NCERT MOST IMPORTANT QUESTIONS CLASS – 12 | ACCOUNTANCY PART 2 IMPORTANT QUESTIONS | CHAPTER – 1 | ACCOUNTING FOR NOT-FOR-PROFITING ORGANISATION | EDUGROWN |
In This Post we are providing Chapter- 1 ACCOUNTING FOR NOT-FOR-PROFITING ORGANISATION NCERT MOST IMPORTANT QUESTIONS for Class 12 ACCOUNTANCY which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter
NCERT MOST IMPORTANT QUESTIONS ON ACCOUNTING FOR NOT-FOR-PROFITING ORGANISATION
Question 1:
What is subscription? How is it calculated?
ANSWER:
Subscription is the main source of income for an NPO besides entrance fees, donations, grants, etc. Subscriptions refer to the amount of money paid by the members on periodic basis for keeping their membership with the organisation alive. It is paid monthly, quarterly, half yearly or annually by the members.
It is shown in the debit side of the Receipt and Payment Account with the total amount received during the year that may be related to the current period and to the previous and next accounting period.
While calculating subscription for the current period, advance subscription received for the current period in the previous period and outstanding subscription for the current period are added to the subscription received during the current period. Whereas, on the other hand, advance subscription received for the next accounting period during the current period and outstanding subscription for the preceding period are deducted from the subscription received during the current period.
Calculation of Subscription
| Subscription received during the year | *** | |
| Add: Subscription received (in advance) during previous year for current year | *** | |
| Add: Subscription outstanding at the end of the year | *** | |
| *** | ||
| Less: Subscription received in advance for the next year | *** | |
| Less: Subscription outstanding for the previous year | *** | *** |
| ## Subscription shown in Income and Expenditure Account | *** |
## This subscription is related to the current accounting period and is shown in the Income side of the Income and Expenditure Account.
Question 2:
What is Capital Fund? How is it calculated?
ANSWER:
Capital fund is the excess of NPOs’ assets over its liabilities. In other words, the excess of assets over the liabilities for a profit earning organisation is termed as capital and the same for an NPO is termed as capital fund. Any surplus or deficit ascertained from Income and Expenditure account is added to (deducted from) the capital fund. It is also termed as Accumulated Fund.
Calculation of Capital Fund
| Capital Fund at the beginning of the year | ** | |
| Add: Surplus from Income and Expenditure Account | ** | |
| Add: Subscription Amount (Capitalised amount) | ** | |
| Add: Life membership fee. | ** | ** |
| Less: Deficit from Income and Expenditure Account | ** | |
| Capital Fund at the end of the year | *** |
Question 3:
Explain the statement: “Receipt and Payment Account is a summarised version of Cash Book”.
ANSWER:
Receipts and Payments Account is a summary of the Cash Book. This account is prepared by those organisations which maintain their books on cash basis. All cash receipts are recorded on the Receipts side (i.e. Debit side) and all cash payments are recorded on the Payments side (i.e. Credit side) of Receipts and Payments Account. It is prepared on the basis of cash and bank transactions recorded in the Cash Book. It begins with the opening balance of cash and bank and ends with the closing balances of cash and bank (balancing figure) at the end of the accounting period. It records all the cash and bank transactions both of capital and revenue nature. It not only records the cash and bank transactions relating to the current accounting period, but also cash and bank receipts (or payments) received during the current accounting period that may be related to the previous or next accounting period. This account only helps us to ascertain the closing balance of the cash and bank and helps in assessing the cash position of an NPO. It also forms the basis for the preparation of Income and Expenditure Account.
Similarities between Receipt and Payments Account and Cash Book
The following are the features of Receipt and Payment Account that are common to those of Cash Book:
1. Nature: It is a summarised version of the Cash Book. Similar to the Cash Book, the Receipt and Payment Account is also a Real Account.
2. Nature of Transactions: It records only cash and bank transactions similar to a Two-Column Cash Book. Transactions other than cash and bank like depreciation, loss/ profit on sale of assets, etc. are not recorded in this account.
