Observation

Few of the candidates who attempted this question performed poorly.  The expected answers included:

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3(a)      (i) Accumulated Fund: this is the capital of a not -for - profit making
organization. It is calculated as the difference between the total assets and total liabilities of a not-for-profit making organisation at any point in time.

(ii) Subscription in Arrears: this is the amount of subscription that is outstanding or had not been paid by a member as at the time of preparing the accounts of the club. It is classified as a current asset in the balance sheet.

(iii) Receipts and Payments Account: It is the equivalent of the cash book of a profit making organisation. The debit side shows details of opening cash/bank balances and all cash receipts while the credit side indicates all cash/bank payments and their closing balances.
(iv) Income and Expenditure Account: this is the equivalent of the Profit and Loss Account of a profit making organisation. It records only revenue expenditure and revenue receipts and it discloses a balance as surplus or deficit.
(v) Entrance Fees: These are amounts payable when a person first joins a club. These are normally included as income in the year that they are received. However, the club may capitalize it and spread it over a number of years.
3 (b)      Distinction between Shares and Debentures
Shares are fractions or proportions of members' interest or investments in a company;
While debentures are written acknowledgement of a long term loan given to a company.
- Shares attract dividends; while debentures attract fixed interest.
Holders of shares are part owners of the company; while holders of debentures are creditors to the company.
The interest payable on debentures is compulsory; while-the dividend payable on shares depends on availability of profits.