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Accounting for Not for Profit Organisation Class 12 MCQs Questions with Answers
I. State which of the following is correct.
Question 1.
Receipts and Payments A/c is the summary of a:
(a) Cash Book
(b) Sales Book
(c) Purchases Book
(d) Journal
Answer
Answer: (a) Cash Book
Question 2.
Subscriptions received in advance during the accounting year is:
(a) An Income
(b) An Expense
(c) An Asset
(d) A Liability
Answer
Answer: (d) A Liability
Question 3.
Income and Expenditure A/c is of the nature of:
(a) Trial Balance
(b) Deficit A/c
(c) P & L A/c
(d) Balance Sheet
Answer
Answer: (c) P & L A/c
Question 4.
Cash received by converting an asset into cash is reflected in:
(a) Conversion A/c
(b) Receipts and Payments A/c
(c) Contract A/c
(d) Suspense A/c
Answer
Answer: (b) Receipts and Payments A/c
Question 5.
If the credit side of Receipts and Payments A/c exceeds the debit side, the balance represents:
(a) Bank charges
(b) Commission
(c) Bank overdraft
(d) Interest
Answer
Answer: (c) Bank overdraft
Question 6.
No cash transaction will be excluded from:
(a) Balance Sheet
(b) Profit & Loss A/c
(c) Receipts and Payments
(d) Income and Expenditure A/c
Answer
Answer: (c) Receipts and Payments
Question 7.
In Receipts and Payments A/c, cash in hand or at the bank is put on:
(a) Credit side
(b) Left-hand side
(c) Right-hand side
(d) None of these
Answer
Answer: (b) Left-hand side
Question 8.
The task of preparing Income and Expenditure A/c and the Balance Sheet commences after the preparation of the:
(a) Trial Balance
(b) Profit and loss A/c
(c) Trading A/c
(d) Cash A/c
Answer
Answer: (d) Cash A/c
Question 9.
In Income and Expenditure A/c all revenue expenses are entered on:
(a) Assets side
(b) Left-hand side
(c) Liabilities side
(d) Right-hand side
Answer
Answer: (b) Left-hand side
Question 10.
In the Income and Expenditure Account all revenue receipts are entered on:
(a) Assets side
(b) Left-hand side
(c) Right-hand side
(d) Liabilities side
Answer
Answer: (c) Right-hand side
II. Fill in the blanks with the correct word.
Question 11.
Excess of incomes over expenditure is known as _________
Answer
Answer: Surplus
Question 12.
The difference in the balance sheet at the beginning of the year is known as _________
Answer
Answer: Capital fund
Question 13.
Entrance fee should be taken as ________ receipt.
Answer
Answer: Revenue
Question 14.
The main source of income for a not for profit is ____________
Answer
Answer: Subscription
Question 15.
Financial statements in case of NPO consists of receipts & payments account, _______, and balance sheet.
Answer
Answer: Income and Expenditure account
Question 16.
Receipts and payments account is prepared on _________ basis whereas cash book is prepared on the _______ basis.
Answer
Answer: Yearly, daily
Question 17.
Income and expenditure account is prepared on the basis of _______ incomes and _________ expenditures.
Answer
Answer: Revenue, revenue
Question 18.
Legacy is a ______ receipt.
Answer
Answer: Capital
III. State whether the following statements are True or False:
Question 19.
Not-for-profit organisations are organisations that serve not only their members but also the general public.
Answer
Answer: True
Question 20.
Not for profit organisations do not enjoy separate legal entity.
Answer
Answer: False
Question 21.
Profit earned by a, not for profit organisation is known as surplus.
Answer
Answer: True
Question 22.
General donations are capital in nature whereas specific donations are capital in nature.
Answer
Answer: False
Question 23.
Receipts and payments account records capital receipts and capital payments only.
Answer
Answer: False
Question 24.
Income & expenditure account is prepared on the same principles as we prepare profit and loss account.
Answer
Answer: True
Question 25.
Specific funds are shown on the liabilities side whereas expenses on specific funds are shown on the assets side.
Answer
Answer: False
Question 26.
Cashbook and receipts & payments account is prepared on the basis of cash basis of accounting.
Answer
Answer: True
IV. One word Questions.
Question 27.
How are specific donations treated while preparing final accounts of a ‘Not-For-Profit Organisation’?
