(1) Capital Fund or Permanent Fund: Capital income or capitalized amounts received by an institution other than a special purpose fund are shown under this head, i.e. added to the capital fund. At output-cost the excess of output over expenditure’ is added to capital and the excess of expenditure over output’ is subtracted from capital.
Sometimes instead of adding ‘increase in output over cost’ to capital and deducting ‘increase in output over cost’, the increase at ‘output-cost’ is shown separately on the liability side in the consolidated balance sheet. That year Increase in yield” is added. ‘Increase in cost’ is deducted from it. An increase in output is also known as an ‘increase’ and an increase in expenditure as a ‘decrease’.
(2) Subscription or Membership Fees: Generally, the organization collects a fixed subscription or membership fee from its members on a regular basis every year for the continuation of membership. This is the main source of income for the organization. This income is treated as revenue income and shown on the income side of the income-expenditure account.
(3) Admission Fees or Entrance Fees: The new members of the organization have to pay admission fees or entrance fees while being admitted as members. Admission fee income is treated as capital income or revenue income as per the rules laid down in the constitution of the institution. Sometimes, as per the notification, part amount of admission fee is to be treated as capital income and part amount as revenue income. If no notification is given, the income from admission fee is treated as revenue income.
(4) Life Membership Fees : Some members get life membership by paying a lump sum fixed by the organization, instead of paying the organization fee every year. Unless otherwise instructed, a life member’s free capital is added to the capital stock in the matured balance as income.
(5) Donation: Generally, donation income is added to the capital stock as capital income. If the organization receives regular donations, it is shown on the income side of the expenditure account as revenue income. If the organization receives donations only occasionally and has not given any notice of donation, then the income from that donation is added to the capital stock in Paka Sarvaiya as capital income.
If a donation or charity is received for a particular purpose, it is shown as capital income in a specific fund separate from the liability side of capital in the balance sheet.
(6) Funds for Specific Purpose: If a donation or charity is received for a specific purpose, it is used only for that purpose. The amount of such donation is shown in a separate specified fund, not added to the capital fund in the consolidated balance sheet. E.g., President’s Honor Fund, Prize Fund, Building Fund, etc. When any expenditure is incurred on this, it is not shown in the income-expenditure; But in mature balance the liability side is deducted from the fund. For example, when funds are received for a prize, the cost of the prize is shown in the balance sheet by deducting the prize fund from the liability side. If the amount of the fund is invested in certain types of securities, the amount of interest earned is added to that fund.
If the expenditure incurred on the same is more than the amount of special tax, the excess amount shall be treated as revenue expenditure at output-expenditure is borrowed.
(7) Legacy : When some persons bequeath their property to an institution by will. That amount is added to the capital stock as capital income for the organization
