Students can Download Chapter 1 Accounting for Not For Profit Organisation Questions and Answers, Plus Two Accountancy Chapter Wise Questions and Answers helps you to revise the complete Kerala State Syllabus and score more marks in your examinations.
Kerala Plus Two Accountancy Chapter Wise Questions and Answers Chapter 1 Accounting for Not For Profit Organisation
Plus Two Accountancy Accounting for Not For Profit Organisation One Mark Questions and Answers
The Receipts and payments account is a_______.
(a) Real Account
(b) Nominal Account
(c) Personal Account
(d) Impersonal Account
(a) Real Account
The Revenue account prepared by not-for-profit organisation is called.
(a) Receipt and Payment A/c
(b) Profit and Loss A/c
(c) Income and Expenditure A/c
(d) Statement of affairs
(c) Income and Expenditure A/c
income and Expenditure A/c is prepared in order to ascertain_______.
(a) Profit or Loss
(b) Surplus or deficit
(c) Cash in hand and at bank
(d) Assets and Liabilities
(b) Surplus or deficit.
The Receipts and payment account contains______.
(a) Capital receipts and payments only
(b) Revenue receipts and payments only
(c) All receipts and payments
(d) Petty receipts and payments only
(c) All receipts and payments.
Income and Expenditure A/c is a______account.
Income and Expenditure A/c records transactions of______nature.
(c) Both revenue and capital
Choose odd one and give reasons.
(a) Tsunami arts and club
(b) Tsunami trading company
(c) Tsunami artis club
(d) Tsunami library
(b) Tsunami trading company is a trading organisation, all others are non-trading organisation.
______represents the excess of the assets over liabilities.
The excess of income over expenditure is called______.
The amount received by a Non-profit organisation as per the will of a deceased person is called____.
Receipts and payments A/c is maintained under_____system of accounting.
Specific donation is a______receipt.
Plus Two Accountancy Accounting for Not For Profit Organisation Two Mark Questions and Answers
Define Receipts and Payment Account.
Receipts and Payment account is “a statement prepared at the end of an accounting year giving a summary of all receipts and payments recorded in cash book.” It is debited with all items of receipts and credited with all payments.
What are the difference between cash book and Receipts and payment A/c?
The difference between Receipts and Payment A/c and cash book are as follows.
|Receipts and Payment A/c||Cash Book|
|1. Entries are not made date-wise
2. All entries are made in classified form
3. This accounts is opened by non-trading concern only.
|1. All entriess are made date-wise
2. All entries are made in detail
3. This account is opened in both trading and non-trading concerns.
What do you mean by Income and Expenditure Account?
An Income and Expenditure Account is a nominal account prepared by a not-for-profit organisation, in order to ascertain the surplus or deficit by recording revenue items of the particular period. It isparepared in the form of profit and loss account.
State whether the following expenditure is revenue or capital. Give reasons for your answers.
- The advertising expenditure, the benefit of which will last for 5 years.
- Registration fee paid at the time of purchase of a building.
1. Revenue Expenditure / Deferred Revenue Expenditure:
Advertising expenditure is not written off completily to the profit and loss account of the accounting year during which it is incurred. It is spread overa number of years whose benefit is likely to be received.
2. Capital Expenditure:
Any amount spent on acquistion of an asset or for increasing the nature of an asset is called capital expenditure. Registration fee paid is a capital expenditure.
How will you treat Entrance fees in Income and Expenditure Account?
The fee charged for admitting a person as a member in an institution is called admission fee or entrance fee. It is paid only once by the member, it is not of a recurring nature and should not be treated as income. There is another argument that though each member pays it only once, the institution receives it every year when new admission take place.
Therefore, it can be treated as revenue income. Here again if there is specific instruction to treat the entire or a portion of the amount as capital the relevant amount should be taken to Balance Sheet.
Plus Two Accountancy Accounting for Not For Profit Organisation Three Mark Questions and Answers
What are the Accounting records of not-for-profit organisation?
- Not-for-profit organisation usually keep ‘a cash book’ in which all receipts and payments are recorded.
- They maintain ‘a ledger’ containing the accounts of all incomes, expenses, assets, and liabilities which facilities the preparationof financial state¬ments at the end of the accounting year.
- The final accounts of a non-profit organisation con¬sist of the following:
- Receipts and payment Account
- Income and Expenditure Account
- Balance sheet
What are the procedure for preparing Balance sheet of not-for-profit organisation?
Procedure for preparation of Balance sheet:
The balance sheet of a not-for-profit organisation is prepared as in any other organisation contains particulars of assets and liabilities on the date on which it is prepared.
