(a) The following is the summary of cash transactions of Delhi Literary Club for the year ending 31st March 2019. Delhi Literary Club — Receipts and Payments Account for the year ending 31st March 2019 | Receipts | ₹ | Payments | ₹ | | --- | --- | --- | --- | | To Balance b/d — Cash in hand | 3,200 | By Rent and Rates | 21,000 | | To Entrance fees | 2,300 | By Lecture fees | 4,500 | | To Subscriptions | 46,000 | By Sundry Expenses | 7,200 | | To Life membership fees | 2,500 | By Fixed Deposit | 40,000 | | To Interest received on Fixed Deposit | 500 | By Balance c/d — Cash in hand | 4,300 | | To Sale of furniture (1.4.2018) (Book value ₹ 25,000) | 22,500 | | | | | 77,000 | | 77,000 | Additional Information : (i) Capital Fund as on 1st April 2018, was ₹ 63,200. (ii) At the beginning of the year, the club possessed books worth ₹ 20,000 and furniture worth ₹ 40,000. (iii) Subscription received in advance during the current year amounted to ₹ 1,000. Prepare Income and Expenditure account of the Club for the year ending 31st March, 2019 and the Balance Sheet as on that date. OR (b) From the following particulars of Siva Ltd., prepare common size income statement for the years ended 31st March 2016 and 31st March 2017. | Particulars | 2015-16 (₹) | 2016-17 (₹) | | --- | --- | --- | | Revenue from operations | 2,00,000 | 3,00,000 | | Other income | 25,000 | 75,000 | | Expenses | 2,50,000 | 1,50,000 | | Income tax | 40% | 40% |

> > [!TLDR] > (a) Delhi Literary Club has a surplus of Rs. 12,600 and a Balance Sheet total of Rs. 79,300. (b) Siva Ltd.'s common size statement shows a 2015-16 loss (net -7.5% of revenue) turning into a 2016-17 net profit of 45% of revenue. > > **PART (a) - Delhi Literary Club: Income & Expenditure A/c and Balance Sheet** > > Capital receipts (life membership fees, sale of furniture, fixed deposit) are excluded from the Income & Expenditure A/c; only revenue items are taken. Loss on sale of furniture = book value 25,000 - sale proceeds 22,500 = 2,500. Subscriptions for I&E = 46,000 received - 1,000 received in advance = 45,000. > > **Income and Expenditure Account for the year ended 31.3.2019** > > | Expenditure | Rs. | Income | Rs. | > | --- | --- | --- | --- | > | To Rent and rates | 21,000 | By Entrance fees | 2,300 | > | To Lecture fees | 4,500 | By Subscriptions (46,000 - 1,000) | 45,000 | > | To Sundry expenses | 7,200 | By Interest on fixed deposit | 500 | > | To Loss on sale of furniture | 2,500 | | | > | To Surplus (excess of income over expenditure) | 12,600 | | | > | | **47,800** | | **47,800** | > > **Balance Sheet as on 31.3.2019** > > | Liabilities | Rs. | Assets | Rs. | > | --- | --- | --- | --- | > | Capital fund 63,200 + Surplus 12,600 + Life membership fees 2,500 | 78,300 | Cash in hand | 4,300 | > | Subscription received in advance | 1,000 | Fixed deposit | 40,000 | > | | | Books | 20,000 | > | | | Furniture 40,000 - 25,000 sold | 15,000 | > | | **79,300** | | **79,300** | > > **Working:** Opening capital fund is verified: cash 3,200 + books 20,000 + furniture 40,000 = 63,200 (matches). Life membership fees 2,500 is capitalised (added to capital fund). > > **PART (b) - Siva Ltd.: Common Size Income Statement** > > Every item is expressed as a percentage of Revenue from operations (taken as 100%). > > **Common Size Income Statement for the years ended 31.3.2016 and 31.3.2017** > > | Particulars | 2015-16 (Rs.) | % of revenue | 2016-17 (Rs.) | %

(a) The following is the summary of cash transactions of Delhi Literary Club for the year ending 31st March 20

Question 19 of 48

(a) The following is the summary of cash transactions of Delhi Literary Club for the year ending 31st March 2019.

