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CSEET · Fundamentals of Accounting · Accounting for Non-Profit Organizations

Opening cash and bank balance of Harmony Trust was Rs 18,000. During the year it received subscriptions Rs 60,000, donations for a building fund Rs 25,000 and interest Rs 5,000. It paid salaries Rs 30,000, purchased furniture Rs 20,000 and paid general expenses Rs 12,000. The closing cash and bank balance in the Receipts and Payments Account is:

The closing balance is Rs 46,000. Total receipts including the opening balance are Rs 108,000 (18,000 + 60,000 + 25,000 + 5,000), and total payments including furniture are Rs 62,000. The difference of Rs 46,000 is carried down as the closing cash and bank balance.

  1. ARs 46,000Correct
  2. BRs 41,000
  3. CRs 66,000
  4. DRs 21,000

Explanation

Receipts = 18,000 + 60,000 + 25,000 + 5,000 = 108,000. Payments = 30,000 + 20,000 + 12,000 = 62,000. Closing balance = 108,000 - 62,000 = 46,000. Rs 21,000 results from wrongly excluding the donation and interest, and Rs 66,000 omits the opening balance... treating capital items incorrectly, as all cash items are included.

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