Examkin

Soru

Zorluk: Çok zorTreatment of Entrance Fees, Donations, and Legacies

Match each type of receipt in a non-profit organization with its correct accounting treatment in the financial statements.

  • Unrestricted general legacy received with no conditions attached by the testatorCredited directly to the Income and Expenditure Account as revenue income for the period
  • Specific donation received explicitly for constructing a sports pavilionCredited directly to the Special Purpose Building/Capital Fund Account in the Statement of Financial Position
  • Entrance fees received by a club whose constitution mandates total capitalizationCapitalized and credited directly to the Accumulated Fund in the Statement of Financial Position
  • Lump-sum life membership subscriptions received to cover lifelong benefitsCredited to a deferred income account and amortized to the Income and Expenditure Account systematically over members' estimated lifetime

Cevap

Unrestricted general legacies match with crediting directly to the Income and Expenditure Account; specific pavilion donations match with crediting to a Special Purpose Building/Capital Fund Account; fully capitalized entrance fees match with crediting to the Accumulated Fund; and lump-sum life membership subscriptions match with crediting to a deferred income account and amortizing over members' estimated lifetime.
The matches correctly distinguish between revenue income (unrestricted general legacies), special capital funds (specific pavilion donations), direct capital transfers to accumulated fund (constitutionally capitalized entrance fees), and deferred revenue income amortized over time (life membership fees).

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1
Analyze the nature and purpose of unrestricted general legacies.
Since no specific restriction is attached by the donor, it is treated as revenue income and credited to the Income and Expenditure Account.
General income without stipulations is available for routine operational activities.
2
Evaluate the accounting rule for specific-purpose donations.
Donations designated for capital asset creation (e.g., pavilion construction) must be capitalized in a Special Building/Capital Fund Account under liabilities/capital funds in the Statement of Financial Position.
Capital receipts intended for specific long-term assets cannot be credited to the general operational revenue account.
3
Determine the impact of constitutional directives on entrance fees.
If the club's constitution mandates 100% capitalization, entrance fees bypass the Income and Expenditure Account and are added directly to the Accumulated Fund.
Accounting treatment in non-profit entities strictly obeys constitutional provisions.
4
Identify the multi-period treatment of life membership subscriptions.
Life membership fees are recognized as deferred income (Life Membership Fund) and apportioned to the Income and Expenditure Account annually over the expected duration of membership.
This complies with the matching concept by spreading revenue across the periods in which service benefits are provided.

Anahtar Kavram

Classification of capital versus revenue receipts in non-profit organizations
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Konular

Treatment of Entrance Fees, Donations, and Legacies