3. No distinction between Capital and Revenue items: It records all the cash and bank receipts and payments of both capital and revenue nature. Likewise, the transactions recorded in the Cash Book are also of both capital and revenue nature.
4. Opening and closing balance: It begins with the opening balance of cash and bank and ends with the closing balance of the cash and bank (balancing figure) at the end of the accounting period.
5. Purpose: It reveals the cash position of an organisation. It helps to ascertain the total amount paid and received during an accounting period. Similarly, a Cash Book also helps us to assess the cash position of an organisation.
Thus, on the basis of the above mentioned points and similarities, the statement ‘Receipt and Payment Account is a summarised version of Cash Book’ is justified.
Question 4 :
“Income and Expenditure Account of a Not-for-Profit Organisation is akin to Profit and Loss Account of a business concern”. Explain the statement.
ANSWER:
Income and Expenditure Account (I&E) is similar to Profit and Loss Account (P&L), in the sense that the former is prepared by Not-for-profit-Organisations and the latter is prepared by profit earning organisations. Both the accounts are prepared on the accrual basis.
Similar to the P&L, all the expenses and losses pertaining to the current accounting period are recorded on the debit side (Expenditure side) and all the gains and income of the current accounting period are recorded on the credit side (Income side) of the I&E. The balancing figure of the I&E is surplus or deficit and that of the P&L is net profit or net loss. Both the accounts record only revenue items which are related to the current accounting period.
Similarities between Income and Expenditure Account and Profit and Loss Account
I&E Account of an NPO is akin to the Profit and Loss Account of a profit earning business in the following manners.
1. Nature of Account: Both the concerned accounts are nominal in nature.
2. Basis of Recording: Both the accounts record only revenue expenses and revenue income related to the current accounting period. The items of capital nature are not ignored while preparing these accounts.
3. Period: Transactions related to current year are recorded in Income and Expenditure account in the same manner in which profit and loss account is prepared. Transactions related to previous year or next year are excluded.
4. Adjustments: The treatment of adjustments like, outstanding expenses, prepaid expenses, income received in advance, income due but not received, depreciation, bad debts etc. is same as that in Profit and Loss Account. Thus, both the accounts are prepared on the accrual basis.
Question 5:
Distinguish between Receipts and Payments Account and Income and Expenditure Account.
ANSWER:
| Basis of Difference | Receipts and Payments Account | Income and Expenditure Account |
| 1. Nature | It is a summary of cash and bank transactions | It is a summary of current year income and expenses |
| 2. Revenue and Capital | It records transactions related to both revenue and capital nature. | It records transactions related to revenue nature only. |
| 3. Debit Side | Debit side of this account records cash and bank receipts during an accounting period. | Debit side of this account records expenses and losses incurred in the current accounting period. |
| 4. Credit side | Credit side of this account records payments in cash and through cheques. | Credit side of this account records income and gains earned in the current accounting period. |
| 5. Type of account | It is a Real Account | It is a Nominal Account |
| 6. Period | It records receipts and payments made during the year that may be related to the current accounting period or the preceding period and the succeeding accounting period. | It only records income and expenditure made during the current accounting period. |
| 7. Object | This account depicts the cash position of an NPO. | This account shows the net result in terms of surplus or deficits due to the business activities during the year. |
| 8. Opening Balance | This account begins with the opening balance of cash in hand and cash at bank or overdraft. | Usually, it has no opening balance but sometimes surplus or deficits forwarded from the last accounting period (if not added to the Capital Fund) can be shown as the opening balance of this account. |
| 9. Closing balance | The balancing figure of this account is expressed in terms of the closing balance of cash in hand and cash at bank or overdraft. | The balancing figure is expressed in terms of either surplus (if incomes > expenses) or deficit (if expenses > incomes). |
| 10. Depreciation | It does not include non-cash items like depreciation, appreciation, etc. | It includes non-cash items like depreciation, bad-debts, provisions, etc. in order to ascertain the actual net profit or net loss. |
| 11. Adjustment | Receipts and Payments during the year can be adjusted before preparation of the financial statements. | Adjustments regarding both cash and non-cash transactions can be made. |
| 12. Transfer of Balance | The opening balance of this account is brought forward from the last year’s Receipts and Payments Account and the closing balance of this account is carried forward to the subsequent year’s Receipts and Payments Account and is shown in the Balance Sheet of the current accounting period. | If the closing balance of this account is surplus then it is added to the Capital Fund in the Balance Sheet. If the closing balance is deficit then it is deducted from the Capital Fund in the Balance Sheet. |
| 13. System | It is prepared on cash basis. | It is prepared on accrual basis. |
Question 6:
Explain the basic features of Income and Expenditure Account and of Receipt and Payment Account.