The excess of assets over liabilities is called capital fund or general fund and it increase with surplus of income over expenditure and also certain other items which are capitalised. If the opening capital fund is not given, then the opening balance sheet is prepared in order to know the opening fund.
From the given particulars ascertain the amount to be credited to income and expenditure account for the year ending 31.12.08.
Subscription received during the year – Rs. 18,000
Subscription outstanding oh 31.12.08 – Rs. 1,000
Subscription received in advance on 31.12.08 – Rs. 1,200
Subscription received in advance on 31.12.07 – Rs. 700
Subscription outstanding on 31.12.07 – Rs. 100 of which Rs. 900 were received in 2008.
Calculate expenses incurred for the year2009 from the following particulars.
|Expenses paid during 2009||950|
|Expenses outstanding 1.1.2009||300|
|Expenses outstanding on 31.12.2009||450|
|Expenses paid in advance on 1.1.2009||200|
|Expenses paid in advance on 31.12.2009||300|
From the following, calculate the amount to be shown in the Income and expenditure account, in respect of stationery. Payment made for stationery during the year Rs. 700. Stock of stationery on the opening date and closing date Rs. 50 and 90 respectively. Amount due for stationery bought during the year Rs. 140.
Subscription received by Anuragha sports club during 2008 amounted to Rs. 25,400, which included Rs. 2,500 received in arrears forthe year2007 and Rs. 4,200 received in advance for 2009. It is found that Rs. 4000 has not been received for the current year (2008) and that Rs. 2,400 was received in advance in 2007 as subscription for 2008. Calculate income from subscription for the year 2008.
How will you treat with the following items while preparing final accounts of a Non-profit organisation?
Trial Balance as on 31.12.2007
Match Fund Investment and match fund bank balance – Rs. 95,000 and Rs. 4,500 will be shown on the assets side of the balance sheet. The match fund will be shown on the liability side of the Balance sheet as follows:
Match Fund – 1,00,000
Add Interest on match fund investments – 4,000
Less Match expenses – 4,500
Match Fund Balance – 99,500
How will you deal with the following items while preparing for Bombay Criket Club, its Income and Expenditure A/c and Balance sheet for 2008?
Tournament Investments Rs. 25,000/- will be shown on the assets side of the balance sheet. The tournament fund will be shown on the liability side of the balance sheet as follows:
From the following information find out the total amount of subscription to be credited to Income and Expenditue A/c for the year ending 31.12.2004.
- Subscription received during the year 2004 – 22,000
- Subscription outstanding on 31.12.2003 – 1200
- Subscription outstanding on 31/12/2004 – 2400
- Subscription received in advance on 31.12.2004 – 2600.
- Subscription received in advance on 01.01.2004 – 3200.
From the following data, find out the total amount of rent to be debited for the Income and Expenditure Account for the year ending 31.12.2004.
|Rent paid during the year||2500|
|Rent outstanding on 31.12.2004||400|
|Rent paid in advance on 31.12.2004||300|
|Rent outstanding on 31.12.2003||250|
|Rent paid in advance on 31.12.2003 paid in advance on 31.12.2009||300|
How will you deal with the following items while preparing income and expenditure account for the year ending March 2016 in respect of XYZ Club:
Locker rent received during the year 2015 – 16 Rs. 75,000.
Show how will you deal with the following items in the final accounts of a not-for-profit organisation?
|Interest of Prize fund investment||6000|
|Prize Fund investment||60000|
|Donation for prize fund||25000|
Plus Two Accountancy Accounting for Not For Profit Organisation Five Mark Questions and Answers
Define a not-for-profit organisation and mention its features.
Not-for-profit organisation is an entity intended to render services to the members of the public without any intention of profit”
eg: sports and arts club, Hospitals, Libraries charitable institutions, etc.
- Their main objective is to render services to members and to the public.
- They are not expected to earn profit.
- They donot normally engage in trading activities.
- Credit transactions are not usually made.
- Such concerns keep only cash book to record daily transactions.
- They prepare a summary of cash book at the end called Receipts and payments A/c.
- No trial balance is prepared.
- Do not prepare trading, profit and loss A/c, but prepare Income and Expenditure A/c.
What are the steps involved in the preparation of Receipts and payment Account?
Procedure for preparation of Receipts and payments account as follows.
1. This account always starts with opening balance of cash in hand and cash at bank, cash in hand always has a debit balance and hence appears on the debit side as the first item. Cash at bank has either a debit balance or a credit balance (overdraft).
2. All receipts made in cash during the accounting year will be shown on the debit side and all cash payments made during the accounting year are shown on the credit side.
