Question

When cash is received for life membership,which one of the following double entries is passed ?

• A. Cash Debit and Capital/General fund Credit
• B. Life membership Debit and cash Credit
• C. Investment Debit and cash Credit
• D. Cash Credit and life membership fund Debit

Answer 1

The correct option is A Cash Debit and Capital/General fund Credit

Some organisations provide its members an option to pay a lump sum amount to become members for the whole life. The members opting for the life membership are not required to pay periodic subscription. As this is received only once it is transferred to the Capital fund Account in Balance Sheet. As cash is received, cash account is debited and it is a liability, so capital/ General fund is credited.