ANSWER:
Income and Expenditure Account (I&E) Account is a Nominal Account and is prepared on the accrual basis. It records all transactions of revenue nature that are related to the current accounting period (whether outstanding or prepaid) for which the books are maintained. All expenses and losses are recorded on the debit side (Expenditure side) and all income and gains are recorded on the credit side (Income side) of I&E Account. The closing balance or the balancing figure of I&E Account is termed as surplus (or deficit), if the sum total of the Income side exceeds (is lesser than) the sum total of the Expenditure side.
The following are the basic features of Income and Expenditure Account
1. Nature: It is a Nominal Account. The debit side of I&E records all expenses and losses and the credit side records all incomes and gains related to the current accounting period.
2. Basis: It is prepared on the basis of Receipt and Payment Account (R&P). All the revenues items whether incomes or expenditures are transferred from R&P.
3. Excludes Capital Transactions: The transactions those are capital in nature are excluded from this account. For example, only profit or loss on sale of fixed assets is recorded but the total amount of sales is not recorded since sale of fixed asset is considered as a capital receipt.
4. Akin to Profit and Loss Account: Income and Expenditure Account (I&E) is similar to the Profit and Loss Account in the sense that while the former is prepared to ascertain surplus or deficit during an accounting period the latter is prepared to ascertain net profit or net loss incurred during an accounting period.
5. Records only Current Year’s items: This account records only those transactions that are related to current accounting year. In other words, transactions related to the preceding or succeeding accounting period are excluded even if these transactions are realised in the current period.
6. Adjustments: Various cash and non-cash items like, outstanding expenses, prepaid expenses, income received in advance, income due but not received, depreciation, bad debts, etc. can be adjusted in this account.
7. Balancing Figure: The balancing figure of this account is expressed in terms of either surplus (if incomes > expenses) or deficit (if expenses > incomes). The surplus balance, if any, is added to the Capital Fund, whereas, the deficit balance, if any, is deducted from the Capital Fund.
Receipts and Payments Account is a summary of the Cash Book. All the cash receipts are recorded on the Receipts side (i.e. Debit side) and all the cash payments are recorded on the Payments side (i.e. Credit side) of Receipts and Payments Account. It is prepared on the basis of cash and bank transactions recorded in the Cash Book. It begins with the opening balance of cash and bank and ends with the closing balances of cash and bank (balancing figure) at the end of the accounting period. It records all the cash and bank transactions both of capital and revenue nature. It not only records the cash and bank transactions relating to the current accounting period but also cash and bank receipts (or payments) received during the current accounting period that may be related to the previous or next accounting period.
The following are the features of Receipt and Payment Account.
1. Nature: It is a Real Account. It is a summarised version of the Cash Book.
2. Nature of Transactions: It records only cash and bank transactions. Transactions other than cash and bank like depreciation, loss/ profit on sale of assets, etc. are not recorded in this account.
3. No distinction between Capital and Revenue items: It records all cash and bank receipts and payments of both capital and revenue nature.
4. Opening and closing balance: It begins with the opening balance of cash and bank and ends with the closing balance of the cash and bank (balancing figure) at the end of the accounting period.
5. Purpose: It reveals the cash position of an organisation. It helps to ascertain the total amount paid and received during an accounting period.
