A club has 400 members each paying Rs 150 a year. Subscription outstanding for the current year is Rs 300 and subscription received in advance is Rs 400. The amount credited to the income and expenditure account is:

1. Members multiplied by the annual rate already gives the full income earned for the year. 2. That is 400 members times Rs 150, which is Rs 60,000. 3. The outstanding Rs 300 is part of that Rs 60,000, simply not yet received in cash, so adding it again would count it twice. 4. The advance of Rs 400 is not income of this year at all, so it neither adds to nor reduces the Rs 60,000 figure. 5. The credit to the income and expenditure account is therefore Rs 60,000, with the outstanding shown as an asset and the advance as a liability. 6. The three wrong options are precisely the three natural mis-adjustments: adding the outstanding, adding it and deducting the advance, and deducting the outstanding. _Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 2 "Accounts of Not-for-Profit Organisation", §2.5.4(a) and Part-A exercises_