Identify, which one of the following will be posted in the Income and…

Identify, which one of the following will be posted in the Income and Expenditure Account?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Subscription

Only revenue items go to the Income and Expenditure Account. Subscription is the yearly membership fee and the main regular income of the organisation, so it is shown on the income side. Specific donations, life membership fees and specific legacies are capital receipts.

Option (1) Donation for Building — Incorrect. A specific donation is capitalised and shown on the liabilities side of the Balance Sheet.

Option (3) Life Membership Fees — Incorrect. It is a capital receipt credited to the capital fund.

Option (4) Legacy for library — Incorrect. A legacy for a stated use is a specific legacy, shown as a liability in the Balance Sheet.

Note: This question is from the pre-rationalised NCERT book. The topic is not there in the latest NCERT book (2026-27), but it is still in the CUET 2026 syllabus, so do not skip it.

NCERT (Pre-rationalised edition):
Subscriptions – “Subscription is a membership fee paid by the member on annual basis. This is the main source of income of such orgnisations. Subscription paid by the members is shown as receipt in the Receipt and Payment Account and as income in the Income and Expenditure Account.”

NCERT (Pre-rationalised edition):
Specific Donations – “If donation received is to be utilised to achieve specified purpose, it is called Specific Donation. The specific purpose can be an extension of the existing building, construction of new computer laboratory, creation of a book bank, etc. Such donation is to be capitalised and shown on the liabilities side of the Balance Sheet irrespective of the fact whether the amount is big or small.”

NCERT (Pre-rationalised edition):
Life Membership Fees – “Some members prefer to pay lump sum amount as life membership fee instead of paying periodic subscription. Such amount is treated as capital receipt and credited directly to the capital/general fund.”

NCERT (Pre-rationalised edition):
Legacies – “It is the amount received as per the will of a deceased person who may or may not specify the use of the amount. Legacies, use of which is specified are specific legacy and is shown in the balance sheet as liability. If the use is not specified it is considered as revenue nature and credited to income and expenditure account.”