• 1 Marks

FA – Nov 2012 – L1 – SA – Q19 – Accounts of Not-for-Profit Entities

Determining the effect of omitting honorarium from the receipts and payments account.

The effect of omitting honorarium paid to the secretary from the Receipts and Payments Account of a social club is that it overstates the:

A. Asset and understates Accumulated fund
B. Accumulated fund and understates the assets
C. Assets and understates the liabilities
D. Liabilities and understates Accumulated fund
E. Asset and overstates the Accumulated fund

E. Asset and overstates the Accumulated fund

Explanation:
The correct answer is E because omitting the honorarium from the receipts and payments account means that an expense is missing, leading to an overstatement of both the assets and the accumulated fund.

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