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

Anand Sports Club received entrance fees of ₹60,000 during 2024-25. The club's policy is to treat entrance fees as a revenue receipt. How will the amount be treated?

Because the club's policy treats entrance fees as revenue, the entire ₹60,000 is credited to the Income and Expenditure Account for the year. Without such a policy, entrance fees would be capitalised and added to the Capital Fund.

  1. ACredited to the Capital Fund
  2. BCredited to the Income and Expenditure Account in fullCorrect
  3. CShown as a liability in the Balance Sheet
  4. DDeducted from the cost of fixed assets

Explanation

Entrance fees are normally capitalised, but where the club's stated policy treats them as revenue, they are credited in full to the Income and Expenditure Account. Crediting the Capital Fund would contradict the stated policy.

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