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

In the Income and Expenditure Account of a not-for-profit organisation, which of the following items is NOT recorded?

Purchase of capital sports equipment is not recorded in the Income and Expenditure Account because it is capital expenditure. It appears as an asset in the Balance Sheet, while only depreciation on it, along with revenue items like subscriptions and honorarium, is charged to the account.

  1. ASubscription income earned for the year
  2. BHonorarium paid to the secretary for the year
  3. CPurchase of a new sports equipment of capital natureCorrect
  4. DDepreciation on furniture

Explanation

The Income and Expenditure Account is a nominal account that records only revenue items of the current period on an accrual basis. Purchase of sports equipment is capital expenditure, so it is shown as an asset on the Balance Sheet and only its depreciation is charged to the account.

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