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

Deepa Club has a policy of treating 50% of entrance fees as revenue income, rest capitalised. In 2024-25 it received entrance fees of ₹80,000 and life membership fees of ₹1,50,000. Opening life membership fund was ₹3,00,000. It treats life membership fees as capital and transfers nothing to income. What is the amount credited to the Income and Expenditure Account for these two items, and the closing life membership fund?

Only half of the entrance fees, ₹40,000, is credited to the Income and Expenditure Account. The life membership fees of ₹1,50,000 are capital and increase the fund from ₹3,00,000 to ₹4,50,000.

  1. A₹40,000 and ₹4,50,000Correct
  2. B₹1,90,000 and ₹3,00,000
  3. C₹80,000 and ₹4,50,000
  4. D₹40,000 and ₹3,00,000

Explanation

Entrance fees: 50% of ₹80,000 = ₹40,000 goes to income and ₹40,000 to capital. Life membership fees of ₹1,50,000 are added to the fund: ₹3,00,000 + ₹1,50,000 = ₹4,50,000. Option ₹80,000 ignores the 50% policy. Option ₹1,90,000 wrongly treats life fees as income.

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