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

Which of the following items appearing in the Receipts and Payments Account of a club would be shown on the credit (income) side of the Income and Expenditure Account?

Entrance fees treated as revenue income under the club's policy are credited to the Income and Expenditure Account. Sale of old furniture at book value, legacies and life membership fees are capital receipts shown in the Balance Sheet, so they are excluded from income.

  1. AProceeds from sale of old furniture at book value
  2. BEntrance fees received, where the club's policy is to treat them as revenue incomeCorrect
  3. CReceipt of a legacy
  4. DAmount received for a general fund as a life membership fee, to be capitalised

Explanation

Entrance fees are treated as revenue income only if the organisation's policy says so; otherwise they are capitalised. Sale proceeds of furniture at book value, legacies and life membership fees are capital receipts and go to the Balance Sheet, not the Income and Expenditure Account.

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