These fees amount are added to the capital fund on the liability side of the balance sheet. For the year . If rules and regulations of the organization provide specific directions regarding donation, the amount of donation should be treated accordingly. Balance of Income and Expenditure Account shows: (a) Cash in hand (b) Capital Fund (c) Net Profit (d) Excess of Income over Expenditure or Vice Versa. The income statement above shows five full calendar years plus a last twelve months (LTM) period as of 9/30/13. It is a capital receipt for the organisation. Subscription is usually the main source of revenue for non trading concerns. Life membership: Fees some members prefer to pay lumpsum amount as life membership fee instead of paying periodic subscription. By office expenses . The Scottish Professional Football League Trust is the charitable arm of the Scottish Professional Football League and was established to lead and co-ordinate community engagement activities across all 42 member clubs. All receipts (revenue and capital) are shown on the debit side and all payments (revenue and capital) are shown on the credit side. and my children even to eat was a problem because they have no money to buy food stuff and to pay my children's school fees. . See additional tips for using data tables.. Sub account codes: An Income accrued is shown on the assets side of the balance sheet. 28. April . It increases as a result of surplus and decreases as a result of deficit computed by preparing an income and expenditure account. as . Treatment of Special Items • Entrance Fee/Admission Fee: Entrance Fee/Admission Fee is a revenue receipt and therefore accounted as an income and credited to Income and Expenditure Account. Income and Expenditure Account is akin to Profit and Loss Account. It is charged once in the life time of a member. Life membership fees of non-trading concerns is— (A) Capital Receipts (B) Revenue Receipts(C) Both (D) None of these 4. It is a summary of all cash and banking transactions. Income and expenditure account. The following items are frequently used in preparing the accounts of non-trading concerns (also known as non-profit organizations). Income and expenditure account is merely another name for profit and loss account. Dr. Cr. for Year 2009 A debit balance in the Income and Expenditure A/c denotes excess of Expenditure over Income. the income side of the Income and Expenditure Account. To interest . . debit balance of the income & expenditures account. This is an item of revenue expenditure and will be recorded on the debit side of the income and expenditure account. Life members are not required to pay the annual membership fees. Capital Fund. On April 2, Celina uses $20,000 from the checking account for a passive activity expenditure. The amount for the creation of special fund comes from special donations, excess of income over expenditure and/or special fund-raising activities performed by the organization. • On joining the club each life member has to pay a life membership fee of $4000. If it is assumed that the membership fees that needs to be transferred to the income and expenditure account amounted to R37 440 and that the profit on refreshments amounted to R20 000. How to Prepare Accounts for a Non-Profit Organisation. 12. Commissioner of Income Tax vs. M/s. The honorarium is therefore an expression of gratitude rather than payment of remuneration for the work done. If any member dies beforehand, the balance of his life membership subscription is transferred to Capital Fund . Q. The amount of fund is invested in some trusted securities for a specific period. Answer: (d) Excess of Income over Expenditure or Vice Versa 6. b) As the sale of sport materials by any sport club is considered as revenue income, so it is shown on the credit side of the Income and Expenditure Account. It is the amount that members pay regularly to keep their membership alive. General Ledger account codes 711100 to 799950. How to treat Life subscriptions and entry fee in a non-profit making organizations. Expenses. Entrance or admission fee is paid by a member while joining the organization, which is recurring and treated as income. Mention the important features of Income and Expenditure Account. Taking the above information into account prepare the Income and Expenditure Account of the Society for the year ended 31 st December 1994 and the Balance Sheet as on that date. The amount of life membership fee is initially credited to a special fund account. Entrance Fees or Admission Fees is the amount that a person pays at the time of becoming a member of a Not-for- Profit Organization. The assessee is engaged in the business of providing Corporate Finance Services, Bid Support Services and Vendor Assistance. Before you list all the things you need to account for, you need to know which ones are more important than others, and why. It is the fund that non profit organizations create for some special purpose such as construction of a new building, purchase of an equipment or machine etc. It is a voluntary payment to a person who has provided some service to the organization voluntarily. The small and recurring donations should be credited to income and expenditure account for the relevant period. 2. If a member who has paid life membership fee dies before the whole amount paid by him has been transferred to income and expenditure account, the balance should be transferred to capital fund account on the date of death. It is considered as a receipt for a NPO. The amount of subscription normally becomes due at the beginning of each accounting period. It is not accounted as income because a life member . But if the amount of donation is large and non-recurring in nature, it should be added to the capital fund of the organization. Use the Filter box and type in an account code, description or sub account code. 5,400. at 31. st. December 20X9 . From the following receipts and payments account, income and expenditure account and opening balance sheet. Life membership fees will shown in liabilities side of balance sheet. What accounting treatment is made for life membership fees, when income and expenditure account is prepared? Salary paid in advance during current year was 2,600. (i) Entrance fees received ` 20,000, Life membership fees received ` 20,000 during the year. It can also be referred to as a profit or loss account, and is a crucial financial statement that shows the businesses income and expenditures, detailing your net income or net profits. 