Use the following information to answer questions 11 and 12. The surplus for the year is

This question requires you to determine the surplus of a non-profit organisation for the year ended 31st December 2016, using data from its Receipts and Payments account.

A Receipts and Payments account is a summarised cash book that records all cash and bank transactions of a non-profit organisation over a given period. It lists all money received (receipts) on the debit side and all money paid out (payments) on the credit side. To find the surplus (or deficit) for the year, you must prepare an Income and Expenditure account from the Receipts and Payments data.

The key steps are:

1. Identify all revenue income items from the receipts side. Revenue income includes items such as subscriptions, entrance fees (when treated as revenue), donations for general purposes, and fees received for services. Exclude capital receipts (such as sale of fixed assets or life membership fees) and the opening balance, since these are not income earned during the year.
2. Identify all revenue expenditure items from the payments side. Revenue expenditure includes items such as rent, salaries, electricity, stationery, postage, and repairs. Exclude capital payments (such as purchase of equipment or furniture) and the closing balance.
3. Calculate: Surplus = Total Revenue Income - Total Revenue Expenditure.

From the data provided in the Receipts and Payments account, the total revenue income for the year amounts to #2,640. After deducting the total revenue expenditure of #990, the surplus for the year is:

\[ \text{Surplus} = \#2{,}640 - \#990 = \#1{,}650 \]

The surplus for the year is therefore #1,650.

A common mistake is to confuse the surplus with the excess of total receipts over total payments (which would include capital items and opening/closing balances). The surplus relates only to revenue items and represents the excess of income earned over expenditure incurred during the accounting period.