NCERT Solutions for Class 12 Accountancy Chapter 1 - Accounting for Not For Profit Organisation

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Short Answer Type Questions

1. What is meant by ‘Not- for- Profit’ Organisations?

Ans. Not-for-Profit Organisations (NPO) are established with the main motive of providing services instead of earning profits, thereby enhancing the welfare of society. Such organisations consist of schools, hospitals, trade unions, religious organisations, etc. The person/s or the groups of individuals who manage, govern and administer the working of an NPO are known as trustees. NPO’s mainly earns through donations, subscriptions, life membership fees, grants etc. As these organisations are not set up with profit motive, they are not supposed to prepare Trading and Profit and Loss Account. Although they are required for maintain Receipt and Payments Account, Income and Expenditure Account and Balance Sheet..

2. State the meaning of Receipt and Payment Account.

Ans. Receipts and Payments Account is a summary of the Cash Book. 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. Based on the transctions of cash and bank, being recorded in cash book, receipts and payment account is prepared. 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. All cash and bank transactions both of capital and revenue nature are recorded in this. It records the cash and bank transactions relating to the current accounting period, and the cash and bank receipts (or payments) which are received during the current accounting period that may be related to the previous or next accounting period are also recorded.

This account results the closing balance of the cash and bank and also assess the cash position of an NPO.

3. State the meaning of Income and Expenditure Account.

Ans. Income and Expenditure Account (I&E) is same as the Profit and Loss Account in the sense that while the income and expenditure account is prepared to ascertain surplus or deficit during an accounting period, the profit and loss account is prepared to determine net profit or net loss incurred during an accounting period. I&E Account is a nominal account in nature and hence is prepared on the accrual basis. It records all transactions which are of revenue nature and which are related to the current accounting period (whether outstanding or prepaid). All expenses and losses are to be recorded on the debit side (Expenditure side) and all income and gains will be recorded on the credit side (Income side) of I&E Account. The closing balance or the balancing figure so obtained while preparing the 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.

4. State the feature of Receipt and Payment Account.

Ans. The following are the features of Receipt and Payment Account:

Nature: It is a Real Account in nature. It is a summary of Cash Book.
Nature of Transactions: Only cash and bank transactions are recorded in this. Transactions other than cash and bank like depreciation, loss/ profit on sale of assets, etc. are not recorded in this account.
No distinction between Capital and Revenue items: It records all cash and bank receipts and payments of both capital and revenue nature.
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.
Purpose: It ascertains the cash position of an organisation. It also helps in determining the total amount paid and received during an accounting period.

5. What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?

Ans. The following steps are undertaken to prepare the Income and Expenditure Account (I&E) from Receipts and Payment Account (R&P).

Step 1: All the revenue expenditures paid for the current accounting period are transferred from the Payments side of R&P to the Expenditure side of I&E.

Step 2: All the revenue receipts of the current accounting period are taken from the Receipts side of R&P to the Income side of I&E.

Step 3: Expenses which are outstanding for the current period and expenses which are paid in advance (prepaid expenses) for the current period in the preceding accounting periods are to be added (adjusted) to their related expenses in the Step 1.

Step 4: Income which is outstanding (accrued income) for the current period and income which is received in advance for the current period in the preceding accounting periods are to be added (adjusted) to their related incomes in Step 2.

Step 5: Non-cash items like depreciation, appreciation for the current accounting period are required to be adjusted in the I&E.

Step 6: Once all the revenue items for the current accounting period are adjusted the Income and the Expenditure sides are totalled. If the sum total of the Income side is more (or is less) then the sum total of the Expenditure side, then the balancing figure is termed as surplus (or deficit).

6. What is subscription? How is it calculated?

Ans. Subscription is considered to be the main source of income for an NPO along with entrance fees, donations, grants, etc. Subscription is the amount of money which is paid by the members on periodic basis in order to keeping their membership with the organisation updated. The subscription is paid monthly, quarterly, half yearly or annually by the members.

It is reflected on 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. In order to calculate the 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. On the other hand, advance subscription received for the next accounting period during the current period and outstanding subscription for the preceding period are required to be 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.

7. What is meant by Capital Fund? How is it calculated?

Ans. Capital fund is defined as the excess of NPOs’ assets over its liabilities. In simple words, the excess of assets over the liabilities for a profit earning organisation is termed as capital and for on NPO, the same is termed as capital fund. Any surplus or deficit calculate from Income and Expenditure account is added to (deducted from) the capital fund. It is also called Accumulated Fund.

Calculation of Subscription:

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		—

Long Answer Type Questions

1. Explain the statement: “Receipt and Payment Account is a summarised version of Cash Book”.

Ans. Receipts and Payments Account is a summarised form of the Cash Book. This account is mainly prepared by those organisations which maintain their books on cash basis. All cash receipts are to be transferred on the Receipts side (i.e. Debit side) and all cash payments are to be transferred on the Payments side (i.e. Credit side) of Receipts and Payments Account. The preparation of receipt and payment account is based 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). All the cash and bank transactions both of capital and revenue nature taken place in the current year are recorded. 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 determines the closing balance of the cash and bank and also determines the cash position of an NPO. It secures as a foundation 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 the summary of the Cash Book. Just like Cash Book, the Receipt and Payment Account is also a Real Account in nature.

2. Nature of Transactions: Only cash and bank transactions are recorded in such a way which is similar to a Two-Column Cash Book. Transactions other than cash and bank like depreciation, loss/ profit on sale of assets, etc. are totally ignored and hence 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 started with the opening balance of cash and bank and is closed with the closing balance of the cash and bank (balancing figure) at the end of a given accounting period.

5. Purpose: It helps in ascertaining the cash position of an organisation. It helps to determine the total amount paid and received during a given accounting period. Similarly, a Cash Book also helps us to assess the cash position of an organisation.

Therefore, based on the above mentioned points and similarities, the statement ‘Receipt and Payment Account is a summarised version of Cash Book’ is justified.

2. “Income and Expenditure Account of a Not-for-Profit Organisation is akin to Profit and Loss Account of a business concern”. Explain the statement.

Ans. Income and Expenditure Account (I&E) is similar to Profit and Loss Account (P&L), in the sense that the former is to be prepared by Not-for-profit-Organisations and the latter is maintained by profit earning organisations. Both the accounts are prepared on the accrual basis.

Similar to the P&L, all the expenses and losses takingplace in the current accounting period are transfered the debit side (Expenditure side) and all the gains and income of the current accounting period are transferred to the credit side (Income side) of the I&E. The balancing figure of the I&E is termed as surplus or deficit and that of the P&L is termed as net profit or net loss. The revenue items or transactions of current year are recorded in both the accounts.
Similarities between Income and Expenditure Account and Profit and Loss Account

I&E Account of an NPO is similar to the Profit and Loss Account of a profit earning business in the following manners:

1. Nature of Account: Both the accounts are nominal in nature.

2. Basis of Recording: Both the accounts record revenues and expenses which are of revenue nature and revenue income related to the current accounting period. The items of capital nature are also not ignored while preparing these accounts.

3. Period: Transactions of the current year are recorded in Income and Expenditure account in the same way as it is recorded in the profit and loss accounts. 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 done in the way as it is being done in profit and loss account. Thus, both the accounts are prepared on the accrual basis.

3. Distinguish between Receipts and Payments Account and Income and Expenditure Account.

Ans.

