Skip to content

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

Vikas Club received ₹60,000 as entrance fees and ₹40,000 as life membership fees during 2024-25. The club's policy is to treat entrance fees as a capital receipt and to capitalise life membership fees. What amount will be credited to the Income and Expenditure Account for these two items for the year?

The amount credited to the Income and Expenditure Account is nil. Under the club's policy, entrance fees and life membership fees are both capital receipts, so they are added directly to the Capital Fund or a related fund and are not treated as income of the year.

  1. A₹1,00,000
  2. B₹60,000
  3. C₹40,000
  4. DNilCorrect

Explanation

Under the stated policy both receipts are capital in nature. Entrance fees go to the Capital Fund, and life membership fees go to a Life Membership Fund or the Capital Fund. Neither is credited to the Income and Expenditure Account, so the amount is nil. Option 1 is wrong because it treats both as revenue income.

Did you get it right without looking?

One question tells you little. A timed set on Financial Statements of Not-for-Profit Organisations shows your real accuracy, how long you take and where you lose marks.

Practise Financial Statements of Not-for-Profit OrganisationsFree diagnostic mock

More Financial Statements of Not-for-Profit Organisations questions