Pragya Madan, an Ex Indian hockey woman player decided to start a hockey academy to train young enthusiastic girls of her village with the support of her family, She started Bright Hockey Academy. On 1st April 2022. Her neighbor Ishwar died and he willed his land to start the academy. Her father 'Ramkumar' spent Rs.20,00,000 for construction of pavilion. 100 young girls joined the academy and they paid yearly of Rs.1,000 each. 10 members paid a single amount Rs.25,000 to get life membership. Hockey and balls purchased during the year amounted to Rs.27,000 Closing stock of these item is nil. Based on the above information you are required to answer the questions.
Life Membership fees of Rs.25,000 is
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → added to capital fund
Life membership fee is a lump sum paid once in place of yearly subscriptions. It is not income of one year, so it is a capital receipt, credited directly to the capital (general) fund.
Option (1) recorded on income side of Income and Expenditure A/c — Incorrect. Only revenue receipts of the year go to the income side; a lump sum for life is a capital receipt.
Option (2) Shown on assets side of Balance sheet — Incorrect. The fee received is a source of funds, shown on the liabilities side; the cash received is the asset.
Option (3) Shown on expenditure side of Income and Expenditure account — Incorrect. A fee received is never an expense.
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): |