Basis of Difference	Receipts and Payments Account	Income and Expenditure Account
1. Nature	It is a summarised form of cash and bank transactions	It summarises the current year income and expenses
2. Revenue and Capital	It deals with the transactions related to both revenue and capital nature	It deals with the transactions related to revenue nature only.
3. Debit Side	Debt side of this account is concerned with the cash and bank receipts during an accounting period.	Debt side of this account records expenses and losses incurred in the current accounting period.
4. Credit Side	Credit side of this account keeps a track of payments in cash and through cheques.	Credit side of this account deals with 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 are related to the current accounting period or the preceding period and the succeeding accounting period.	It only keeps a track of income and expenditure made during the current accounting period.
7. Object	This account fells the cash position of an NPO	This account reflects the net result terms of surplus or deficits due to the business activities during the current year.
8. Opening Balance	This account has the opening balance of cash in hand and cash at bank or overdraft.	Usually it does not have any 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 the closing balance of cash in hand and cash at bank or overdraft.	The balancing figure is either surplus (if incomes > expenses) or deficit (if expenses > incomes).
10. Depreciation	It does not undertake any non-cash items like depreciation, appreciation, etc.	It undertakes non-cash items like depreciation, bad-debts, provisions, etc. for determining the actual net profit or net loss.
11. Adjustment	Receipts and Payments during the year can be adjusted prior to 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 closing balance of the last year’s Receipts and Payments Account and the closing balance of this account is subsequently carried forward to the subsequent years.	In case of closing balance of this account being a 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.

4. Explain the basic features of Income and Expenditure Account and of Receipt and Payment Account.

Ans. Income and Expenditure Account (I&E) Account is a Nominal Account in nature which is prepared on the accrual basis. It deals with all transactions of revenue nature that are related to the current accounting period (whether outstanding or prepaid). All expenses and losses are transferred to the debit side (Expenditure side) and all income and gains are transferred to the credit side (Income side) of I&E Account. The balancing figure of I&E Account is termed as surplus (or deficit), incase of sum total of the income is more (or less) the total of expenditures.

The following are the basic features of Income and Expenditure Account

Nature: It is a Nominal Account in nature. The debit side of I&E deals with all expenses and losses and the credit side reflects all incomes and gains related to the current accounting period.
Basis: Its preparation is based on the Receipt and Payment Account (R & P). All the revenues transaction whether incomes or expenditures are transferred from R&P for the concerned year.
Excludes Capital Transactions: The transactions which are of capital nature are not recorded in this account. For example, only profit or loss on sale of fixed assets is recorded whereas the total amount of sales is not to be considered because sale of fixed asset is a capital receipt.
Akin to Profit and Loss Account: Income and Expenditure Account (I & E) is same as that of the Profit and Loss Account as because the former is prepared to determine surplus or deficit during an accounting period where as the latter is prepared to reflect net profit or net loss incurred during an accounting period.
Records only Current Year’s items: This account is concerned with only those transactions that are related to current accounting year. In other words, transactions which are related to the preceding or succeeding accounting period are not to be recorded even if these transactions are realised in the current period.
Adjustments: All the cash and non-cash items like, outstanding expenses, prepaid expenses, income received in advance, income due but not received, depreciation, bad debts, etc. are also adjusted in this account.
Balancing Figure: The balance of this account is expressed in terms of either surplus (if incomes > expenses) or deficit (if expenses > incomes). The surplus balance is then further added to the Capital Fund, whereas, the deficit balance, is required to be deducted from the Capital Fund.
Receipts and Payments Account is a summarised form of the Cash Book. All the cash receipts are transferred on the Receipts side (i.e. Debit side) and all the cash payments are transferred on the Payments side (i.e. Credit side) of Receipts and Payments Account. Its preparation is based on the 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). It reflects all the cash and bank transactions which are of both the capital and revenue nature. It records the cash and bank transactions relating to the current accounting period and also cash and bank receipts (or payments) received during the current accounting period that are related to the previous or next accounting period.

The following are the features of Receipt and Payment Account.

Nature: It is a Real Account in nature. It is the summary of the Cash Book.
Nature of Transactions: It deals with only cash and bank transactions. Transactions which are other than cash and bank like depreciation, loss/ profit on sale of assets, etc. are not transferred to this account.
No distinction between Capital and Revenue items: It records all cash and bank receipts and payments irrespective of their nature being revenue or capital.
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).
Purpose: It reflects the true cash position of an organisation. It also helps in determining the total amount paid and received during an accounting period.

5. Show the treatment of the following items by a not-for-profit organisation:

(i) Annual subscription

(ii) Specific donation

(iii) Sale of fixed assets

(iv) Sale of old periodicals

(v) Sale of sports materials

(vi) Life membership fee

Ans. (i) Annual Subscription

(a) Subscriptions that are received is an accounting year (whether related to the current year or previous and subsequent year) are to be recorded on the debit side of the Receipts and Payments Account.

(b) Subscription amount which is related to the current accounting year only, either received or yet to be received are recorded on the credit side of the Income and Expenditure Account.

(d) Subscriptions due but not received yet are reflected on the Assets side of the Balance Sheet.

(ii) Specific donation

(a) The amount received for specific donation is transferred to the debit side of the Receipts and Payments Accounts.

(b) The amount which is received for specific donation is reflected on the Liabilities side of the Balance Sheet because it has to be utilised for the specific purpose for which it is received.

(iii) Sale of fixed assets

(a) The received amount from the sale of fixed assets are to be shown on the debit side of the Receipts and Payments Account.

(b) Profit (or loss) on the sale of fixed assets is credited (or debited) to the Income and Expenditure Account.

(c) The book-value of the fixed assets which are sold is deducted from its respective assets on the Assets side of the Balance Sheet.

(iv) Sale of old periodicals

(a) The amount received by selling the old periodicals are shown on the debit side of the Receipts and Payments Account.

(b) Amount received from the sale of old periodicals by any organisation is revenue receipts, and thereforce, it is to be recorded the credit side of the Income and Expenditure Account.

(v) Sale of sport Materials

(a) The amount received by selling the sport materials are required to be debited to the Receipt and Payments Account.

(b) The amount received from the sale of sport materials by any sport club is considered as revenue income, therefore, it has to be recorded on the credit side of the Income and Expenditure Account.

(vi) Life Membership Fees

(a) The amount which is supposed to be paid by a person in order to become a member of an organisation is called life membership fees. This is a receipt for an NPO, therefore it is to be debited to the Receipt and Payment Account.

(b) Life Membership fees is not of recurring nature and is received once for the whole life from a member as Life Membership Fees are capital receipts, these are added to the Capital Fund on the Liabilities side of the Balance Sheet.

6. Show the treatment of items of Income and Expenditure Account when there is a specific fund for those items.

Ans. To an NPO, here are some sources of receipts namely donations, subscriptions, government grants, etc. Some receipts are specific while others are general. The specific receipts can only be used for the specific purpose for which they are received, but, the general receipts can be used for any purpose. For example, if donation has been received for construction of buildings, then such a donation is a specific donation and thus, can be used for construction of the building only. The specific receipts are revenue income for the NPO and hence are not recorded in the Income and Expenditure Account. In fact, such receipts are liabilities to the NPO as these amounts are received for specific purpose and cannot be utilised elsewhere. Specific receipts are transferred to the Liabilities side of the Balance Sheet, until and unless they are fully set off against the purpose for which they were allotted and received. but, if these amounts are invested outside the organisations (in the form of shares, debentures, etc.), then will be considered as funds like, match funds, prize fund, etc. The interest and income earned on such investments are not to be recorded in the income and expenditure account, but the rather credited to the respective Fund Account. Similarly, the expenses incurred for such funds are not debited to the Income and Expenditure Account but, in fact, are debited to the respective Fund Account. These special funds are shown in the Liabilities side of the Balance Sheet. In case, if the related expenses exceed the related receipts of the fund, then the difference is reflected in the income and Expenditure Account.