3. Only actual cash receipts and cash payments are recorded in this account.
4. At end of the accounting period, this account is balanced and it shows the closing balance of cash in hand and at bank or bank overdraft, as the case may be.
From the following Receipts and Payment account, show subscription to be shown in Income and Expenditure Account for the year ending 31.03.2010 and relevant item in the Balance Sheet as at 31.03.2010.
Receipts and Payments Account (an extract) (for the year ended 31.03.2010)
The charitable trust has 1000 members each paying Rs.200 as annual subscription. Outstanding subscription as on 31.03.2009 was Rs. 27000/-.
Balance sheet as on 31.03.2010:
The following is the Receipts and Payments A/c of Neelgiri club forthe yearended 31.12.2007.
Receipts and Payments Account:
The club has 100 members each paying an annual subscription of Rs.100. On 1.1.2007, Stock of stationery was for Rs. 75 and 31.12.07 stock is valued at Rs.125. On 1.1.2007, furniture was valued at Rs. 5,000. Provide depreciation on furniture @ 20% p.a.Prepare Income and Expenditure A/c for the year ended 31.12.2007.
Income and Expenditure Account for the year ended 31.12.2007
Mention the difference between receipts and payment account and Income and Expenditure Account.
|Receipts and payment A/c||Income & Expenditure A/c|
|1. It is a real account||1. It is a nominal account|
|2. It is a summary of cash book||2. It is like a profit and Loss A/c|
|3. Its debit side shows receipts and credit side shows payments||3. Debit side shows expenses and credit side shows income and gians.|
|4. It starts with an opening balance of cash/bank||4. It does not start with cash/ bank balance|
|5. It records both revenue and capital items||5. It records only revenue items.|
|6. Adjustments are not made||6. Adjustments are made|
|7. objective is to ascertain the balance of cash in hand or cash at bank||7. Objective is for knowing surplus or deficit.|
|8. Its closing balance is carried to the succeeding year||8. Its balance is transferred to capital fund.|
|9. Includes receipts and payments for current year, previous year and next year.||9. Includes items relating to current year only.|
|10. lt is prepared on cash system||10. It is prepared as mercantile system|
What are the steps involved in the preparation of income and Expenditure Account?
While preparing an Income and Expenditure account, the following points are to be considered.
- This account is prepared usually in “T” form taking revenue expenses on the debit side and the revenue incomes on the credit side.
- It is also prepared in vertical form. Under this method, the total of revenue incomes are shown first, revenue expenses follow it. After this, the total of expenses is deducted from the total of the incomes for ascertaining the surplus or deficit.
- It is prepared to find out the current year’s surplus or deficit, it does not have any opening balance. Therefore, previous year’s surplus or deficit is not important.
- This account takes only the revenue incomes and revenue expenses. Capital receipts and payments are not taken into account.
- Since it is maintained under accrual basis, current year’s income and expenditures alone are shown.
- Outstanding expenses, accrued incomes, prepaid expenses, income received in advance, depreciation, provision, etc. in the current year are to be suitably adjusted.
- At the end of the accounting year the income and expenditure account is balanced and it reflects either a surplus or a deficit which is transferred to capital fund.
Explain the treatment of the following items by a not- for-profit organisation:
- Life membership
- Endowment fund
Donation appears on the receipt side of the receipts and payment Account. Donation can be for specific purposes or for general purposes.
If donation received is to be utilised to achieve specified purpose, it is called specific donation. The specific purpose donation is to be capitalised and shown on the liabilities side of the balance sheet irrespective of the fact whetherthe amount is big or small.
Donations are to be utilised to promote the general purpose of the organisation, it is called general donation. These are treated as revenue receipts as it is a regular source of income, hence it is taken to income side of the income and expenditure account of the current year.
The amount received by a non-profit organisation as perthe will of a deceased person is called legacy. It appears on the receipts side of the Receipt and Payment Account and is directly added to capital found or general fund in the balance sheet. If the legacies of a small amount may be treated as income and shown on the income side of the income and expenditure account.
3. Life membership:
Fees some members prefer to pay lumpsum amount as life membership fee instead of paying periodic subscription. Such amount is treated as capital receipt and credited directly to the capital fund or general fund.
4. Endowment fund:
It is a capital receipt and shown on the liabilities side of the Balance sheet as an item of a specific purpose fund.
How will you treat the following items by a not-for- profit organisation?
- Sale of periodicals
- Payment of Honorarium
- Special fund
- Government Grant
1. Sale of Periodicals:
It is an item of recurring nature and shown as the income side of the income and expenditure a/c.
