Q.A club received a legacy of ₹50,000 during the year ended 31.3.2025. Show how this item will be treated in the final accounts of the club.
Reasoning. A legacy is an amount that a club or society receives under the will of a person who has died. It is a non-recurring, windfall receipt, not connected with the club's regular activities of providing services to members, and is therefore in the nature of a capital receipt rather than income.
Treatment. The ₹50,000 legacy is added directly to the Capital Fund shown on the liabilities side of the Balance Sheet as on 31.3.2025. It does not pass through the Income and Expenditure Account at all, and so has no effect on the surplus or deficit computed for the year.
(If a question specifically describes a legacy as a small, recurring amount meant for meeting revenue expenses, that stated fact would override the general rule and it would instead be credited to the Income and Expenditure Account — but that is the exception, not the default.)
₹50,000 is a capital receipt, added directly to the Capital Fund in the Balance Sheet; it is not shown in the Income and Expenditure Account.
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