Delhi Literary Club — Receipts and Payments Account for the year ending 31st March 2019

Receipts	₹	Payments	₹
To Balance b/d — Cash in hand	3,200	By Rent and Rates	21,000
To Entrance fees	2,300	By Lecture fees	4,500
To Subscriptions	46,000	By Sundry Expenses	7,200
To Life membership fees	2,500	By Fixed Deposit	40,000
To Interest received on Fixed Deposit	500	By Balance c/d — Cash in hand	4,300
To Sale of furniture (1.4.2018) (Book value ₹ 25,000)	22,500
	77,000		77,000

Additional Information :

Capital Fund as on 1st April 2018, was ₹ 63,200.
At the beginning of the year, the club possessed books worth ₹ 20,000 and furniture worth ₹ 40,000.
Subscription received in advance during the current year amounted to ₹ 1,000. Prepare Income and Expenditure account of the Club for the year ending 31st March, 2019 and the Balance Sheet as on that date. OR

(b) From the following particulars of Siva Ltd., prepare common size income statement for the years ended 31st March 2016 and 31st March 2017.

Particulars	2015-16 (₹)	2016-17 (₹)
Revenue from operations	2,00,000	3,00,000
Other income	25,000	75,000
Expenses	2,50,000	1,50,000
Income tax	40%	40%

Puducherry TnboardTamil Nadu HSC (DGE) Commerce Board 2020Subjective· 5mImportance★★★★★

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Concept understanding — Income and Expenditure Account

An Income and Expenditure Account is the not-for-profit organisation's equivalent of a Profit & Loss Account: a nominal account prepared on the accrual basis that records only revenue incomes and expenses of the current period, and whose balance is a surplus (excess of income over expenditure) or deficit rather than profit or loss.

Convert the cash-based Receipts & Payments Account into the accrual-based Income & Expenditure Account by removing all capital items and all items of other periods, then adjusting current-period incomes/expenses for outstanding and prepaid amounts.

How it differs from Receipts & Payments

Receipts & Payments A/c = a summarised cash book: all cash received/paid, capital or revenue, current year or not.
Income & Expenditure A/c = only revenue items of the current year on accrual basis; capital receipts (donations for building, legacies, sale of assets) and capital payments (buying assets) are excluded and go to the Balance Sheet.

Preparing it (the adjustments)

Start from receipts/payments and apply accrual adjustments:

Adjustment	Treatment
Subscriptions received	+ outstanding for this year, − received in advance, − last year's arrears now received
Expenses paid	+ outstanding, − prepaid
Depreciation on assets	Debit (non-cash expense)
Bad debts / provisions	Debit

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(a) Delhi Literary Club has a surplus of Rs. 12,600 and a Balance Sheet total of Rs. 79,300. (b) Siva Ltd.'s common size statement shows a 2015-16 loss (net -7.5% of revenue) turning into a 2016-17 net profit of 45% of revenue.

PART (a) - Delhi Literary Club: Income & Expenditure A/c and Balance Sheet

Capital receipts (life membership fees, sale of furniture, fixed deposit) are excluded from the Income & Expenditure A/c; only revenue items are taken. Loss on sale of furniture = book value 25,000 - sale proceeds 22,500 = 2,500. Subscriptions for I&E = 46,000 received - 1,000 received in advance = 45,000.

Income and Expenditure Account for the year ended 31.3.2019

Expenditure	Rs.	Income	Rs.
To Rent and rates	21,000	By Entrance fees	2,300
To Lecture fees	4,500	By Subscriptions (46,000 - 1,000)	45,000
To Sundry expenses	7,200	By Interest on fixed deposit	500
To Loss on sale of furniture	2,500
To Surplus (excess of income over expenditure)	12,600
	47,800		47,800

Balance Sheet as on 31.3.2019

Liabilities	Rs.	Assets	Rs.
Capital fund 63,200 + Surplus 12,600 + Life membership fees 2,500	78,300	Cash in hand	4,300
Subscription received in advance	1,000	Fixed deposit	40,000
		Books	20,000
		Furniture 40,000 - 25,000 sold	15,000
	79,300		79,300

Working: Opening capital fund is verified: cash 3,200 + books 20,000 + furniture 40,000 = 63,200 (matches). Life membership fees 2,500 is capitalised (added to capital fund).