Question 7:
The following is the account of cash transactions of the Nari Kalayan Samittee for the year ended December 31, 2017:
| Receipts | AmountRs | Payments | AmountRs |
| Balance from last year | 2,270 | Rent | 6,600 |
| Subscriptions | 32,500 | Electric charges | 3,200 |
| Life membership fee | 3,250 | Lecturer’s fee | 730 |
| Donation | 2,500 | Office expenses | 1,480 |
| Profit from entertainment | 7,250 | Printing and Stationery | 1,050 |
| Sale of old Books (books value Rs 1,000) | 750 | Legal fee | 1,870 |
| Interest | 350 | Books | 6,500 |
| Furniture purchased | 8,600 | ||
| Expenses on nukar drama | 1,300 | ||
| Cash in hand | 8,040 | ||
| Cash at bank | 9,500 | ||
| 48,870 | 48,870 | ||
You are required to prepare an Income and Expenditure Account after the following adjustments:
(a) Subscription still to be received are Rs 750, but subscription include Rs 500 for the year 2018.
(b) In the beginning of the year the Sangh owned building Rs 20,000 and furniture Rs 3,000 and Books Rs 2,000.
(c) Provide depreciation on furniture @ 5% (including purchase), books @ 10% and building @ 5%.
ANSWER:
| Books of Nari Kalyan SamitteeIncome and Expenditure Account as on Dec. 31, 2017 | ||||
| Dr. | Cr. | |||
| Expenditure | AmountRs | Income | AmountRs | |
| Rent | 6,600 | Subscription | 32,500 | |
| Electric Charges | 3,200 | Add: Outstanding for 2017 | 750 | |
| Lecturer’s fee | 730 | 33,250 | ||
| Office Expenses | 1,480 | Less: Advance for 2018 | (500) | 32,750 |
| Printing and Stationery | 1,050 | Donation | 2,500 | |
| Legal Fee | 1,870 | Profit from Entertainment | 7,250 | |
| Depreciation on: | Interest | 350 | ||
| Books | 750 | |||
| Furniture | 580 | |||
| Building | 1,000 | 2,330 | ||
| Expenses on Nukar Drama | 1,300 | |||
| Loss on Sale of Books | 250 | |||
| Surplus | 24,040 | |||
| 42,850 | 42,850 | |||
| Balance Sheet as on Dec. 31, 2016 | |||
| Liabilities | AmountRs | Assets | AmountRs |
| Capital Fund as Dec. 31, 2016 | 27,270 | Building | 20,000 |
| (Balancing Figure) | Furniture | 3,000 | |
| Books | 2,000 | ||
| Cash and Bank | 2,270 | ||
| 27,270 | 27,270 | ||
| Balance Sheet as on Dec. 31, 2017 | ||||||
| Liabilities | AmountRs | Assets | AmountRs | |||
| Capital Fund | 27,270 | Building | 20,000 | |||
| Add: Life Membership Fees | 3,250 | Less: 5% Depreciation | (1,000) | 19,000 | ||
| Add: Surplus | 24,040 | 54,560 | ||||
| Furniture | 3,000 | |||||
| Advance Subscription for 2018 | 500 | Add: Purchases | 8,600 | |||
| 11,600 | ||||||
| Less: 5% Depreciation | 580 | 11,020 | ||||
| Books | 2,000 | |||||
| Add: Purchases | 6,500 | |||||
| 8,500 | ||||||
| Less: Sales | 1,000 | |||||
| 7,500 | ||||||
| Less: 5% Depreciation | 750 | 6,750 | ||||
| Cash in Hand | 8,040 | |||||
| Cash at Bank | 9,500 | |||||
| Subscription Outstanding | 750 | |||||
| 55,060 | 55,060 | |||||
Question 8:
Following is the Receipt and Payment Account of Indian Sports Club, prepared Income and Expenditure Account, Balance Sheet as on December 31, 2017:
| Receipt and Payment Account for the year ending December 31, 2017 | |||
| Receipts | AmountRs | Payments | AmountRs |
| Balance b/d | 7,890 | Salary | 11,000 |
| Subscriptions | 52,000 | Electric charges | 5,500 |
| Life member ship fee | 2,200 | Billiard Table | 17,500 |
| Entrance fee | 3,200 | Office expenses | 4,100 |
| Tournament fund | 26,000 | Printing and Stationery | 2,300 |
| Locker Rent | 1,250 | Tournament expenses | 18,500 |
| Sale of old sports goods (Costing Rs 2,200) | 2,500 | Repair of ground | 2,000 |
| Sale of Old Newspaper | 750 | Furniture purchased | 7,700 |
| Legacy | 37,500 | Sports equipments | 12,000 |
| Cash in Hand | 12,690 | ||
| Cash at Bank | 10,000 | ||
| Fixed Deposit (on 1.10.17 for 10% p.a) | 30,000 | ||
| 1,33,290 | 1,33,290 | ||
Other Information:
Subscription outstanding was on December 31, 2016 Rs 1,200 and Rs 3,200 on December 31, 2017. Locker rent outstanding on December 31, 2017 Rs 250. Salary outstanding on December 31, 2017 Rs 1,000.