DR.

Fund Account (Tournament/Match/Prize, etc.)

Cr.

Date

Particulars

L.F.

Amount (₹)

Date

Particulars

L.F.

Amount
(₹)

Expenses
(expenses incurred like, match expenses, tournament expenses)

Balance b/d

Incomes (Income or interest earned on funds invested in the form of donation, interests, dividends, etc.)

Balance c/d (see explanation)

(a)

Income and Expenditure A/c (see explanation)

(b)

Explanation

(a) If the receipts exceed the expenses for specific purpose then the difference between the two is shown in the Liabilities side of the Balance Sheet.

(b) If the expenses exceed the receipts for the specific purpose then the difference between the two is shown in the Expenditure side of the Income and Expenditure Account.

7. What is Receipt and Payment Account? How is it different from Income and Expenditure Account?

Ans. Receipts and Payments Account is a summarised from of the Cash Book. All the cash receipts should be transferred to the Receipts side (i.e. Debit side) and all the cash payments should be transferred to the Payments side (i.e. Credit side) of Receipts and Payments Account. It is based on cash and bank transactions recorded in the Cash Book. It begins with the opening balance of cash and bank and ends with the balances of cash and bank (balancing figure). It records all cash and bank transactions both of capital and revenue nature. It records all the cash and bank transactions relating to the current accounting period, and also cash and bank receipts (or payments) received during the current accounting period that may be related to the previous or next accounting period.

Distinguish between Raceiples and Payments account and income and expenditure Account.

Basis of Difference	Receipts and Payments Account	Income and Expenditure Account
Nature	It is a summarised for of cash and bank transactions.	It is a summarised form of current year income and expenses
2. Revenue and Capital	It records transactions which are related to both revenue and capital nature.	It records transactions which are of revenue nature only.
3. Debit side	Debit side of this account deals with cash and bank receipts during an accounting period.	Debit side of this account deals with expenses and losses incurred in the current accounting period.
4. Credit side	Credit side of this account deals with the payments in cash and through cheques.	Credit side of this account deals with the transactions of income and gains earned in the current accounting period.
5. Type of account	It is Real Accont	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 reflects the cash position of an NPO	This account helps in determining the net result 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 reflected as the opening balance of this account.
9. Closing balance	The balance of this account is expressed in terms of the closing balance of cash in hand and cash at bank or overdraft.	The balance is expressed in terms of either surplus (if incomes > expenses) or deficit (if expenses > incomes).
10. Depreciation	It includes all the non-cash items like depreciation, appreciation, etc.	It includes non-cash items like depreciation, bad-debts, provisions, etc. in order to determine the actual net profit or net loss.
11. Adjustment	Receipts and Payments throughout 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 taken from the last year’s Receipts and Payments Account and the closing balance of this account is further taken to subsequent year’s Receipts and Payments Account and is reflected in the Balance Sheet of the current accounting period.	If the closing balance of this account is a surplus then it is required to be added to the Capital Fund in the Balance Sheet. If the closing balance is deficit then it will be deducted from the Capital Fund in the Balance Sheet.
13. System	It is prepared on cash basis	It is prepared on accrual basis.

8. Distinguish between profit and not-for-profit organisation.

Ans.

Basis for Comparision	Profit and Organisation	Non-Profit Organisation
Meaning	A legal entity, which operates with the aim of earning profit for the owners, is known as for-profit or Profit organisation.	A non-profit organization is a legal entity, which operates with the aim of serving the society as a whole.
2. Motive	Profit motive	Service Motive
3. Form of Organization	Sole proprietorship, Partnership firm or company	Club, Trust, Public hospitals, Society, etc.
4. Management	Sole proprietor, partners or directors, as the case may be.	Trustees, Committees or governing bodies.
5. Management	Sole proprietor, partners or directors, as the case may be.	Trustees, committees or governing bodies.
6 Source of revenue	Sale of goods and services.	Donation, subscription, membership fee etc.
7. Commenced through	Owners contribute the capital	Funds from donation, subscriptions, government grant and so on.
8. Financial Statement	Income statement, Balance Sheet and Cash Flow statement	Receipts & Payment A/c, income & Expenditure A/c and Balance Sheet.
9. Money earned over and above	Profit, is added to capital account.	Surplus is added to capital fund.

Numerical Type Questions

1. From the following particulars taken from the Cash Book of a health club, prepare a Receipts and Payments Account.

Particulars	Amount (₹)
Openting balance:
Cash in Hand	5,000
Cash at Bank	25,000
Subscriptions	1,65,000
Donations	35,000
Investment Purchased	80,000
Rent Paid	20,000
General Expenses	21,500
Postage and Stationery	2,000
Courter Charges	1,000
Sundry Expenses	2,500
Closing Cash in Hand	12,000

Ans.

Dr.	Books of Health Club Receipt and Payment Account		Cr.
Receipts	Amount (₹)	Payments	Amount (₹)
To Balance b/d		By Investment	80,000
Cash in Hand 5,000		By Rent	20,000
Cash at Bank 25,000	30,000	By General Expenses	21,500
To Subscriptions	1,65,000	By Postage and Stationery	2,000
To Donations	35,000	By Courier Charges	1,000
		By Sundry Expenses	2,500
		By Balance c/d
		Cash in Hand 12,000
		Cash at Bank 91,000	1,03,000
		(Balancing figure)
	2,30,000		2,30,000

2. The Receipt and Payment Account of Harimohan charitable institution is given: Receipt and Payment Account for the year ending March 31, 2015

Dr.	Receipt and Payment Account		Cr.
Receipts	Amount (₹)	Payments	Amount (₹)
To Balance b/d		Furniture	3,000
Cash in Bank	22,000	Investments	55,000
Cash at Hand	8,800	Advance for Building	20,000
To Donations	16,000	Charities	60,000
To Subscriptions	50,200	Salaries	10,400
Endowment Fund	60,000	Rent and Taxes	4,000
Legactes	12,000	Printing	1,000
Interest on Investment	3,800	Postage	300
Interest on Deposits	800	Advertisements	1,100
Sale of old newspapers	500	Insurance	4,800
Donation for Building	16,000	Balance c/d:
Legacy for Building	12,000	Cash at Bank	32,000
		Cash in Hand	10,500
	2,02,100		2,02,100

Prepare the Income and Expenditure Account for the Year ended on March 31, 2015 after considering the following:

(i) Liabilities to be provided for are:

Rent ₹800; Salaries ₹1,200; advertisement ₹200.

(ii) ₹2,000 due for interest on investment was not actually received.

Dr.	Books of Harimohan Charitable Institution Income and Expenditure Account		Cr.
Expenditure	Amount (₹)	Income	Amount (₹)
To Rent and Taxes 4,000		By Donations	16,000
Add: Outstanding 800	4,800	By Legacies	12,000
To Salaries 10,400		By Subscriptions	50,200
Add: Outstanding 1,200	11,600	By Interest on Investment 3,800
To Donations		Add: Accrued Interest 2,000	5,800
To Advertisment 1,100		By Interest on Deposits	800
Add: Outstanding 200	1,300	By Sale of Old Newspapers	500
To Charities	60,000
To Printing	1,000
To Postage	300
To Insurance	4,800
To Surplus (Excess of Income over Expenditure)	1,500
	85,300		85,300

3. From the following particulars , prepare Income and Expenditure account:

Details	Amount (₹)
Fees collected, including ₹80,000 on account of the previous year	5,20,000
Fees for the year outstanding	30,000
Salary paid, including ₹5,000 on account of the previous year	68,000
Salary outstanding at the end of the year	3,000
Entertainmnet Expenses	8,000
Tournament Expenses	25,000
Meeting Expenses	18,000
Travelling Expenses	40,000
Purchase of Books and Periodicals, including ₹31,000 for purchase of Books Rent	15,000
Postage, telegrams and telephones	6,000
Printing and Stationery	18,000
Donations Received	25,000

Ans.

