Observation

Candidates’ performance in this question which was on posting of outstanding liabilities in the final accounts and procedures for recording income generating activity in a not-for-profit making organization was below average.
Some of the expected responses were:

Outstanding liabilities are included in the Balance Sheet in order to :

(i) recognize the full amount of liabilities in the Balance Sheet;

(ii)show the true financial position of the organization at any given time;

(iii)avoid misleading the users of the accounting information.

The procedures for recording an income generating activity of a bar in a not-for-profit-making organization:

(i)   Record all purchases relating to the activity.

(ii) Record all expenses relating to the activity.

(iii) Record sales generated from the activity.

(iv) Value the closing stock

(v) Prepare a trading account to determine the profit or loss of the activity.

(vi) Transfer the profit or loss to the income and expenditure account.