On January 1, 2017, club has Building Rs 36,000, furniture Rs 12,000, Sports equipments Rs 17,500. Depreciation charged on these items @ 10% (including Purchase).
ANSWER:
| Indian Sports ClubIncome and Expenditure Account as on Dec. 31, 2017 | |||||
| Dr. | Cr. | ||||
| Expenditure | AmountRs | Income | AmountRs | ||
| Salary | 11,000 | Subscriptions | 52,000 | ||
| Add: Outstanding for 2017 | 1,000 | 12,000 | Add: Outstanding for 2017 | 3,200 | |
| Electric Charges | 5,500 | 55,200 | |||
| Office Expenses | 4,100 | Less: Outstanding for 2016 | (1,200) | 54,000 | |
| Printing and Stationery | 2,300 | ||||
| Repair of Ground | 2,000 | Locker Rent | 1,250 | ||
| Depreciation on: | Add: Outstanding for 2017 | 250 | 1,500 | ||
| Furniture | 1,970 | ||||
| Building | 3,600 | Entrance Fees | 3,200 | ||
| Sports Equipments | 2,730 | 8,300 | Profit on Sale of Sports | ||
| Surplus | 26,300 | Equipments (Rs 2,500 – Rs 2,200) | 300 | ||
| Sale of Old Newspapers | 750 | ||||
| Accrued Interest | 750 | ||||
| 60,500 | 60,500 | ||||
| Balance Sheet as on January 01, 2016 | ||||
| Liabilities | AmountRs | Assets | AmountRs | |
| Capital Fund (Balancing Figure) | 74,590 | Subscription Outstanding | 1,200 | |
| Building | 36,000 | |||
| Furniture | 12,000 | |||
| Sports Equipments | 17,500 | |||
| Cash and Bank | 7,890 | |||
| 74,590 | 74,590 | |||
| Balance Sheet as on Dec. 31, 2017 | |||||
| Liabilities | AmountRs | Assets | AmountRs | ||
| Salary Outstanding | 1,000 | Subscripting Outstanding | 3,200 | ||
| Tournament Fund | 26,000 | Locker Rent Outstanding | 250 | ||
| Less: Tournament Expenses | 18,500 | 7,500 | Building | 36,000 | |
| Less: 10% Depreciation | (3,600) | 32,400 | |||
| Capital fund | 74,590 | ||||
| Add: Life Membership Fee | 2,200 | Furniture | 12,000 | ||
| Add: Legacy | 37,500 | Add: Purchases | 7,700 | ||
| Add: Surplus | 26,300 | 1,40,590 | 19,700 | ||
| Less: 10% Depreciation | (1,970) | 17,730 | |||
| Sports Equipments | 17,500 | ||||
| Add: Purchases | 12,000 | ||||
| 29,500 | |||||
| Less: Sales | (2,200) | ||||
| 27,300 | |||||
| Less: 10% Depreciation | (2,730) | 24,570 | |||
| Billiard Table | 17,500 | ||||
| Cash in hand | 12,690 | ||||
| Cash at Bank | 10,000 | ||||
| Fixed Deposit | 30,000 | ||||
| Add: Accrued Interest | 750 | 30,750 | |||
| 1,49,090 | 1,49,090 | ||||
Question 9:
From the following Receipt and Payment Account of Jan Kalyan Club, prepare Income and Expenditure Account and Balance Sheet for the year ending March 31, 2017.
