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

Which item appearing in the Receipts and Payments Account of a club will NOT be directly transferred to its Income and Expenditure Account at the same amount?

Purchase of sports equipment is not transferred, because it is capital expenditure and appears as an asset in the Balance Sheet. Revenue receipts and payments that relate wholly to the current year are carried to the Income and Expenditure Account at the same amounts.

  1. APurchase of sports equipmentCorrect
  2. BSalaries paid for the current year only
  3. CInterest received on investments relating only to the current year
  4. DEntertainment expenses paid relating only to the current year

Explanation

Purchase of sports equipment is a capital expenditure and is shown as an asset in the Balance Sheet, not in the Income and Expenditure Account. The other items are revenue items relating wholly to the current year, so they transfer at the same amounts.

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