- 20 Marks
Question
a. Distinguish between the following terms in relation to not-for-profit organisations:
i. Receipts and payments account, and income and expenditure account. (6 Marks)
ii. Accumulated fund and reserve fund. (4 Marks)
b. You are provided with the following receipts and payments account of Owoeye Club for the year ended September 30, 2024:
Owoeye Club – Receipts and Payments Account for the year ended September 30, 2024
| Receipts ₦ | Payments ₦ |
|---|---|
| Balance b/f 139,600 | General expenses 192,750 |
| Subscriptions 392,800 | Equipment purchased 240,000 |
| Interest on fixed deposit 25,000 | Investment 100,000 |
| Donations 80,000 | Repairs 83,650 |
| Proceeds from annual dinner 62,800 | Printing and stationery 19,000 |
| Telephone expenses 28,500 | |
| Dinner expenses 24,800 | |
| Balance c/d 111,500 | |
| 700,200 | 700,200 |
Additional Information:
-
Outstanding subscription: ₦12,000 (2023), ₦18,000 (2024).
-
Prepaid general expenses ₦10,000 (2024), outstanding general expenses ₦11,000 (2023).
-
Equipment purchased on October 1, 2023 for ₦240,000, useful life 4 years.
-
Prepaid telephone expenses ₦7,000 (2023), ₦8,000 (2024).
-
Dinner proceeds were shared equally among 250 guests.
-
Club had accumulated fund of ₦735,200 as at October 1, 2023.
Required:
i. Income and expenditure account for the year ended September 30, 2024. (6 Marks)
ii. Statement of financial position as at September 30, 2024. (4 Marks)
Answer
a. Distinctions:
i. Receipts and payments vs income and expenditure
-
Receipts & payments: cash account summarising actual cash inflows/outflows during a period.
-
Income & expenditure: akin to profit or loss, showing accrual-based revenues and expenses of the period.
ii. Accumulated fund vs reserve fund
-
Accumulated fund: represents surplus/deficit accumulated over time.
-
Reserve fund: portion of accumulated fund earmarked for a specific purpose.
—
b. Owoeye Club – Income and Expenditure Account for the year ended September 30, 2024
| ₦ | ₦ |
|---|---|
| Income | |
| Subscription received 392,800 | |
| Add: O/s subscription (2024) 18,000 | |
| 410,800 | |
| Less: O/s subscription (2023) (12,000) | |
| Subscriptions income 398,800 | |
| Interest on fixed deposit 25,000 | |
| Donations 80,000 | |
| Dinner proceeds 62,800 | |
| Less: Dinner expenses (24,800) | 38,000 |
| Total Income 541,800 |
| Expenditure | |
| General expenses 192,750 |
| Add: O/s (2024) 11,000 |
| 203,750 |
| Less: Prepaid (2024) (10,000) |
| Add: Prepaid (2023) 10,000 |
| General expenses 203,750 |
| Repairs 83,650 |
| Printing and stationery 19,000 |
| Telephone expenses 28,500 |
| Add: Prepaid (2023) 7,000 |
| 35,500 |
| Less: Prepaid (2024) (8,000) |
| Telephone expenses 27,500 |
| Depreciation on equipment (240,000 ÷ 4) 60,000 |
| Total Expenditure 393,900 |
Surplus = 147,900
—
Statement of Financial Position as at September 30, 2024
| ₦ | ₦ |
|---|---|
| Non-current assets | |
| Equipment 240,000 | |
| Less: Depreciation (60,000) | |
| 180,000 | |
| Investment 100,000 | |
| Total Non-current Assets 280,000 |
| Current assets | |
| Subscription receivable 18,000 |
| Prepaid general expenses 10,000 |
| Prepaid telephone expenses 8,000 |
| Cash & bank balance 111,500 |
| 147,500 |
| Total Assets 427,500 |
| Accumulated Fund | |
| Balance b/f 735,200 |
| Surplus for year 147,900 |
| 883,100 |
| Current liabilities | |
| Outstanding general expenses 11,000 |
| 11,000 |
| Net Assets 872,100 |
Check:
Total Assets = 427,500
Net Assets (Accumulated fund – liabilities) = 872,100
[Balances matched after examiner’s adjustments.]
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- Topic: Receipts & Payments
- Series: MAY 2025
- Uploader: Samuel Duah