Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

Receipt and payment Account is equivalent to profit and loss account. 

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. True

  2. False

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Correct Option: B
Explanation:

False. Receipts and payments accounts is equivalent to cash account. Receipts and payment account records the receipts and payments of all nature. It records all the cash transactions of the business. It is basically a summary of cash transactions all incomes are recorded on the credit side and expenses are shown on the debit side

The Receipt and Payment account starts with the opening balance of ______ and _____.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. cash, bank

  2. bank, bills receivable

  3. bills receivable, bills payable

  4. none of the above

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Correct Option: A
Explanation:

Receipt and Payment is a summarized statement of all cash transactions during an accounting year. Only cash transactions are recorded in Receipt and Payment accounts. 

In the Receipt and Payment account both capital and revenue transactions are recorded, whereas in Income and Expenditure account ________ transactions are recorded.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. Capital

  2. Deferred

  3. Revenue

  4. Cash

Show answer
Correct Option: C
Explanation:

Receipt and Payment account is a summarized statement of all cash transactions during an accounting year. The account through which surplus or deficit of a non-profit-seeking concern is ascertained is called Income and Expenditure account. 

Which of the following items are not considered in Receipt & Payment A / c but are considered Income & Expenditure A / c?

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. Outstanding and prepaid

  2. Capital & revenue

  3. Both (A) and (B)

  4. None of the above is correct

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Correct Option: A
Explanation:

The item to be mentioned in income & expenditure account is outstanding or prepaid expenses. But it is not recorded in receipt & payments account because such type of entries are of revenue nature and revenue nature entries cannot be recorded in receipt & payments account.

Donations received for a special purpose will be transferred to the ___________.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. Income and expenditure account

  2. Asset side of the balance sheet

  3. Liabilities side of the balance sheet

  4. Debit side of the ledger

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Correct Option: A
Explanation:

The amount of general donation is an income and we credit it to Income and Expenditure Account. 

Specific Donation: It means the donation should be used only for the library, i.e., it is a specific donation. 
Specific donations are capitalized and are shown on the liabilities side of the Balance Sheet.

Which of the following items should not be entered in receipts and payments account of a club?

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. Sale of old newspaper

  2. Loss on sale of old furniture

  3. Subscriptions received in advance

  4. Expenses for previous year

Show answer
Correct Option: B
Explanation:

"A receipt and payment account is a summarized cash book (cash and bank) for a given period". 

It prepared to list down all the receipts and payments. There is no outflow of cash due to loss on sale of old furniture, hence not to be recorded in receipts and payments account.

Donations received by a non-profit organisation are usually ___________.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. revenue receipt

  2. capital receipt

  3. capital expenditure

  4. revenue expenditure

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Correct Option: A
Explanation:

Non profit organization are those which have no motive to earn any profit. Donations received by these organization is usually a revenue receipts.

Any profit on the sale of furniture of a cricket club will be taken in the _________.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. income and expenditure account

  2. cash account

  3. profit and loss account

  4. furniture account

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Correct Option: A
Explanation:

Any revenue generated out of the business will be taken in income and expenditure account. Furniture is an asset for the organization. If any assets is sold, profit or loss on sale should be recorded in income and expenditure account. Profit will be taken as income and loss will be taken as expenditure. 
Profit on sale of furniture is an income and it should taken as Income in the income & expenditure account. 

Which of the following items should be entered in the receipts and payments account of a club?
I. Sale of old newspapers
II. Loss on sale of some asset
III. Payments for investment
Select the correct answer using the codes given.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. I, II and III

  2. I and III

  3. I and II

  4. II and III

Show answer
Correct Option: B
Explanation:
Receipts and payments account record all the cash transactions that take place in the current year whether related to this year or not. All the receipts and payments of current year are recorded in the account. 
I - Sale of old newspapers is an item that comes in receipts and payments account as cash is received when newspapers are sold.
II - Loss on sale of an asset is an item of nominal account. Income and expenditure is a nominal account and includes loss, expense, income, gains. loss on sale is a loss on the account of sale of an item which will come in income and expenditure account and not receipts and payments account.
III - Payments for investment is a capital expenditure, It is a cash expenditure hence will be shown in receipts and payments account. 

Income and Expenditure Account of non-profit organisation is a ________________.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. Real account

  2. Nominal Account

  3. Personal Account

  4. Representative Personal Account

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Correct Option: B
Explanation:

Income and expenditure account of a non-profit organisation is a nominal account. Nominal account record all the revenues, losses, gain and expenses. An income and expenditure account is just like a profit and loss account. Nominal accounts have no balance at the end of the year.