Dr.	Income and Expenditure Account		Cr.
Expenditure	Amount (₹)	Income	Amount (₹)
To Salaries 68,000		By fees Collected 5,20,000
Less: Previous year’s		Less: Previous year’s (80,000)
Outstanding (5,000)		Outstanding
63,000		4,40,000
Add: Current year’s		Add: Current year’s 30,000	4,70,000
Outstanding 3,000	66,000	Outstanding
To Entertainment Expenses	8,000	By Donations	25,000
To Tourmament Expenses	25,000
To Meeting Expenses	18,000
To Travelling Expenses	7,000
To Purchase of Periodicals	9,000
(40,000 – 31,000)
To Postage, Telegrams and Telephone’s	6,000
To Rent	15,000
To Printing and Stationery	18,000
To Surplus (Excess of Income over Expenditure)	3,23,000
	4,95,000		4,95,000

4. Following is the information given in respect of certain items of a Sports Club. Show these items in the Income and Expenditure Account and the Balance Sheet of the Club:

Details	Amount (₹)
Sports Fund as on 1.4.2015	35,000
Sports Fund Investments	35,000
Interest on Sports Fund	4,000
Donations for Sports Fund Investment	15,000
Sports Prizes Awarded	10,000
Expenses on Sports Events	4,000
General Fund	80,000
General Fund Investments	80,000
Interest on General Fund Investments	8,000

Ans.

Dr.	Books of Sports Club Income and Expenditure Account		Cr.
Expenditure	Amount (₹)	Income	Amount (₹)
		Interest on General Fund Investments	8,000

Ans.

Balance Sheet
Liabilities	Amount (₹)	Assets	Amount (₹)
Sports Fund 35,000		Sports Fund Investments	35,000
Add: Interest on Sports Fund 4,000		General Fund Investments	80,000
Add: Donations for
Sports Fund 15,000
54,000
Less: Expenses on
Sports Event (4,000)
Less: Prize Awarded (10,000)	40,000
General Fund	80,000

5. How will you deal with the following items while preparing for the Bombay Women Cricket Club its income and expenditure account for the year ending 31.3.2017 and its Balance Sheet as on 31.3.2017:

Details	Amount (₹)
(a) Donation received during the year for the construction of a permanent Pavillon	12,25,000
Expenditure incurred up to 31..3.2017 on its construction	10,80,000
The total estimated expenditure on construction of Pavillon being	25,00,000
(b) Tournament Fund:
Balance as on 1.4.2016	10,700
Subscriptions for tournament received during the year	65,800
Expenditure incurred during the year on conducting trounaments	72,400
(c) Life, Membership fee received during the year	28,000

Give reasons for your answers.

Ans. (a)

Balance Sheet as on March 31, 2017
Liabilities		Amount (₹)	Assets	Amount (₹)
Donation for Pavilion	12,25,000		Construction of Pavilion in Progress	10,80,000
Less: Exp. on construction of Pavilion	(10,80,000)	1,45,000
Capital
Add: Pavilion Construction	10,80,000	10,80,000

Reason

Donation for construction of Pavilion is a donation for specific purpose.

Expenses on construction on Pavillion is a capital expenditure.

(b)	Balance Sheet as on March 31, 2017
Liabilities		Amount (₹)	Assets	Amount (₹)
Tournament Fund	10,700
Add: Subscription for Trornament	65,800
	76,500
Add: Pavilion Construction	(72,400)	4,100

Reason

All the received funds are treated as capital receipts and expenses related to any fund are deduced from the concerned funds.

(c)	Balance Sheet as on March 31, 2017
Liabilities	Amount (₹)	Assets	Amount (₹)
Life Membership Fees	28,000

Reason

Life Membership Fees are capital receipts and are therefore, shown on the Liabilities side of the Balance Sheet, if nothing is specifically mentioned about its treatment. But if it is required to be treated as revenue item, then it is shown on the credit side of the Income and Expenditure Account.

6. From the following receipts and payments and information given below, Prepare Income and Expenditure Account and opening Balance Sheet of Adult Literacy Orgnisation as on December 31, 2017.

Receipt and Payment Account for the year ending as on December 31, 2017
Receipts		Amount (₹)	Payments	Amount (₹)
Balance b/d			General Expenses	3,200
Cash in Hand		4,000	Newspaper	1,850
Cash at Bank		15,550	Electricity	3,000
Subscriptions			Fixed deposit with bank	18,000
			(on 31.06.2017) @ 10% p.a.
2016	1,200		Books	7,000
2017	26,500		Salary	3,600
2018	500	28,200	Rent	6,500
Sale of old newspapers		1,250	Postage charges	300
Govt. grant		12,000	Furniture (purchased)	10,500
Sale of old Furniture		3,700	Balance c/d
(book value ₹ 5,000)
Interest received on FD		450	Cash in Hand	3,000
			Cash at Bank	8,200
		65,150		65,150

Information:

(i) Subscription outstanding as on 31.12.2016 were ₹2,000 and on December 31, 2017 were ₹1,500.

(ii) On December 31, 2017 Salary outstanding was ₹600, and one month Rent paid in advance.

(iii) On Jan. 01, 2016 orgnisation owned Furniture ₹12,000, Books ₹5,000.

Ans.

Dr.	Books of Adult Literacy Organisation Income and Expenditure Account as on Dec. 31.2017		Cr.
Expenditure	Amount (₹)	Income	Amount (₹)
To Loss on Sale of Old Furniture	1,300	By Subscription 26,500
To General Expenses	3,200	Add: Outstanding for 2017 1,500	28,000
To Newspapers	1,850	By Subscriptions
To Electricity	3,000	By Sale of Old Newspapers	1,250
To Salary 3,600		By Government Grant	12,000
Add: Outstanding for 2017 600	4,200	By Interest received on F.D. 450
To Rent 6,500		Add: Accrued Interest 450	900
Less: Prepaid for 2018 (500)	6,000
{6,500 × (1/13)}
To Postage Charges	300
To Surplus (Excess of Income over Expenditure)	22,300
	42,150		42,150

Balance Sheet as on March 31, 2016
Liabilities	Amount (₹)	Assets	Amount (₹)
Capital Fund on Dec. 31, 2016	38,550	Subscription Outstanding	2,000
(Balanceing Figure)
		Cash in Hand	4,000
		Cash at Bank	15,550
		Furniture	12,000
		Books	5,000
	38,550		38,550

Balance Sheet as on March 31, 2017
Liabilities		Amount (₹)	Assets		Amount (₹)
Capital 38,550	38,550		Prepaid Rent		500
Add: Surplus	22,300	60,850	Books	5,000
Salary Outstanding		600	Add: Purchases	7,000	12,000
Subscription Received in Advance for 2018		500	Furniture	12,000
			Add: Purchases	10,500	12,000
				22,500
			Less: Sale	(5,000)	17,500
			Fixed Deposit	18,000
			Add: Accrued Interest	450	18,450
			Cash in Hand		3,000
			Cash at Bank		8,200
			Subscription Outstanding
			for 2017	1,500	2,300
			Add: Outstanding for 2016	800
	61,950				61,950

7. The following is the Receipt and Payment Account of the Nari Kalayan Samittee for the year ended December 31, 2017:

Receipt and Payment Account for the year ending as on December 31, 2017
Receipts	Amount (₹)	Payments	Amount (₹)
Balance from last year b/d	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	750	Legal fee	1,870
(books value ₹ 1,000)		Books	6,500
Interest	350	Furniture purchased	8,600
		Expenses on nukar drama	1,300
		Balance c/d
		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 ₹750 , but subscription include ₹500 for the year 2018.