| Receipt and Payment Account for the year ending March 31, 2017 | |||
| Receipts | AmountRs | Payments | AmountRs |
| Cash in hand as on 1.4.16 | 6,800 | Salaries | 24,000 |
| Subscription | 60,200 | Traveling Expenses | 6,000 |
| Donation | 3,000 | Stationery | 2,300 |
| Sale of furniture (Book value Rs 6000) | 4,000 | Rent | 16,000 |
| Entrance fee | 800 | Repair | 700 |
| Life membership fee | 7,000 | Books purchased | 6,000 |
| Interest on investment (@ 5% for full year) | 5,000 | Building purchased | 30,000 |
| Cash in hand as 31.3.2017 | 1,800 | ||
| 86,800 | 86,800 | ||
Additional Information:
| As on1.04.2016 | As on31.03.2017 | ||
| (i) | Subscription received in advance | 1,000 | 3,200 |
| (ii) | Outstanding subscription | 2,000 | 3,700 |
| (iii) | Stock of stationery | 1,200 | 800 |
| (iv) | Books | 13,500 | 16,500 |
| (v) | Furniture | 16,000 | 8,000 |
| (vi) | Outstanding rent | 1,000 | 2,000 |
ANSWER:
| Books of Jan Kalyan ClubIncome and Expenditure Account as on 31 March 2017 | |||||
| Dr. | Cr. | ||||
| Expenditure | AmountRs | Income | AmountRs | ||
| Loss on Sale of Furniture (Rs 6,000 – Rs 4,000) | 2,000 | Subscription | 60,200 | ||
| Salaries | 24,000 | Less: Outstanding for 2016 | (2,000) | ||
| Traveling Expenses | 6,000 | 58,200 | |||
| Stationery | 2,300 | Add: Outstanding for 2017 | 3,700 | ||
| Add: Opening Stock | 1,200 | 61,900 | |||
| 3,500 | Add: Advance in 2016 | 1,000 | |||
| Less: Closing Stock | (800) | 2,700 | 62,900 | ||
| Less: Advance in 2017 | (3,200) | 59,700 | |||
| Repairs | 700 | ||||
| Rent | 16,000 | Donation | 3,000 | ||
| Less: Outstanding for 2016 | (1,000) | Entrance Fees | 800 | ||
| 15,000 | Interest on Investments | 5,000 | |||
| Add: Outstanding for 2017 | 2,000 | 17,000 | |||
| Depreciation on Books | 3,000 | ||||
| Depreciation on Furniture | 2,000 | ||||
| Surplus | 11,100 | ||||
| 68,500 | 68,500 | ||||
| Balance Sheet as on April 01, 2016 | |||
| Liabilities | AmountRs | Assets | AmountRs |
| Advance Subscription | 1,000 | Cash in Hand | 6,800 |
| Outstanding Rent | 1,000 | Investment {5,000 × (100/5)} | 1,00,000 |
| Capital Fund (Balancing figure) | 1,37,500 | Subscription Outstanding | 2,000 |
| Stock of Stationery | 1,200 | ||
| Books | 13,500 | ||
| Furniture | 16,000 | ||
| 1,39,500 | 1,39,500 | ||
| Balance Sheet as on March 31, 2017 | |||||
| Liabilities | AmountRs | Assets | AmountRs | ||
| Advance Subscription | 3,200 | Subscription Outstanding | 3,700 | ||
| Outstanding Rent | 2,000 | Stock of Stationery | 800 | ||
| Capital Fund | 1,37,500 | Investments | 1,00,000 | ||
| Add: Life Membership Fees | 7,000 | ||||
| Add: Surplus | 11,100 | 1,55,600 | Books | 13,500 | |
| Add: Purchases | 6,000 | ||||
| 19,500 | |||||
| Less: Depreciation | (3,000) | 16,500 | |||
| Building | 30,000 | ||||
| Cash in Hand | 1,800 | ||||
| Furniture | 16,000 | ||||
| Less: Sales | 6,000 | ||||
| 10,000 | |||||
| Less: Depreciation | (2,000) | 8,000 | |||
| 1,60,800 | 1,60,800 | ||||
