A

CASE STUDY

ON

NATIONAL ASSOCIATION OF

ACCOUNTANTS (NAA)

Group Members:

•Akshay Vavdiya•Gokarn Bahadur

Karkee•Jayesh Kalal•Hitesh Vadher•Pranav Garge•Sunil Sharma

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.

ESTIMATED INCOME STATEMENTFor the year ending December 31, 2005

Particulars Dollar ($)

Revenues:Membership duesJournal subscriptionsPublication salesFoundation grant2004 annual meeting profitTotal revenues

287,50031,00011,90054,0003,400

387,800

Expenses:Printing and mailing publicationsCommittee meeting expenseAnnual meeting advanceDesktop publishing systemAdministrative salaries and expensesMiscellaneousTotal expenses

92,40049,20010,80027,000

171,50025,000

375,900

Surplus 11,900

Questions Regarding the GAAP Principles:

• Accounting Period Concept• Conservatism Concept• Matching Concept• Materiality Concept

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

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

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

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

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

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.

ACTUAL INCOME STATEMENTFor the year ending December 31,2005

Particulars Dollar ($)

Revenues:Membership duesJournal subscriptionsPublication salesFoundation grant2004 annual meeting profitTotal revenues

255,10028,30011,9002,7003,400

301,400

Expenses:Printing and mailing publicationsCommittee meeting expenseAdministrative salaries and expensesMiscellaneousTotal expenses

80,80049.200

171,50025,000

326,500

Deficit 25,100

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.

THANK YOU.

Any Queries???