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The amount received towards life membership fee from members is treated as a capital receipt because it is:
AReceived only from new members
BAlways spent on fixed assets
CNon-recurring in its nature
DRefundable to the members
Answer & Solution
Correct answer: C. Non-recurring in its nature
1. A life membership fee is paid once by a member for lifelong membership.
2. The textbook states that it is a capital receipt because it is non-recurring in nature.
3. Recurring receipts such as ordinary subscriptions are revenue receipts by the same reasoning.
4. Nothing in the chapter says the amount must be spent on fixed assets or is refundable, so those options add conditions the book does not state.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 2 "Accounts of Not-for-Profit Organisation", §2.4_
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