Question 10:
Receipt and Payment Account of Shankar Sports club is given below, for the year ended March 31, 2017
| Receipt and Payment Account for the year ending March 31, 2017 | |||
| Receipts | AmountRs | Payments | AmountRs |
| Opening Cash in hand | 2,600 | Rent | 18,000 |
| Entrance fees | 3,200 | Wages | 7,000 |
| Donation for building | 23,000 | Billiard table | 14,000 |
| Locker rent | 1,200 | Furniture | 10,000 |
| Life membership fee | 7,000 | Interest | 2,000 |
| Profit from entertainment | 3,000 | Postage | 1,000 |
| Subscription | 40,000 | Salary | 24,000 |
| Cash in hand | 4,000 | ||
| 80,000 | 80,000 | ||
Prepare Income and Expenditure Account and Balance Sheet with help of following Information:
Subscription outstanding on March 31, 2016 is Rs 1, 200 and Rs 2,300 on March 31, 2017, opening stock of postage stamps is Rs 300 and closing stock is Rs 200, Rent Rs 1,500 related to 2015 and Rs 1,500 is still unpaid.
On April 01, 2016 the club owned furniture Rs 15,000, Furniture valued at Rs 22,500
On March 31, 2017. The club took a loan of Rs 20,000 (@ 10% p.a.) in 2017.
ANSWER:
| Books of Shankar Sports ClubIncome and Expenditure Account as on 31 Dec. 2017 | ||||
| Dr. | Cr. | |||
| Expenditure | AmountRs | Income | AmountRs | |
| Rent | 18,000 | Entrance Fees | 3,200 | |
| Add: Outstanding for 2017 | 1,500 | Locker Rent | 1,200 | |
| 19,500 | Profit from Entertainment | 3,000 | ||
| Less: Outstanding for 2016 | (1,500) | 18,000 | ||
| Subscription | 40,000 | |||
| Wages | 7,000 | Less: Outstanding for 2016 | (1,200) | |
| Depreciation on Furniture | 2,500 | 38,800 | ||
| Interest | 2,000 | Add: Outstanding for 2017 | 2,300 | 41,100 |
| Postage | 1,000 | Deficit (Balancing Figure) | 6,100 | |
| Add: Opening Stock | 300 | |||
| 1,300 | ||||
| Less: Closing Stock | (200) | 1,100 | ||
| Salaries | 24,000 | |||
| 54,600 | 54,600 | |||
| Balance Sheet as on December 31, 2016 | |||
| Liabilities | AmountRs | Assets | AmountRs |
| Rent Outstanding | 1,500 | Cash in Hand | 2,600 |
| 10% Loan | 20,000 | Subscription Outstanding | 1,200 |
| Furniture | 15,000 | ||
| Stock of Postage Stamps | 300 | ||
| Capital fund Deficit (Balancing figure) | 2,400 | ||
| 21,500 | 21,500 | ||
| Balance Sheet as on December 31, 2017 | ||||||
| Expenditure | AmountRs | Income | AmountRs | |||
| Rent Outstanding | 1,500 | Subscription Outstanding | 2,300 | |||
| 10% Loan | 20,000 | Stock of Postage Stamps | 200 | |||
| Donation for Building | 23,000 | Billiard Table | 14,000 | |||
| Capital Fund | (2,400) | Furniture | 15,000 | |||
| Add: Life Membership Fee | 7,000 | Add: Purchases | 10,000 | |||
| Less: Deficit | (6,100) | 25,000 | ||||
| Less: Depreciation | (2,500) | 22,500 | ||||
| Cash in Hand | 4,000 | |||||
| * Capital Fund (Deficit) | 1500 | |||||
| 44,500 | 44,500 | |||||
* NOTE 1:
| Capital Fund | (2,400) | ||
| Add: | Life Membership Fees | 7,000 | |
| Less: | Deficit | (6,100) | |
| Net Deficit | (1,500) |