correct
  2. B₹2,55,000
  3. C₹3,45,000
  4. D₹2,70,000

Explanation

Expense for the year = payments + closing outstanding - opening outstanding = 2,70,000 + 45,000 - 30,000 = ₹2,85,000. Option ₹2,55,000 results from reversing the adjustments for outstanding amounts.

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