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

Which of the following items appearing in a Receipts and Payments Account of a not-for-profit organisation would be shown on the credit side of its Income and Expenditure Account for the same year, assuming no adjustments are needed?

Interest received on general investments is a recurring revenue receipt, so it is credited to the Income and Expenditure Account. The other items, sale of furniture, a capitalised legacy and a specific building fund donation, are capital in nature and go to the Balance Sheet.

  1. AProceeds from sale of old furniture
  2. BLegacy received that is to be capitalised
  3. CInterest received on general investmentsCorrect
  4. DReceipt of a specific donation for a building fund

Explanation

Interest on investments is a revenue receipt and is credited as income. Sale of furniture is a capital receipt, a legacy to be capitalised goes to the Capital Fund, and a specific donation for a building fund is shown as a specific fund in the Balance Sheet.

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