Skip to content

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

Sunrise Sports Club had a Capital Fund of ₹5,00,000 on 1 April. During the year its income was ₹3,20,000 and its expenditure ₹3,50,000. It also received ₹40,000 as life membership fees, which it capitalises. What is the Capital Fund at year end, assuming no other adjustments?

The Capital Fund is ₹5,10,000. The year's deficit of ₹30,000 (income ₹3,20,000 less expenditure ₹3,50,000) reduces the opening fund of ₹5,00,000, while capitalised life membership fees of ₹40,000 increase it: 5,00,000 − 30,000 + 40,000.

  1. A₹5,10,000Correct
  2. B₹5,30,000
  3. C₹4,70,000
  4. D₹5,70,000

Explanation

Deficit = 3,20,000 − 3,50,000 = ₹30,000, which reduces the fund. Life membership fees of ₹40,000 are capitalised and added. Capital Fund = 5,00,000 − 30,000 + 40,000 = ₹5,10,000. Check: 5,00,000 + 40,000 = 5,40,000, less 30,000 = 5,10,000. Option ₹5,30,000 wrongly adds the deficit's complement without life fees treatment, and ₹4,70,000 omits the life fees.

Did you get it right without looking?

One question tells you little. A timed set on Accounting for Non-Profit Organizations shows your real accuracy, how long you take and where you lose marks.

Practise Accounting for Non-Profit OrganizationsFree diagnostic mock

More Accounting for Non-Profit Organizations questions