NON-PROFIT

ORGANIZATION
[ICAP Past Papers]
CAF 1: FINANCIAL ACCOUNTING & REPORTING 1
Non-Profit Organization Compiled by: Murtaza Quaid

NON-PROFIT ORGANIZATION
Question 1. [CAF 1 ICAP Past Paper, Spring 2016, Q1, 20 marks]
Seaview Club started its operations on 1 February 2015. Sponsor of the club contributed Rs. 50 million
towards general fund for the start of operations and placed the amount in the bank. Following is the
receipts and payments summary for the period from 1 February 2015 to 31 December 2015:

Additional information:
(i) The joining fee for award of membership is Rs. 50,000. Annual subscription is Rs. 24,000. All new
members pay three years’ subscription in advance. The memberships were awarded as follows:

(ii) The club sells beverages at a gross profit margin of 20%. All sales are billed in the first week of
the next month and the payment is received in the same month. Sale of beverages during
December 2015 amounted to Rs. 150,000.
(iii) 25% of total purchases of beverages made during the year remained unsold at year-end.
(iv) Salaries are paid on the first day of next month. The amount of salaries includes an advance
amounting to Rs. 10,000 paid to an employee on 1 December 2015. The advance is repayable on
1 February 2016.
(v) Rent for three years was paid in advance on 1 February 2015.
(vi) Presently the club is operating on rental premises. However, a plot of land has been purchased
on which construction would commence shortly. Title of land would be transferred after
completion of legal formalities.
(vii) Payments for utilities include security deposit paid to utility companies amounting to Rs. 20,000.
Utility bills are paid on the 7th day of the next month.
(viii) Insurance premium was paid on 1 February 2015 covering a period of 12 months.

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Non-Profit Organization Compiled by: Murtaza Quaid

(ix) Repairs and maintenance include an advance of Rs. 100,000 paid to a contractor for
construction of a parking shed. Repair bills amounting to Rs. 7,000 were outstanding at year-
end.
(x) Furniture & fixtures and van were purchased on 1 February 2015. Depreciation on these assets
is to be charged at 10% and 20% respectively.
Required: Prepare statement of financial position as at 31 December 2015 and income & expenditure
account of Seaview Club for the period ended 31 December 2015.

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Non-Profit Organization Compiled by: Murtaza Quaid

Question 2. [CAF 1 ICAP Past Paper, Spring 2017, Q1, 20 marks]

The accountant of Leisure Club was terminated on account of charges of fraud on 31 December 2016
and Mr. Emad has been appointed in his place. Emad has gathered the following information in respect
of the year ended 31 December 2016:
(i) The club has 3,300 members and the membership fee is Rs. 10,000 per annum. The fee payable
by each member becomes due on the first day of the quarter in which he became a member.
The fee received in each quarter was as follows:

Last year the fee was Rs. 9,000 per annum. However, the number of members was the same.
(ii) A summary of the bank account for the year is shown below:

(iii) Amounts paid from petty cash were as follows:

(iv) The club has a tuck shop which earns a profit margin of 20% of sales. All sales of tuck shop are
made on cash. During the year, stock costing Rs. 500,000 was destroyed by fire.
(v) The opening WDV of fixed assets was Rs. 28,000,000. Exercise equipment was purchased on 1
October 2016. Fixed assets having opening WDV of Rs. 800,000 were disposed off on 31 March
2016. Fixed assets are depreciated @ 20% under the reducing balance method.
(vi) The opening and closing balances of cash in hand were Rs. 300,000 and Rs. 25,000 respectively.
(vii) The following balances have been extracted through a scrutiny of the available records:

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Non-Profit Organization Compiled by: Murtaza Quaid

Required:
(a) Determine the amount of loss incurred by the club due to fraud committed by the previous
accountant. (09)
(b) An income and expenditure account for the year ended 31 December 2016. (05)
(c) Statement of financial position as at 31 December 2016. (06)

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Non-Profit Organization Compiled by: Murtaza Quaid

Question 3. [CAF 1 ICAP Past Paper, Spring 2020, Q5, 18 marks]

Following is the trial balance of Chongtar International Hospital as on 31 December 2019:

Additional information:
(i) Cost of closing physical inventory of medicines and hospital supplies was Rs. 25.8 million and Rs.
13.8 million respectively. Medicines costing Rs. 3.1 million were found expired. Medicines are
only used to treat the admitted patients and are not sold separately.
(ii) Year-end physical count of cafeteria inventory could not take place. Goods are sold in cafeteria
at a gross margin of 25% on sales.
(iii) Rent outstanding at year-end was Rs. 1.4 million.
(iv) 15% of salaries and 10% of rent are related to cafeteria.
(v) Hospital facilities of Rs. 48.6 million were provided free of charge to the patients.
(vi) ‘Walk on diabetes day’ was organised in December 2019. Expenses relating to the event
amounting to Rs. 1.2 million were outstanding and unrecorded at year end.

