(a) Explain the following terms used in not-for-profit making organizations. i. Accumulated fund ii. Subscription in arrears iii. Receipts and Payment Accou...

(a) Terms used in not-for-profit making organisations

1. Accumulated fund: the capital of the organisation - the excess of its total assets over its total liabilities.
2. Subscription in arrears: subscriptions that are due and have been earned for the period but have not yet been received from members; treated as a current asset (income owing).
3. Receipts and Payments Account: a summarised cash book showing all cash and bank receipts and payments during the period, with opening and closing balances; it records both capital and revenue items on a cash basis.
4. Income and Expenditure Account: the equivalent of the profit and loss account; it records revenue incomes and expenses on the accruals basis to determine the surplus or deficit for the period.
5. Entrance fees: fees paid by new members on admission to the organisation.

(b) Distinction between shares and debentures

• A share is a unit of the ownership capital of a company; a shareholder is a member/owner. A debenture is a loan to the company; a debenture holder is a creditor.
• Shares earn a dividend that depends on profit (an appropriation of profit); debentures earn a fixed interest that is a charge payable whether or not profit is made.
• Shareholders have voting rights; debenture holders do not.
• Debentures are usually secured and repaid before shareholders on winding up; ordinary shareholders rank last.