PART (b) - Siva Ltd.: Common Size Income Statement

Every item is expressed as a percentage of Revenue from operations (taken as 100%).

Common Size Income Statement for the years ended 31.3.2016 and 31.3.2017

| --- | --- | --- | --- | --- | …

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

CA Foundation 2025Set may-202520 marks

Q. (a) The Receipts and Payments Account of ABC Club for the year ended March 31, 2025 was as follows : [12] (Figures are in '000) Receipts Amount Payments Amount Cash in hand 150 Ground man's Fee 1,125 Balance at Bank as per Pass Book : Moving Machine 2,250 - Deposit Account 3,345 Ground Rent 375 - Current Account 900 Cost of Teas 375 Bank Interest 45 Fares 600 Donations and Subscriptions 3,900 Printing & Office Expenses 420 Receipts from teas 450 Repairs to Equipment 750 Contribution to fares 150 Honorarium to Secretary and Treasurer of 2024 600 Sale of Equipment 120 Balance at Bank as per Pass Book: Net proceeds of Variety Entertainment 1,170 - Deposit Account 4,635 Donation for forthcoming Tournament 1,500 - Current Account 225 Cash in hand 375 Total 11,730 Total 11,730 You are given the following additional information : (Figures are in '000) Particulars April 1, 2024 March 31, 2025 Subscription due 225150 Amount due for printing, etc. 150120 Cheques unpresented being payment for repairs 450390 Estimated value of machinery and equipment 1,200 2,625 Interest not yet entered in the Pass book 30 Bonus to Ground man outstanding 450 For the year ended March 31, 2025, the honorarium to the Secretary and Treasurer are to be increased by a total of ₹ 3,00,000. Prepare the Income and Expenditure Account and Balance Sheet for the period ending March 31, 2025.

Receipts	Amount	Payments	Amount
Cash in hand	150	Ground man's Fee	1,125
Balance at Bank as per Pass Book :		Moving Machine	2,250
– Deposit Account	3,345	Ground Rent	375
– Current Account	900	Cost of Teas	375
Bank Interest	45	Fares	600
Donations and Subscriptions	3,900	Printing & Office Expenses	420
Receipts from teas	450	Repairs to Equipment	750
Contribution to fares	150	Honorarium to Secretary and Treasurer of 2024	600
Sale of Equipment	120	Balance at Bank as per Pass Book:
Net proceeds of Variety Entertainment	1,170	– Deposit Account	4,635
Donation for forthcoming Tournament	1,500	– Current Account	225
		Cash in hand	375
Total	11,730	Total	11,730

Particulars	April 1, 2024	March 31, 2025
Subscription due	225	150
Amount due for printing, etc.	150	120
Cheques unpresented being payment for repairs	450	390
Estimated value of machinery and equipment	1,200	2,625
Interest not yet entered in the Pass book		30
Bonus to Ground man outstanding		450

(b) A, B and C are partners sharing profits and losses in the ratio of 2:2:1. Their Balance Sheet as on 31st March, 2024 is as follows : [8]

Liabilities	Amount ₹	Assets	Amount ₹
Trade Creditors	19,275	Land and Building	37,500
Outstanding Liabilities	2,250	Furniture	9,750
General Reserve	9,750	Closing Stock	17,625
Capital :		Sundry Debtors	8,250
A 18,000		Cash and Bank balance	1,650
B 18,000
C 7,500	43,500
Total	74,775	Total	74,775

The partners have agreed to take D as a partner w.e.f. 1st April, 2024 on the following terms :

(i) D shall bring ₹ 7,500 towards his capital and required sum of goodwill.