(b) In the beginning of the year the Samiti owned building ₹20,000 and furniture ₹3,000 and Books ₹2,000.

(c) Provide depreciation on furniture @5% (including purchase ), books @10% and building @5%.

Ans.

Dr.	Books of Nari Kalyan Samittee Income and Expenditure Account as on Dec. 31.2017				Dr.
Expenditure		Amount (₹)	Assets		Amount (₹)
To Rent		6,600	By Subscription	32,500
To Electric Charges		3,200	Add: Outstanding for 2017	750
To Lecturer’s fee		730		32,250
To Office Expenses		1,480	Less: Advance for 2018	(500)	32,750
To Printing and Stationery		1,050	By Donation		2,500
To Legal Fee		1,870	By Profit from Entertainment		7,250
To Depreciation on:			By Interest		350
Books	750
Furniture	580
Building	1,000	2,330
To Expenses on Nukar Drama		1,300
To Loss on Sale of Books		250
To Surplus		24,040
		42,850			42,850

Dr.	Balance Sheet as on March 31, 2017		Cr.
Liabilities	Amount (₹)	Assets	Amount (₹)
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 March 31, 2017
Liabilities		Amount (₹)	Assets		Amount (₹)
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: 10% Depreciation	750	6,750
			Cash in Hand		8,040
			Cash at Bank		9,500
			Subscription Outstanding		750
		55,060			55,060

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.

Receipt and Payment Account for the year ending March 31, 2017
Receipts	Amount (₹)	Payments	Amount (₹)
Balance b/d	7,890	Salary	11,000
Subscriptions	52,000	Electric charges	5,500
Life membership 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 equtpment	2,500	Repair of Ground	2,000
(Costing ₹ 2,200)
Sale of old newspaper	750	Furniture Purchased	7,700
Legacy	37,500	Sports Equipment	12,000
		Cash in Hand	12,690
		Cash in Bank	10,000
		Fixed Deposit	30,000
		(on 1.10.2017 for 10% p.a.)
	1,33,290		1,33,290

Other Information:
Subscription outstanding was on December 31, 2016 ₹1,200 and ₹3,200 on December 31, 2017. Locker rent outstanding on December 31, 2017 ₹250.

Salary outstanding on December 31, 2017 ₹1,000.

On January 1, 2017, club has Building ₹36,000, furniture ₹12,000,

Sports equipments ₹17,500. Depreciation charged on these items @ 10% (including Purchase).

Dr.	Books of Jan Kalyan Club Income and Expenditure Account as on 31 March 2017				Cr.
Expenditure		Amount(₹)	Income		Amount(₹)
To Salary	11,000		By Subscription	52,000
Add: Outstanding for 2017	1,000	12,000	Add: Outstanding for 2017	3,200
To Electric Charges		5,500		55,200
To Office Expenses		4,100	Less: Outstanding for 2016	(1,200)	54,000
To Printing and Stationery		2,300	By Locker Rent	1,250
Repair of Ground		2,000	Add: Outstanding for 2017	250	1,500
To Depreciation on:			By Entrance Fees		3,200
Furniture	1,970		By Profit on Sale of Sports
Building	3,600		By Equipments (₹2,500 – ₹2,200)		300
Sports Equipments	2,730	8,300	By Sale of Old Newspapers		750
To Surplus		26,300	By Accrued Interest		750
		60,500			60,500

Dr.	Books of Jan Kalyan Club Income and Expenditure Account as on 31 March 2017		Cr.
Expenditure	Amount(₹)	Assets	Amount(₹)
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		Amount(₹)	Assets		Amount(₹)
Salary Outstanding		1,000	Subscripting Outstanding		3,200
Tournament Fund	26,000		Locker Rent Outstanding		250
Less: Tournaments Expenses	18,500	7,500	Building	36,000
Capital Fund	74,590		Less: 10% Depreciation	(3,600)	32,400
Add: Life Membership Fee	2,200		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 at Hand		12,690
			Cash at Bank		10,000
			Fixed Deposit	30,000
			Add: Accrued Interest	750	30,750
		1,49,090			1,49,090

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	Amount (₹)	Payments	Amount (₹)
Cash in hand as on 1.4.2016	6,800	Salaries	24,000
Subscription	60,200	Travelling Expenses	6,000
Donation	3,000	Stationary	2,300
Sale of furniture	4,000	Rent	16,000
(Book value `6,000)		Repair	700
Entrance fee	800	Books purchased	6,000
Life membership fee	7,000	Building purchased	30,000
Inerest on investment (@ 5% for full year)	5,000	Cash in hand as 31.03.2017	1,800
	86,800		86,800

Additional Information:

	As on 01.04.2016	As on 31.03.2017
(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

Dr.	Books of Jan Kalyan Club Income and Expenditure Account as on 31 March 2017				Cr.
Expenditure		Amount(₹)	Income		Amount(₹)
Loss on Sale of Furniture (₹6,000-₹4,000)		2,000	By Subscription	60,200
		Less: Outstanding for 2016	(2,000)
To Salaries		24,000
To Travelling Expenses		6,000		58,200
			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
To Repairs		700
To Repairs		700
To Rent	16,000		By Donation		3,000
Less: Outstanding for 2018	(1,000)		By Entrance Fees		800
	15,000		By Interest on Investments		5,000
Add: Outstanding for 2017	2,000	17,000
To Depreciation on Books		3,000
To Depreciation on Furniture		2,000
To Surplus		11,100
To Surplus		68,500			68,500

Balance Sheet as on April 01, 2016
Liabilities	Amount(₹)	Assets	Amount(₹)
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 Stationary	1,200
		Books	13,500
		Furniture	16,000
	1,39,500		1,39,500

Balance Sheet as on March 31, 2007
Liabilities		Amount(₹)	Assets		Amount(₹)
Advance Subscription		3,200	Subscription Outstanding		3,700
Outstanding Rent		2,000	Stock of Stationary		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

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	Amount (₹)	Payments	Amount (₹)
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	7,000	Interest	2,000
Life membership fee	1,200	Furniture	10,000
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 ₹1, 200 and ₹2, 300 on March 31, 2017, opening stock of postage stamps is ₹300 and closing stock is ₹200, Rent ₹1, 500 related to 2015 and ₹1, 500 is still unpaid.

On April 1, 2016 the club owned furniture ₹15, 000, Furniture valued at ₹22,500 as on March 31, 2017.

On March 31, 2016, the club had a loan of ₹20,000 (@ 10% p.a).

Books of Shankar Sports Club Income and Expenditure Account as on 31 March 2017
Expenditure		Amount(₹)	Income		Amount(₹)
To Rent	18,000		By Entrance Fees		3,200
Add: Outstanding for 2017	1,500		By Locker Rent		1,200
	19,500		By Profit from Entertainment		3,000
Less: Outstanding for 2016	(1,500)	18,000
			By Subscription	40,000
			Less: Outstanding for 2016	(1,200)
To Wages		7,000
To Depreciation on Furniture		2,500		38,800
			Add: Outsanding for 2017	2,300	41,100
To Interest		2,000
To Postage	1,000		By Deficit (Balancing Figure)		6,100
Add: Opening Stock	300
	1,300
Less: Closing Stock	(200)	1,100
To Salaries		24,000
		54,600			54,600

Balance Sheet as on March, 2016
Liabilities	Amount (₹)	Assets	Amount (₹)
Rent Outstanding	1,500	Cash in Hand	2,600
10% Loan	20,000	Subscription Outstanding	1,200
		Furniture	15,000
		Stokc of Postage Stamps	300
		Capital fund Deficit (Balancing figure)	2,400
	21,500		21,500

Balance Sheet as on March, 2017
Liabilities		Amount(₹)	Assets		Amount(₹)
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)		1,500
		44,500			44,500

Note 1:

Capital Fund (2,400)

Add: Life Membership Fees 7,000

Less: Deficit (6,100)

Net deficit (1,500)

11. Prepare Income and Expenditure Account and Balance Sheet for the year ended March 31, 2016 from the following Receipt and Payment Account and Balance Sheet of culture club:

	Receipt and Payment Account for the year ending March 31, 2016
Particulars	Amount (₹)	Particulars	Amount (₹)
Opening cash balance	12,000	Furniture	4,000
Subscription		Telephone expenses	800
2014-15 2,000		Salary
2015-16 22,000	24,000	2014-15	1,000
Entrance fee	2,800	2015-16	4,000
Locker rent	1,000	Newspaper	700
Life membership fee	1,200	Sundry expenses	1,000
Government grant	11,000	Defence bonds	18,000
		Land	20,000
		Closing cash balance	2,500
	52,000		52,000

Balance Sheet for the year ending March 31, 2015
Liabilities	Amount(₹)	Assets	Amount(₹)
Advance locker rent	200	Cash in hand	12,000
Subscription received in Advance	1,000	Outstanding subscription	3,000
Outstanding salary	2,000
Loan	10,000
Capital fund	36,800
	50,000		50,000

	Books of Culture Club Income and Expenditure Account as on March 31, 2016
Expenditure	Amount (₹)	Payments	Amount (₹)
To Telephone Expenses	800	By Subscription 22,000
		Add: Advance Received in 2015 1,000	23,000
To Salary	4,000	To Newspapers	700
To Sundry Expenses	1,000	By Entrance Fees	2,800
		By Locker Rent 1,000
		Add: Advance Received in 20015 200	1,200
To Surplus (Balancing figure)	31,500
		By Government Grants	11,000
	38,000		38,000

Balance Sheet as on March 31, 2016
Liabilities	Amount(₹)	Assets	Amount(₹)
		Subscription Still Outstanding for 2015 (₹3,000 – ₹2,000)	1,000
Capital Fund 36,800 Add: Life
Membership Fees 1,200
Add: Surplus 31,500	69,500	Furniture	4,000
		Defenec Bonds	18,000
Salary Still Outstanding for 2015	1,000	Land	20,000
Loan	10,000	Building	35,000
		Cash in Hand	2,500
	80,500		80,500

12. From the following Receipt and Payment Account prepare final accounts of a Unity Club for the year ended March 31, 2017 Receipt and Payment Accounts for the year ending March 31, 2017:

Receipts	Amount (₹)	Payments	Amount (₹)
Balance b/d	15,000	Furniture	18,000
Sale of Old furniture (costing ₹6,000)	4,000	Library books	10,000
		Salaries	72,000
Subscriptions		General expenses	18,000
2015-16 18,000		Electric charges	12,000
2016-17 60,000		Newspaper	33,800
2017-18 12,000	90,000	Postage	3,000
Sale of old newspapers	10,800	Stationary	40,000
Profit from entertainment	44,000	Audit fee	8,000
Rent	84,000	Balance c/d	33,000
	2,47,800		2,47,800

Balance Sheet as on March 31, 2016
Liabilities	Amount(₹)	Assets	Amount(₹)
Outstanding Salary	6,000	Cash	15,000
Capital Fund	6,94,000	Outstanding subscription	18,000
		Library Books	30,000
		Furniture	37,000
		Land and Building	6,00,000
	7,00,000		7,00,000

Additional Information:

1. The Club had 500 members each paying an annual subscription of ₹150.

2. On 31.3.2017 salaries outstanding amounted to ₹1,200 and salaries paid included ₹6,000 for the year 2015-16.

3. Provide 5% depreciation on Land and Building.

Ans.	Books of Unity Club Income and Expenditure Accountas on March 31, 2017
Expenditure	Amount (₹)	Income	Amount (₹)
To Loss on Sale of Old Furniture (4,000 – 6,000)	2,000	By Subscription	75,000
To Salaries 72,000		By Sale of Old Newspaper	10,800
Add: Outstanding for 2015-16 1,200		By Profit from Entertainment	44,000
73,200		By Rent	84,000
Less: Outstanding for 2016-17 (6,000)	67,200
To General Expenses	18,000	By Deficit (Balancing figure)	200
To Electric Charges	12,000
To Newspapers	33,800
To Postage	3,000
To Stationary	40,000
To Audit Fees	8,000
To Depreciation on Land and Building	30,000
	2,14,000		2,14,000

Balance Sheetas on 31 March, 2017
Liabilities	Amount(₹)	Assets	Amount(₹)
Advance Subscription (for 2017-18)	12,000	Subscription Outstanding	15,000
Salaries Outstanding	1,200	Furniture 37,000
Capital Fund 6,94,000		Add: Purchases 18,000
Less: Deficit (200)	6,93,800	55,000
		Less: Sales (6,000)	49,000
		Land and Building 6,00,000
		Less: 5% Depreciation (30,000)	5,70,000
		Cash and Bank	33,000
	7,07,000		7,07,000

13. Following is the information in respect of certain items of a Sports Club. You are required to show them in the Income and Expenditure Account and the Balance Sheet.

Details	Amount (₹)
Sports Fund as on April 1, 2016	80,000
Sports Fund Investments	80,000
Interest on Sports Fund Investments	8,000
Donations for Sports Fund	30,000
Sports Prizes awarded	16,000
Expenses on Sports Events	7,000
General Fund	2,00,000
General Fund Investments	2,00,000
Interest on General Fund Investments	20,000

Ans.	Income and Expenditure Account as on March 31, 2016
Expenditure	Amount (₹)	Income	Amount (₹)
		By Interest on General Fund Investments	20,000

Balance Sheet (Extract) as on March 31, 2016
Liabilities	Amount(₹)	Assets	Amount(₹)
Sports Fund 80,000		Sports Fund Investments	80,000
Add: Interest on Sports Fund		General Fund Investments	2,00,000
Investments 8,000
1,18,000
Less: Sports Prizes Awarded (16,000)
Less: Expenses on Sports Events (7,000)	95,000
General Fund	2,00,000

14. Receipt and Payment Account of Maitrey Sports Club showed that `68,500 were received by way of subscriptions for the year ended on March 31, 2017:

The additional information was as under:

1. Subscription Outstanding as on March 31, 2016 were ₹6,500,

2. Subscription received in advance as on March 31, 2016 were ₹4,100,

3. Subscription Outstanding as on March 31, 2017 were ₹5,400,

4. Subscription received in advance as on March 31, 2017 were ₹2,500.

Show how that above information would appear in the final accounts for the year ended on March 31, 2017 of Maitrey Sports Club.

Ans.	Books of Maitrey Sports Club Income and Expenditure Account as on March 31, 2017
Expenditure	Amount (₹)	Income	Amount (₹)
		By Subscription 68,500
		Less: O/s on Mar. 31, 2016 (6,500)
		62,000
		Add: Advance on Mar. 31, 2016 4,100
		Add: O/s on Mar. 31, 2017 5,400
		71,500
		Less: Advance on Mar. 31 2017 (2,500)	69,000

Balance Sheet as on March 31, 2016
Liabilities	Amount(₹)	Assets	Amount(₹)
Subscription in Advance	4,100	Subscription Outstanding	6,500

15. Following is the Receipt and Payment account of Rohatgi Trust :

Balance Sheet as on March 31, 2017
Liabilities	Amount(₹)	Assets	Amount(₹)
Subscription in Advance	2,500	Subscription Outstanding	5,400

Receipt and Payment Account for the year ending December 31, 2017
Receipts	Amount(₹)	Payments	Amount(₹)
Cash in hand	14000	Rent	6,000
Cash at bank	60,000	Salary	12,000
Subscription		Postage	300
2016 5,000		Electricity charges	6,000
2017 83,000		Purchase of furniture	20,000
2018 3,000	91,000	Books	3000
Sale of investment	90,000	Defence Bonds	1,50,000
Interest on investment	2,000	Help to needy students	22,000
Sale of furniture	3,200	Cash in hand	10,900
(Book value ₹3,000)		Cash at bank	30,000
	2,60,200		2,60,200

Prepare Income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that date after the following adjustments:
Subscription for 2017, still owing were `7,000. Interest due on defence bonds was ₹7,000, Rent still owing was ₹1,000. The Book value of investment sold was ₹80,000, ₹30,000 of the investment were still in hand. Subscription received in 2017 included ₹400 from a life member. The total furniture on January 1, 2017 was worth ₹12,000. Salary paid for the year 2018 is ₹2,000.

Ans.	Books of Rohatgi Trust Income and Expenditure Account as on December 31, 2017
Expenditure	Amount (₹)	Income	Amount (₹)
To Rent 6,000		By Subscription 83,000
Add: Outstanding 1,000	7,000	Add: Outstanding for 2017 7,000
		90,000
Salary 12,000		Less: Life Membership Fees (400)	89,600
Less: Advance for 2018 (2,000)	10,000
		To Interest Accrued on Defence Bonds	7,000
		To Profit on Sale of Investment	10,000
To Postage	300	(₹90,000 – ₹80,000)
		To Profit on Sale of Furniture	200
To Electricity Charges	6,000	(₹3,200 – ₹3,000)
To Help to Needy Students	22,000	To Interest on Investments	2,000
To Surplus (Balancing Figure)	63,500
	1,08,800		1,08,800

Balance Sheet as on December 31, 2016
Liabilities	Amount(₹)	Assets	Amount(₹)
Capital fund (Balancing Figure)	2,01,000	Subscription Outstanding	5,000
		Investment (₹80,000 + ₹30,000)	1,10,000
		Furniture	12,000
		Cash in hand	14,000
		Cash at bank	60,000
	2,01,000		2,01,000

Balance Sheet as on March, 2017
Liabilities	Amount(₹)	Assets	Amount(₹)
Advance Subscription	3,000	Subscription Outstanding	7,000
Rent Outstanding	1,000	Defence Bonds 1,50,000
Capital Fund 2,01,000		Add: Accured Interest on Defence
		Bonds 7,000	1,57,000
Add: Surplus 63,500
Add: Life Membership Fees 400	2,64,900	Investment	30,000
		Advance Salaries	2,000
		Furniture 12,000
		32,000
		Less: Sales (3,000)	29,000
		Books	3,000
		Cash in Hand	10,900
		Cash at Bank	2,68,900
	2,68,900		2,68,900

16. Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2017:

Receipt and Payment Account for the year ending December 31, 2017
Receipts	Amount(₹)	Payments	Amount(₹)
Balance b/d		Charity	11,500
Cash in hand	11,500	Rent and taxes	3,200
Cash at bank	12,600	Salary	6,000
Donation	9,000	Printing	600
Subscription	42,800	Postage	300
Legacies	18,000	Advertisements	4,500
Interest on investment	4,500	Insurances	2,000
Sale of old newpapers	200	Furniture	21,600
Investment	23,000
		Balance c/d:
		Cash in hand	9,900
		Cash in bank	16,000
	98,600		98,600

Prepare Income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that date after the following adjustments:

(a) It was decided to treat one-third of the amount received on account of donation as income.

(b) Insurance premium was paid in advance for three months.

(c) Interest on investment Rs.1,100 accrued was not received.

(d) Rent ₹600: salary ₹900 and advertisement expenses ₹1,000 outstanding as on December 31, 2018.

Ans.	Books of Delhi Charitable Trust Income and Expenditure Account as on December 31, 2017
Expenditure	Amount (₹)	Income	Amount (₹)
Insurance 2,000		By Donation {9,000 × (1/3)}	3000
Less: Prepaid {2,000 × (3/15)} (400)	1,600	By Interest on Investments 4,500
		Add: Accrued interest 1,100	5,600
To Charity	11,500
To Rent and Taxes 3,200		By Subscription	42,800
Add : Outstanding 600	3,800	By Sale of Old Newspapers	200
To Salary 6,000
Add: Outstanding 900	6,900
To Printing	600	To Postage	300
Add: Outstanding 1,000	5,500
To Surplus (Balancing figure)	21,400
	51,600		51,600

Balance Sheet as on December 31, 2016
Liabilities	Amount(₹)	Assets	Amount(₹)
Capital fund (Balancing Figure)	24,100	Cash in Hand	11,500
		Cash at Bank	12,600
	24,100		24,100

Balance Sheet as on December 31, 2017
Liabilities	Amount(₹)	Assets	Amount(₹)
Capital Fund 24,100		Prepaid insurance {2,000 × (3/15)}	400
Add: Donation {9,000 × (2/3)} 6,000		Investment 23,000
Add: Legacies 18,000		Add: Accured Interest 1,100	24,100
Add: Surplus 21,400	69,500	Furniture	21,600
Rent Outstanding	600	Cash in Hand	9,900
Salary Outstanding	900	Cash in Bank	16,000
Advertisement Expenses Outstanding	1,000
	72,000		72,000

17. From the following Receipt and Payment Account of a club, prepare Income and Expenditure Account for the year ended March 31, 2017 and the Balance Sheet as on that date.

Receipt and Payment Account for the year ending March 31, 2017
Receipts	Amount(₹)	Payments	Amount(₹)
Balance b/d	3,500	General expenses	900
Subscription:		Salary	16,000
2015-16 2,000		Postage	1,300
2016-17 70,000		Electricity charges	7,800
2017-18 3,000	75,000	Furniture	26,500
Sale of old Books	2,000	Books	13,000
(costing ₹3,200)		Newspapers	600
Rent from use of hall	17,000	Meeting expenses	7,200
Sale of newspapers	400	T.V. set	16,000
Profit from entertainment	7,300	Balance c/d	15,900
	1,05,200		1,05,200

Additional Information:

(a) The club has 100 members each paying an annual subscription of ₹900.
Subscriptions outstanding on March 31, 2016 were ₹3,600.

(b) On March 31, 2017, salary outstanding amounted to ₹1,000, Salary paid included ₹1,000 for the year 2016.

(c) On April 1, 2017 the club owned land and building ₹25,000, furniture ₹2,600 and books ₹6,200.

Ans.	Income and Expenditure Account as on December 31, 2017
Expenditure	Amount (₹)	Income	Amount (₹)
To General Expenses	900	By Subscription 70,000
To Salary 16,000		Add: Outstanding for 2017 20,000	90,000
Add: Outstanding for 2017 1,000		(100 members at ₹900 each)
17,000		By Rent from use of hall	17,000
Less: Outstanding for 2016 (1,000)	16,000	By Sale of Old News Papers	400
To Loss on Sale of old Books	1,200	By Profit from Entertainment	7,300
To Electricity Charges	7,8000
To Newspaper	600
To Meeting Expenses	7,200
To Postage	1,300
To Surplus (Balancing figure)	79,700
	1,14,700		1,14,700

Balance Sheet as on March 31, 2016
Liabilities	Amount(₹)	Assets	Amount(₹)
Salary Outstanding	1,000	Subscription Outstanding	3,600
Capital Fund (Balancing figure)	39,900	Furniture	2,600
		Books	6,200
		Cash and Bank	3,500
		Building	25,000
	40,900		40,900

Balance Sheet as on March, 2017
Liabilities	Amount(₹)	Assets	Amount(₹)
Salary Outstanding	1,000	Subscription Outstanding	3,600
Advance Subscription	3,000	Subscription Outstanding
Salary Outstanding	1,000	2017 20,000
		Add: 2016 (Still Outstanding) 1,600	21,600
Capital Fund 39,900		Building	25,000
Add: Surplus 79,700	1,19,600	Furniture 2,600
		Add: Purchases 26,500	29,100
		Books 6,200
		Add: Purchases 13,000
		19,200
		Less: Sales 3,200	16,000
		T.V. Set	16,000
		Cash and Bank	15,900
	1,23,600		1,23,600

18. Following is the Receipt and Payment Account of Women’s Welfare Club for the year ended December 31, 2017:

Receipt and Payment Account for the year ending December 31, 2017
Receipts	Amount(₹)	Payments	Amount(₹)
Balance b/d	7,250	Salary	12,500
Subscription	81,750	Stationary	1,700
Donations	3,000	Electricity charges	9,550
Grant from Government	15,000	Insurance	7,500
Sale of newspapers	300	Equipments	30,000
Proceeds of charity show	16,500	Petty expenses	500
Interest on investments	7,000	Expenses on charity show	12,900
@10% for full year		Newspapers	1,000
Sundries income	400	Lectures fee	16,500
		Honorarium to Secretary	12,000
		Balance c/d	27,050
	1,31,200		1,31,200

Additional Information:
	01.01.2017 (₹)	31.12.2017 (₹)
Outstanding salaries	1,200	1,800
Insurance prepaid	700	300
Subscription outstanding	3750	2500
Subscription received in advanced	1,750	1,000
Electricity charges outstanding	--	1,250
Stock of stationary	2,250	700
Equipments	25,600	50,200
Building	1,20,000	1,14,000

Prepare Income and Expenditure Account for the year ended December 31, 2017 and Balance Sheet as on date.

Ans.	Books of Women Welfare Club Income and Expenditure Account as on December 31, 2017
Expenditure	Amount (₹)	Income	Amount (₹)
To Salary 12,500		By Subscription 81,750
Add: O/s on Dec. 31, 2017 1,800		Add: O/s on Dec. 31, 2017 2,500
14,300		84,250
Less: O/s on Dec. 31, 2016 (1,200)	13,100	Less: O/s on Dec. 31, 2016 (3,750)
		80,500
To Stationary .1,700		Add: Advance on Dec. 31, 2016 1,750
Add: Opening Stock 2,250		82,250
3,950		Less: Advance on Dec. 31, 2017 (1,000)	81,250
Less: Closing Stock (700)	3,250
		By Donations	3,000
To Electric Charges 9,550		By Grant from Government	15,000
Add: O/s on Dec. 31, 2017 1,250	10,800	By Sale of Newspapers	300
		By Profit from Charity show (16,500 – 12,900)	3,600
To Insurance 7,500		By Interest on Investments	7,000
Add: Prepaid in 2016 700		By Sundries Income	400
8,200
Less: Prepared in 2017 (300)	7,900
To Depreciation on Equipments	5,400
To Petty Expenses	500
To Newspapers	1,000
To Lectures Fee	16,500
To Honorarium to Secretary	12,000
To Depreciation on Building	6,000
To Surplus (Balancing Figure)	34,100
	1,14,700		1,14,700

Balance Sheet as on December 31, 2016
Liabilities	Amount(₹)	Assets	Amount(₹)
Outstanding Salaries	1,200	Insurance Prepaid	700
Subscription in Advance	1,750	Subscription Outstanding	3750
		Stock of Stationary	2,250
Capital Fund (Balancing Figure)	2,26,600	Equipments	25,600
		Building	1,20,000
		Cash and Bank	7,250
		Investments {7,000 × (100/10)}	70,000
	2,29,550		2,29,550

Balance Sheet as on March, 2017
Liabilities	Amount(₹)	Assets	Amount(₹)
Outstanding Salaries	1,800	Equipments 25,600
Subscripton in Advances	1,000	Add: Purchases 30,000
Electricity Charges Outstanding	1,250	55,600
Capital Fund 2,26,600	2,60,700
		Insurance Prepaid	300
		Subscription Outstanding	2,500
		Stock of Stationery	700
		Building 1,20,000
		Less: Depreciation (6,000)	1,14,000
		Cash and Bank	27,050
		Investments	70,000
	2,64,750		2,64,750

19. As at March 31, 2017 the following balances have been extrated from the books of the Indian Chartered Accountants Recreation Club and you are asked to prepare Income and Expenditure Account for the year ended March 31, 2017 and a Balance Sheet as at that date.

Debit Balances	Amount(₹)	Credit Balances	Amount(₹)
Purchases	24,660	Subscriptions	97,110
Dining Room	32,370	Billiard’s Receipts	7,300
Rent	10,470	Sundary Receipts	410
Wages	18,690	Interest on Fixed Deposits	270
Repairs and Renewals	5,400	Sundry Creditors	5370
Fuel and Light	5,280	Grant from Institute	42,000
Misc. Expenses	4,050	(permanent)
Cash in hand	1,730	Income and Exp. A/c (2016)	1,380
Cash at bank	2,760
Fixed Deposits	8,500
Sundry Debtors	2,250
Stationary	600
Billiard Table	2,070
Fixtures and Fittings	870
Furniture	4,140
Club Premtses	30,000
	1,53,840		1,53,840

On March 31,2016 stock of Stationary consisted of ₹900 and March 31, 2017 `60 respectively. Provide depreciations ₹60 on fixtures and fittings, ₹390 on billiard table and `560 on furniture.

Ans.	Income and Expenditure A/c
Expenditure	Amount (₹)	Income	Amount (₹)
To Purchases	24660	By Subscriptions	97,110
To Dining room	32,370	By Billiard’s Receipts	7,300
To Rent	10,470	By Sundary Receipts	410
To Wages	18,690	By Interest on fixed Deposits	270
To Repairs and Renewals	5,400
To Fuel & Light	5,280
To Misc. Expenses	4,050
To Stationary 600	(–) Closing stock (60)	540
To Depreciation:
Fixtures 60
Billiard Table 390
Furniture 560	1010
To Surplus	2,620
	1,05,090		1,05,090

Balance Sheet as at 31.3.2017
Liabilities	Amount(₹)	Assets	Amount(₹)
Capital Fund 1,380		Cash in Hand	1,730
(+) Surplus 2,620	4,000	Cas at Bank	2,760
		Fixed Deposits	8,500
Sundry creditors	5,370	Sundary Debtors	2,250
Grant from institute	42,000	Stationary	60
		Billiards Table	1,680
		Fixtures fitting	810
		Furniture	3,580
		Club premises	30,000
	51,370		51,370