Answer
Answer: Specific donation is treated as capital receipt & it is shown on the liabilities side of the Balance Sheet.
Question 28.
State the basis of accounting of preparing ‘Income and Expenditure Account’ of a ‘Not-For-Profit
Organisation.
Answer
Answer: Accrual basis.
Question 29.
Differentiate between ‘Receipts and Payments Account’ and ‘Income and Expenditure Account’ on the basis of ‘Period’.
Answer
Answer:
| Basic | Receipts & Payments A/c | Income & Expenditure A/c |
| Period | May relate to preceding and succeeding periods | Relate to the current period |
Question 30.
What is meant by ‘Life membership fees’?
Answer
Answer: Membership fee paid in lump stun to become a life member of a not-for-profit organisation.
Question 31.
How are the following items presented in the financial statements of a Not-for-Profit organisation:
(a) Tournament Fund – 80,000
(b) Tournament expenses – 14,000
Answer
Answer:
Question 32.
How are general donations treated while preparing financial statements of a not-for-profit organisation?
Answer
Answer: General donations are treated as revenue receipts
Or
How are general donations treated while preparing financial statements of a not-for-profit organisation?
Answer
Answer: Life membership fee is the membership fee paid by some members as a lump sum amount instead of a periodic subscription
Question 33.
State the basis of accounting on which ‘Receipt and Payment Account’ is prepared in case of Not-for Profit Organisation.
Answer
Answer: Cash basis of accounting
Question 34.
Where will you show the ‘Subscription received in advance’ during the current year in the Balance Sheet of a Not-For-Profit Organisation?
Answer
Answer: Liability side of current year’s balance sheet
Question 35.
A not-for-profit organisation sold its old furniture. State whether it will be treated as revenue receipt or capital receipt.
Answer
Answer: Revenue
Question 36.
Mention a fund who are specific in nature.
Answer
Answer: Sports fund
Question 37.
Income and Expenditure Account of a not-for-profit organisation has shown credit balance of ₹ 1,20,000 during 2012-13. When will you show it?
Answer
Answer: It will be added in the capital fund on the liability side
Question 38.
Do not for profit organisation maintain proper system of accounts?
Answer
Answer: No
Question 39.
Name any one account prepared by not for profit organisations.
Answer
Answer: Receipts and Payment Account, Income and Expenditure Account and Balance Sheet
Question 40.
Give one example of not for profit organisations.
Answer
Answer: Charitable dispensaries, schools, educational institutions, trusts, societies etc
Question 41.
State one source of not for profit organisations.
Answer
Answer: Subscriptions, donations, legacies, government grant etc
Question 42.
State the receipts relating to non-recurring in nature.
Answer
Answer: Capital receipts
Question 43.
State the payments relating to non-recurring in nature.
Answer
Answer: The payments can be classified into capital payment and revenue payment
Question 44.
Give an example of revenue receipt.
Answer
Answer: Subscription
Question 45.
Give an example of capital receipt.
Answer
Answer: Government grant
Question 46.
Give an example of capital payments.
Answer
Answer: Purchase of assets
Question 47.
What name is used for the cash book in case of not for profit organisations?
Answer
Answer: Receipts and Payments Account
Question 48.
Which side the revenue receipts are transferred in the income and enpenditure account?
Answer
Answer: Credit side
Question 49.
When the capital receipts are shown?
Answer
Answer: Liabilities side
Question 50.
Where the capital payments are shown?
Answer
Answer: Assets side
Question 51.
In which account the funds are transferred in case of not for profit organisation?
Answer
Answer: Capital Fund
Question 52.
What is the major source of income for not for profit organisations?
Answer
Answer: Subscription
Question 53.
What name is used for profit in case of not for profit organisations?
Answer
Answer: Surplus
Question 54.
What name is used for loss in case of not for profit organisations?
Answer
Answer: Deficit
Question 55.
Is the surplus or deficit in case of not for profit organisations distributed among members?
Answer
Answer: No
Question 56.
What type of rec eipts are recorded in the income and expenditure account?
Answer
Answer: Revenue Receipts
Question 57.
What type of payments are recorded in the income and expenditure account?
Answer
Answer: Revenue Payments
Question 58.
Which system of accountancy is followed to prepare receipts and payments account?
Answer
Answer: Cash system of accounting
Question 59.
Which system of account is followed to prepare income and expenditure account.
Answer
Answer: Accrual system of accounting
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