Question : How much amount will be recorded in Income and Expenditure A/c If the club has 600 members each paying an annual subscription of Rs. 200. Outstanding Subscription at the end of the year is Rs. 3,000.
Option 1: Rs. 1,17,000
Option 2: Rs. 1,20,000
Option 3: Rs. 1,23,000
Option 4: Rs. 1,26,000
Correct Answer: Rs. 1,20,000
Solution :
An organization's complete accounting of all its receipts and outlays for a given fiscal year is known as an income and expenditure account. This account, which is prepared on an accrual basis, captures all income and outlays for a specific year.
Amount credited to Income and Expenditure A/c = Annual subscription X Number of members = Rs.200 X 600 = Rs.1,20,000.
Only the subscription related to the current year is recorded in Income and Expenditure A/c.
Hence, the correct option is 2.
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