During the year 2007 a club received Rs1, 00,000 as entrance fees. According to accounting policy for the club 40% of the entrance fees is to be capitalised. How will you deal with entrance fees received by NPO?

Ans.      Entrance fees Rs. 60,000 (i.e. 60% of Rs. 1,00,000) will be credited to 'Income and Expenditure Account' and Rs 40,000 (i.e. 40% of Rs. 1,00,000) will be added to capital fund in the balance sheet.