Examkin

Question

Difficulty: MediumCalculation of Accumulated Fund

The following balances were extracted from the financial records of Horizon Athletic Club as of 1st January 2024:

ItemAmount (N\text{N})
Clubhouse building500,000
Sports equipment180,000
Cash at bank45,000
Subscriptions in arrears12,000
Prepaid insurance8,000
Accrued wages15,000
Subscriptions received in advance10,000

Calculate the accumulated fund of the club as of 1st January 2024 in Naira (N\text{N}).

Answer: 720000 Naira

Answer

The accumulated fund of Horizon Athletic Club as of 1st January 2024 is N720,000.
The accumulated fund of a non-profit organization is determined by taking the total value of assets and subtracting all liabilities as of a specific date. Adding all asset balances (Clubhouse building N500,000\text{N}500,000, Sports equipment N180,000\text{N}180,000, Cash at bank N45,000\text{N}45,000, Subscriptions in arrears N12,000\text{N}12,000, and Prepaid insurance N8,000\text{N}8,000) gives total assets of N745,000\text{N}745,000. Summing liability items (Accrued wages N15,000\text{N}15,000 and Subscriptions received in advance N10,000\text{N}10,000) gives total liabilities of N25,000\text{N}25,000. Subtracting liabilities from assets results in N745,000−N25,000=N720,000\text{N}745,000 - \text{N}25,000 = \text{N}720,000.

Step-by-Step Solution

1
Calculate Total Assets as of 1st January 2024
Total Assets = N745,000
Assets comprise non-current assets (Clubhouse building N500,000; Sports equipment N180,000), current assets (Cash at bank N45,000; Prepaid insurance N8,000), and accrued income due to the club (Subscriptions in arrears N12,000).
2
Calculate Total Liabilities as of 1st January 2024
Total Liabilities = N25,000
Liabilities include expenses owing by the club (Accrued wages N15,000) and income collected for subsequent periods (Subscriptions received in advance N10,000).
3
Deduct Total Liabilities from Total Assets to compute Accumulated Fund
Accumulated Fund = N720,000
Accumulated Fund represents the capital equivalent for non-profit entities, computed as Total Assets minus Total Liabilities at the opening date.

Key Concept

Accumulated Fund in Non-Profit Organizations
Rate this question

Topics

Calculation of Accumulated Fund

More questions from this topic