2. Payment of Honorarium:
It is the amount paid to the person who is not the regular employee of the institution. This amount is shown on the expenditure side of the income and expenditure a/c.
3. Special fund:
The special fund such as prize fund, match fund, sports fund, etc. are invested in securities and income from such investment is added to the respective fund and the expenses incurred on such specific purposes are deducted from the specific fund. Special funds are shown on the liability side of the balance sheet.
4. Government fund:
The recurring grants (maintenance grant) by the government is treated as revenue receipt (income) and credited to income and expenditure a/c. Grants such as building grant are treated as capital receipt.
Plus Two Accountancy Accounting for Not For Profit Organisation Eight Mark Questions and Answers
From the following Receipts and payments Accounts and additional information relating to Soorya Arts Club, prepare Income and Expenditure Account forthe year ending 31.03.2006 and a Balance Sheet on that date.
Receipts and Payments Account For the year ending 31.3.2006
- Depreciation on furniture at 10% p.a.
- On 31.3.2006 locker rent receivable was Rs.60, outstanding wages was Rs. 150, and Rs. 500 due for subscriptions.
- On 1.4.2005 the club owned furniture worth Rs. 2,000 and subscription in arrears on that date was Rs. 400.
- 75% of the entrance fee should be capitalised
Income and Expenditure Account for the year ended 31.03.2006:
Note: Subscription = 4000 + 500 = 4500
Depreciation = 1000 × 10/100 × 6/12 + 2000 × 10/100 = 250
Interest on investment = 6000 × 10/100 × 9/12 = 450
Balance sheet as at 1.4.2005:
Balance Sheet as on 31/03/2006:
The following is the Receipts and Payments A/c of the Lions Club for the year ended 31.3.2005.
- Salaries and wages outstanding Rs. 450, the figures on 1.4.2004 being Rs. 270.
- Miscellaneous expenses outstanding on 31.3.2005 amounts to Rs. 720 and paid in advance on 1.4.2004 amounted to Rs. 110.
- Subscription outstanding on 1.4.2004 were Rs. 600, subscription outstanding forthe current year amounts to Rs. 900 as on 31.3.2005.
- On 1.4.2004, there was furniture with a book value of Rs. 5,000 and is subject to a depreciation of 10%. Prepare Income and Expenditure Account for the year ended 31.3.2005 and a Balance sheet as on that date.
Income and Expenditure a/c for the year ended 31/03/05:
Balance Sheet as on 1.4.2004:
Balance Sheet as on 31.3.2005:
The Income and Expenditure Account of Adithya Club for the year ending 31.12.2006 is given below.
Income and Expenditure Account for the year ending 31.12.2006
The accounts has been prepared after the following adjustments.
The club owned a building since 2005 Rs. 20,000. On 31.12.2005 the club had furniture worth Rs. 1000. At the end of the year 2006, the firm had furniture worth Rs. 1,800 after providing depreciation. Cash in hand on 31.12.2006 is Rs. 15,500.
You are required to prepare receipts and payments account of the club for 2006 and the Balance sheet as on 31.12.2006.
Receipts and payments account for the year ended 31.12.2006
Balance sheet as on 1.1.2006
Balance sheet as on 31.12.2006
Following is the receipt and payment Account of central club in respect of the year 31.03.2016.
Receipt and Payment Account for the year ending 31.3.2016
- There are 500 members, each paying an annual subscription of Rs. 50, Rs. 17500 being in arrears for 2014-2015 at the beginning of 2015-2016. During 2014-2015, subscriptions were paid in advance by 40 members for 2015-2016.
- Stock of stationary at 31/3/2015, was Rs.1500 and 31/3/2016 Rs. 2000.
- At 31/3/2016, the rates and taxes were prepaid to the following January 31, the annual charge being Rs.1500.
- A quarter’s charge for telephone is outstanding, the amount accrued being Rs.1500. There is no change in quarterly charge.
- Sundry expenses accruing at 31.3.2015 were rs. 250 and at march 31,2016 Rs.300.
- At march 31,2015 Building stood in the books at Rs. 2,00,000 and it is required to write off depreciation @ 10% p.a.
- Value of 8% Govt, securities at march 31,2015 was Rs. 75,000 which were purchased at that date at par. Additional Govt, securities worth Rs. 25,000 are purchased on 31/3/2016.
You are required to prepare:
- An income and expenditure Account for the year ended 31/3/2016
- A balance sheet on the date.
Income and Expenditure Account for the year ending on 31/3/2016
Balance sheet as on 31/3/2015
Balance sheet as on 31/3/2016