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Non-Profit Organization Compiled by: Murtaza Quaid

(vii) Medical equipment having fair value of Rs. 36.8 million were received as donation. These have
been brought into use but have not been recorded in the books.
(viii) Depreciation is charged on reducing balance method at 15% per annum.
Required:
a) Prepare income and expenditure account for the year ended 31 December 2019 (12)
b) Prepare statement of financial position as on 31 December 2019 (06)

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Non-Profit Organization Compiled by: Murtaza Quaid

Question 4. [CAF 1 ICAP Past Paper, Autumn 2021, Q8, 20 marks]

The accountant of Cereus Golf Club (CGC) was terminated on charges of fraud and you have been
assigned the task of preparing the accounts for the year ended 31 December 2020. You have found that
the proper books had not been maintained. The management of CGC has given you the following
information:
(i) Cash and bank balances at 1 January 2020 amounted to Rs. 0.5 million and Rs. 2 million
respectively. However, as on 31 December 2020, there was no cash balance and Rs. 4.2 million
in the bank.
(ii) The members are required to pay 3 years’ subscription in advance upon admission/renewal. Full
year subscription is charged from members joining during the year. Number of subscriptions
received are as under:

During 2020, 10 members were awarded membership on special permission but they had not
paid the subscription till year-end.
After year-end, 5 more members informed that they had paid the 3 years’ subscription amount
in 2020. It was found out that the amount was misappropriated by the accountant.
(iii) CGC had received a donation of Rs. 8 million in 2019 to meet the repair and maintenance
expenditure of its golf course. Out of total donation, the club has spent Rs. 2.2 million and Rs.
2.8 million in 2019 and 2020 respectively.
(iv) CGC started purchasing golf kits in 2020 for sales as well as for rent purposes. 20% of the
purchases were unpaid at year-end. Two third of the golf kit purchases made in 2020 had been
added to inventory of golf kits for sale and remaining had been added directly to golf kits for
rent.
(v) Golf kits are sold for cash at cost plus 40%. Cost of closing inventory of golf kits for sale
amounted to Rs. 1 million. It was decided to transfer half of these kits into golf kits for rent at
30% of their original cost.
(vi) Some of the receipts and payments during the year were as follows:

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Non-Profit Organization Compiled by: Murtaza Quaid

(vii) CGC has a fidelity insurance policy and any cash deficiency upto a maximum of Rs. 2 million is
recoverable under the policy.
(viii) Fixed assets at 1 January 2020 had a book value of Rs. 25 million. All fixed assets are to be
depreciated at 15% per annum.
Required:
a) Prepare income and expenditure account for the year ended 31 December 2020. (11)
b) Prepare statement of financial position as on 31 December 2020. (09)

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Non-Profit Organization Compiled by: Murtaza Quaid

Question 5. [CAF 1 ICAP Past Paper, Spring 2022, Q, 10 marks]

Following is the trial balance of Mahtab Welfare Hospital (MWH) as on 31 December 2021:

Additional information:
(i) The break-up of restricted fund balance is as follows:

(ii) Contributions received include Rs. 55 million received for construction of hospital.
(iii) During the year, MWH also received construction materials having fair value of Rs. 65 million for
the hospital building which has not been recorded in books.
(iv) MWH has completed the construction of hospital building on 1 April 2021.
(v) Depreciation is to be charged as follows:

Required: Prepare the following using deferral method:

a) Statement of income and expenditure for the year ended 31 December 2021 (04)
b) Statement of financial position as at 31 December 2021 (06)

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Non-Profit Organization Compiled by: Murtaza Quaid

Question 6. [CAF 1 ICAP Past Paper, Autumn 2022, Q3, 10 marks]

Oracle Family Club (OFC) was formed in January 2021. The following information is available in respect
of the first year of operations:
Receipt and payment account for the year ended 31 December 2021

Income and expenditure account for the year ended 31 December 2021

Additional information:
(i) OFC also operates a canteen. All sales and purchases of canteen are made for cash.
(ii) Salary of canteen’s salesman amounted to Rs. 90,000 is included in payments.
Required: Prepare OFC’s statement of financial position as on 31 December 2021.

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