Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

How much amount as Staff Salary A/c will be debited to 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. Staff Salary paid (+) Salary paid in advance for the next year (-) Salary paid in advance in last year for current year

  2. Staff Salary paid (-) