Multiple choice

An annual affiliation fee of Rs. 25,000 has been paid by a club for the affiliation it made with an organisation. The fee was paid on 30th June, 2014. How will it be shown in the accounts of the club in the income statement and balance sheet for the year ending 31st March, 2015?

  1. Rs. 25,000 paid will be shown on the assets side of the balance sheet.

  2. Rs. 25,000 paid will be shown on the expenditure side of the income and expenditure account.

  3. Rs. 12,500 paid will be shown on the expenditure side of the income and expenditure account and Rs. 12,500 will be shown on the assets side of the balance sheet.

  4. Rs. 18,750 paid will be shown on the expenditure side of the income and expenditure account and Rs. 6250 will be shown on assets side of the balance sheet.

  5. Rs. 18,750 paid will be shown on the expenditure side of the income and expenditure account and Rs. 6250 will be shown on the liabilities side of the balance sheet.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The fees up till 31st March stands for 9 months, which is 25,000 * 9/12, i.e. Rs. 18,750 and the rest of Rs. 6250 paid in advance is an asset.

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