(ii) The value of stock should be increased by ₹ 3,750.

(iii) Provision for bad and doubtful should be provided at 10% of the debtors.

(iv) Furniture should be depreciated by 10%.

(v) The value of Land and Buildings should be enhanced by 20%.

(vi) The value of the goodwill is fixed at ₹ 22,500.

(vii) General Reserve will be transferred to the Partners' Capital Accounts.

(viii) The new profit-sharing ratio of A, B, C and D shall be 5 : 5 : 3 : 2.

(ix) The outstanding liabilities include ₹1,500 due to R has been paid by A. Necessary entry was not made in the books. You are required to prepare :

(1) Revaluation A/c

(2) Capital Accounts of the Partners.

(3) Balance sheet as at that 1st of April, 2024.

›Reveal solution

Part (a): Convert ABC Club's Receipts & Payments A/c into an Income & Expenditure A/c and Balance Sheet, adjusting for accruals, depreciation (by estimated values) and unpresented cheques → Surplus ₹60; Balance Sheet ₹7,650.

Part (b): Admit D — prepare Revaluation A/c (profit ₹9,450), Partners' Capital A/cs and the new Balance Sheet (₹94,725).

(All figures below are in ₹ '000, exactly as given in the question.)

Part (a) — Income & Expenditure A/c and Balance Sheet (12 Marks)

Step 1 — Working notes (accrual adjustments)

(W1) Subscriptions & Donations (income):

3{,}900 + 150\ (\text{closing due}) - 225\ (\text{opening due}) = 3{,}825

(W2) Printing & Office expenses:

420 + 120\ (\text{closing due}) - 150\ (\text{opening due}) = 390

(W3) Bank interest: ₹45 received + ₹30 accrued (not yet in the pass book) = 75.

(W4) Honorarium: the ₹600 paid was for 2024 (a liability outstanding at the start of the year). This year's honorarium = previous 600 + increase 300 = 900, and it remains outstanding.

(W5) Ground man: fee 1,125 + outstanding bonus 450 = 1,575.

(W6) Depreciation on machinery & equipment (revaluation/estimated-value method):

Particulars	₹
Opening estimated value	1,200
Add: Mowing machine purchased	2,250
Less: Sale proceeds of equipment	(120)
Less: Closing estimated value	(2,625)
Depreciation (balancing figure)	705

(W7) Repairs (bank-reconciliation adjustment): the R&P shows ₹750, which is the amount of cheques cleared per the pass book. Cheques actually issued this year = 750 − 450 (last year's cheques cleared now) + 390 (this year's cheques still unpresented) = 690 → this is the repairs expense.

(W8) Cash-Book bank balances (Pass Book − unpresented cheques):

Opening: (3,345 + 900) − 450 = 3,795
Closing: (4,635 + 225) − 390 = 4,470

Step 2 — Opening Balance Sheet (1 April 2024) → the Capital Fund

Liabilities	₹	Assets	₹
Creditors for printing	150	Cash in hand	150
Honorarium outstanding (2024)	600	Bank — Deposit A/c	3,345
Capital Fund (bal. fig.)	4,620	Bank — Current A/c (900 − 450)	450
		Subscription due	225
		Machinery & equipment	1,200
Total	5,370	Total	5,370

Answer — Capital Fund on 1 April 2024 = ₹4,620.

Step 3 — Income & Expenditure Account for the year ended 31 March 2025

Expenditure	₹	Income	₹
To Ground man's fee (1,125 + 450)	1,575	By Subscriptions & Donations (W1)	3,825
To Ground rent	375	By Bank interest (W3)	75
To Cost of teas	375	By Receipts from teas	450
To Fares	600	By Contribution to fares	150
To Printing & office exp. (W2)	390	By Net proceeds of variety entertainment	1,170
To Repairs to equipment (W7)	690
To Honorarium (W4)	900
To Depreciation (W6)	705
To Surplus (excess of income over exp.)	60

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