National association of accountants
Published on: Mar 3, 2016
Transcripts - National association of accountants
National Association of Accountants Case Analysis 1
National Association of Accountants
Income Statement For The Year Ending
December 31, 2005
Membership Dues *1
Journal Subscriptions *2
Foundation Grant(used in preliminary planning) *3
Annual Meeting Profit
Printing And Mailing Publications *4
Committee and Meeting Expenses
Administrative Salaries and Expenses
National Association of Accountants Case Analysis 2
Answers to the Questions
Ans. 1 The association has a deficit (expenses greater than revenues)
in 2005 amounting to $ 25,100
Ans. 2 According to company’s financial policy the expenses of the
year must be approximately equal to revenues of the year.
Therefore, company will have to increase the subscriptions in 2006 to
cover up deficit of 2005
*1 The membership dues of $32,400 is the revenue that the
association will earn in 2006 and incomes are recorded when they are
* 2 $8,100 of journal subscriptions have to be delivered in 2006.
Therefore, it will form part of 2006 revenue. Likewise amount of
$5400received in 2004 of subscriptions delivered in 2005 will be
included in 2005’s revenue.
*3 Foundation grant of $54,000 was given for 2006 so it will be
shown in 2006 income statement but since 2700 has been incurred as
preliminary expenses in 2005 so $2,700 will be recognized as 2005
revenue because of MATCHING CONCEPT.
*4 Printing and publication expenses are incurred for two years
therefore amount of $11,600 corresponds to 2006.
*5 Amount of $27000 spent on desktop publishing system is a capital
expenditure therefore will be dealt in balance sheet.
*6 $10,800 preliminary expenses on annual meetings effect would
have been nullified because it is mentioned that registration fees at
the meeting were set so as to cover all conventional costs