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O Level Accounting (7707)•7707/12/O/N/22
Question 24 from 7707/12/O/N/22

Explanation

Accumulated fund equation for non-profit clubs

Steps:

  • Identify the formula: Closing fund = Opening fund + Income - Expenses.
  • Rearrange for income: Income = Closing fund - Opening fund + Expenses = 16,200−16,200 - 16,200−18,000 + $9,500.
  • Calculate the net change: -$1,800 (decrease).
  • Add to expenses: 9,500−9,500 - 9,500−1,800 = $7,750 (equipment purchase is capital, not an expense, so ignored). Why A is correct:
  • $7,750 matches the formula for subscriptions as the sole income source, reflecting surplus/deficit on revenue account. Why the others are wrong:
  • B: Ignores fund decrease, overstates by adding equipment incorrectly.
  • C: Subtracts expenses from fund change, confuses outflow direction.
  • D: Adds fund decrease to expenses, treats decrease as additional income.

Final answer: A

Topic: Clubs and societies

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