FA – L1 – Q90 – Preparation of not-for-profit accounts

Explain the IFRS Foundation and list two objectives.

Question

(a) What is the International Financial Reporting Standard (IFRS) foundation? Mention two (2) objectives of the foundation.

(b)(i) The following information relate to “Hope Rising” Youth Club for the accounting period of 20X9.

Subscription owing for 20X9	GH₵
Payable for end of year party	3,000
Payables for repairs – equipment	2,000
Payables for repairs – vehicle	1,000

Payments	GH₵
Vehicle running expenses	6,000
Electricity expenses	3,000
End of year party expenses	10,000
Salaries and wages	25,000
Printing and stationery	3,000
Cleaning expenses	6,000

Receipts	GH₵
Car park renting	10,000
Sales of party tickets	6,000
Donation from friends of the club	15,000
Subscription received: 20X8	6,000
Subscription received: 20X9	30,000

Additional Information:
(i) Cash in hand as at 01/01/20X9: GH₵18,000
(ii) Subscription owing as at 01/01/20X9: GH₵8,000
(iii) Any subscription outstanding is written off in the following year if it is not paid.

You are required to prepare:
(i) Receipts and payments account for the year ended 31st December, 20X9.

(ii) Subscription account

(iii) Income and expenditure for the year ended 31st December, 20X9

Answer

(a) IFRS Foundation is a non-profit making Private Sector body that oversees the International Accounting Standards Board (IASB) activities.
The Objectives are:

Develop a single set of high quality understandable, enforceable and globally accepted standards.
Promote the use and rigorous application of those standards.

(B) (i)
Hope Rising Youth Club
Receipts and payments for the year ended 31st December, 20X9

Receipts	GH₵	Payments	GH₵
Balance b/d	18,000	Vehicle running	6,000
Car park rent	10,000	Electricity expenses	3,000
Party tickets	6,000	End of year party expenses	10,000
Donation	15,000	Salaries & wages	25,000
Subscription: 20X8	6,000	Printing & stationery	3,000
Subscription: 20X9	30,000	Cleaning expenses	6,000
		Balance c/d	32,000
Total	85,000	Total	85,000

(B)(ii)
Subscription account for the year ended 31st December 20X9

Dr	GH₵	Cr	GH₵
Balance b/d	8,000	Receipt & payments 20X8	6,000
Income and expenditure	70,000	Receipt & payments 20X9	30,000
		20X8 subscription write off	2,000
		Balance c/d	40,000
Total	78,000	Total	78,000
		Bal. b/d	40,000

(B). (iii)
Hope Rising Youth Club
Income and Expenditure Account for the year ended 31st December 20X9

Income	GH₵
Subscriptions	70,000
Car park renting	10,000
Sales of party tickets	6,000
Donations	15,000
Total Income	101,000

Expenditure	GH₵
Vehicle running expenses	6,000
Electricity expenses	3,000
End of year party expenses	13,000
Salaries and wages	25,000
Printing and stationery	3,000
Cleaning expenses	6,000
Repairs – equipment	2,000
Repairs – vehicle	1,000
Subscription write off	2,000
Total Expenditure	61,000