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CMA Foundation · Fundamentals of Financial and Cost Accounting · Financial Statements of a Not-for-Profit Organisation

While converting a Receipts and Payments Account into an Income and Expenditure Account, which item appearing in the Receipts and Payments Account is NOT taken to the Income and Expenditure Account?

Sale proceeds of old furniture are not taken to the Income and Expenditure Account because they are a capital receipt. They reduce the asset in the Balance Sheet, and only any profit or loss on sale is recorded as income or expense.

  1. ASubscriptions received for the current year
  2. BInterest received on investments
  3. CSale proceeds of old furniture (capital receipt)Correct
  4. DProceeds from a charity concert, being revenue in nature

Explanation

Capital receipts such as sale proceeds of fixed assets are not income. They adjust the asset in the Balance Sheet, with any profit or loss on sale going to the Income and Expenditure Account. Revenue items like subscriptions, interest and concert proceeds are included.

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