Q.Which of the following is normally treated as a capital receipt in the accounts of a club, in the absence of any specific instruction?

Most one-off receipts of a club are revenue in nature because they recur as a matter of routine even if no one member repeats the payment; a legacy is the exception.

Each option must be tested against the standard rule for capital versus revenue receipts of a not-for-profit organization.

1. Subscription is the organization's regular, recurring source of income from members and is always a revenue receipt, credited to the Income and Expenditure Account after adjusting for outstanding and advance amounts.
2. Entrance fee, in the absence of a specific instruction to capitalize it, is treated as revenue, because new members are admitted every year as a matter of routine — the receipt recurs at the organization's level even though no individual member pays it twice.
3. Legacy is an amount received under the will of a person who has died — a non-recurring, one-time amount, akin to a gift to the organization's corpus rather than income for running it. It is therefore a capital receipt, added directly to the Capital Fund in the Balance Sheet.
4. Sale of old newspapers is a small, recurring item of scrap sale with no identifiable asset being written off, and is treated as revenue income.
   ✓Final answer

   (c) Legacy — it is the only option that is a capital receipt; the other three are revenue receipts credited to the Income and Expenditure Account.

Students sometimes assume every 'special' or unusually large receipt must be capital — size alone does not decide the treatment; what matters is whether the receipt is of a recurring, routine nature (revenue) or a one-time, corpus-building nature (capital).