Account case of MBA student

1. A
CASE STUDY
ON
NATIONAL ASSOCIATION OF
ACCOUNTANTS (NAA)

2. Group
Members:
• Akshay Vavdiya
• Gokarn Bahadur Karkee
• Jayesh Kalal
• Hitesh Vadher
• Pranav Garge
• Sunil Sharma

3. INTRODUCTION
• NAA is non-professional organization.
• 3,000 members.
• Activities:
– Two professional journals.
– An annual meeting.
– Regional meetings.
– Representation of national accounts (elected body).
• Policies:
– Stand on its own feet.
– Expenses and revenues of the year are almost equal.
– If not, normally be made up by a dues increase in next year.
• Annual meeting in each December
– December 2005.
– Incoming and outgoing board members.

4. ESTIMATED INCOME STATEMENT
For the year ending December 31, 2005
Particulars
Dollar ($)
Revenues:
Membership dues
Journal subscriptions
Publication sales
Foundation grant
2004 annual meeting profit
Total revenues
287,500
31,000
11,900
54,000
3,400
387,800
Expenses:
Printing and mailing publications
Committee meeting expense
Annual meeting advance
Desktop publishing system
Administrative salaries and expenses
Miscellaneous
Total expenses
92,400
49,200
10,800
27,000
171,500
25,000
375,900
Surplus
11,900

5. Questions Regarding the GAAP
Principles:
•
•
•
•
Accounting Period Concept
Conservatism Concept
Matching Concept
Materiality Concept

6. Query No.1
• $54,000 cash grant by Beckwith Foundation to
be held a symposium on June 2006.
• $2,700 was spent on preliminary planning for
the symposium and was included in committee
meeting expenses.
• $54,000-unearned earning for 2005.
• $2,700 earned earning.
• Accounting period concept
• Matching concept

7. Query No. 2
• $ 27,000 spent on desktop publishing system
in December 2005.
• Balance sheet item, do not affect the income
statement
• Accounting period concept

8. Query No. 3
• Advance membership dues for year 2006
amounted $32,400 were included in 2005
revenue.
• Actual membership dues for the yeat 2005 is
( $ 287,500- $ 32,400 = $ 255,100)
• Accounting period concept
• Matching concept

9. Query No. 4
• Member directory cost of $23,200 for 2 years.
• One year member directory cost $11,600.
• Actual total printing and mailing publications
for the year 2005 is ($ 92,400 - $ 11,600 = $
80,800 )
• Accounting period concept

10. Query No. 5
• From $31,000 journal subscription revenue:
– $8,100 was advance receipt for journal delivered in
2006.
– $5,400 offsetting of revenue in 2004.
• Actual journal subscription revenue for the year
2005 is ( $31,000-$8,1000+$5,400=$28,300 )
• Accounting concept
• Matching concept

11. Query No. 6
• $10,800 advanced for annual meeting of 2005
which is used and included in committee
meeting expenses.
• Registration fees at the annual meeting were
set so as to cover all convention cost
($10,800).
• Since revenues for meeting is equal to cost,
there is no effect in income statement.

12. ACTUAL INCOME STATEMENT
For the year ending December 31,2005
Particulars
Dollar ($)
Revenues:
Membership dues
Journal subscriptions
Publication sales
Foundation grant
2004 annual meeting profit
Total revenues
255,100
28,300
11,900
2,700
3,400
301,400
Expenses:
Printing and mailing publications
Committee meeting expense
Administrative salaries and expenses
Miscellaneous
Total expenses
80,800
49.200
171,500
25,000
326,500
Deficit
25,100

13. Part 2
•The financial policy of the association was that
each year should “stand on its own feet”; that
is, expenses of the year should approximately
equal to the revenues of the year. If there was a
deficit in 2005, this amount would normally be
made up by a dues increase in 2006.
•Hence, deficit in 2005 affect the decision to
change (increase) the annual dues for 2006.

14. Any
Queries???