3. Short Road Football Club . Income and expenses related to the prize fund is shown in— (A) Income and Expenditure Account (B) Assets side of the Balance Sheet (C) Liabilities side of the Balance Sheet (D) Cash Account 3. This account is credited with all earnings (both realized and unrealized) and debited with all expenses (both paid and unpaid) The . Income can be paid to you in the form of a salary or wage for work undertaken, and it ranges from gifts or pocket money (e.g. Thinking about your living costs is an important part of planning for . vi) Life Membership Fees. This account is a nominal account. 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. shown on the Liabilities side of Balance Sheet . Sometime members of the organization also provide donation in addition to their regular subscription. B. The opening capital fund is (a) Rs. For example, we have rule of 10 years as life time member and if a person donated 5,00,000 as life time membership, we will add only 50,000 per year in the income and expenditure account and balance will goes to the fund for life . The amount of outstanding subscription is adjusted in the Subscription Account by debit to Outstanding Subscription Account and that balance is shown as an asset in Balance Sheet. Where the life membership fees will be shown in income and expenditure account and in balance sheet? from your parents) to bursaries or loans, savings, interest earned on your savings and income from inheritance. It is non - recurring in nature. During the year, Rs. To profit on entertainment . Further donat ions towards this fund received during the accounting year amounted to Rs.4,300. Where the life membership fees will be shown in income and expenditure account and in balance sheet? • e Membership Fee:Lif The balance of life membership subscription of a member is carried forward till it is fully exhausted. It is considered as a receipt for a NPO. 4. Income accounts are temporary or nominal accounts because their balance is reset to zero at the beginner of each new accounting period, usually a fiscal year. Write a short note on life membership fees. Some organizations provide its members an option to pay a lumpsum amount to become members for the the whole life. What accounting treatment is made for life membership fees, when income and expenditure account is prepared? So, Life Membership Fees is a receipt of Capital nature or non-recurring amount since the members will not be required to pay the fee annually. 1) An income statement always represents a period of time like a month, quarter or a year. If a member who has paid life membership fee dies before the whole amount paid by him has been transferred to income . It represents the surplus of assets over outside liabilities of the organization. It‟s the policy of the club to spread these fees over 20 years to income. Clubtreasurer.com provides small clubs, charities and other not-for-profit organisations with a low cost, easy to use, web-based treasurer, accounting and membership solution to allow you to manage and report your organisation's cash and finances as well as track all your activities, members and memberships. The investment related to special fund is shown as asset on the assets side. 6. 18,000 (b) Rs.11,200 (c) Rs.15,800 (d) Rs. The amount credited to income & expenditure account will be: a)53,600 b) 66,400 c) 55,600 d) 64,400. In the current year, 10 new life memberships were received totaling ` 4,00,000. 3. Hence, debited to R & P Account. Life membership fees : Membership, if granted to a person for the whole life, special fee is charged from him/her, this is called life membership fees. What amount will be credited to the Income and Expenditure Account for the year ending 31st March, 2010 on the basis of the following information? (a) Life Membership Fees (b) Rent Receipt (c) Entrance fees (d) Sports expenses. It may be general or for a specific purpose. If any member dies beforehand, the balance of his life membership subscription is transferred to Capital Fund . Normally, the person providing the service does not demand a fee. However, In order to post it to the Income and Expenditure Account adjustments have to be made to the subscription as only subscription pertaining to that particular year is recorded in I/E account. Entrance Fee or Admission Fee is a revenue receipt and therefore, is accounted as an income and credited to Income and Expenditure Account. . 3,500 was s pent . How will you treat sale of an asset while preparing income and expenditure account and closing balance sheet? Each year an amount equal to annual subscription is credited to income and expenditure account till the amount in special fund is fully exhausted. lump sums paid by members and using the matching method they should be credited when received to Deferred Income account and credited to Income and Expenditure account in equal annual installments over such period as determined by the committee. But where the amount received as admission/entrance fee is large, it should be treated as capital receipt and credited to the capital fund account in the year in which it is received from the member. The contributions or fees, which are compulsory to be paid to such institution, are generally considered revenue expenditure. (a) in debit side of income and expenditure(b) in assets side of balance sheet(c) in credit side of income and expenditure(d) in liabilities side of balance sheet, (c) in credit side of income and expenditure. Deloitte Touche Tohmatsu held that expenditure incurred towards club and hotel membership fees is an allowable expense under Section 37(1) of the Income Tax Act, 1961.. A life membership fee is a Capital Receipt. Answer. By books . Each year an amount equal to annual subscription is credited to income and expenditure account till the amount in special fund is fully exhausted. We also find that none of the decisions have been challenged in this Court. It may pertain to any year. 2 is concerned, we find that a series of judgements have been passed by High Courts holding that club membership fees for employees incurred by the assessee is business expense under Section 37 of the Income Tax Act, 1961. These account codes are used to record Operating expenses. Question 6. Expenses are expenditures, often monthly, that allow a company to operate. This account is preapared by Not-for-Profit organization period. Accounting for Non-Trading Organisations and Professional Persons, Accounting for Retirement and Death of Partner, Company Accounts - Issue of Shares and Debentures, Introduction of Financial Statement of Company, Application of Electronic Spreadsheet in Accounting. Income & Expenditure Account for the year ended 31.03.2019 Balance Sheet as on 31.03.19. 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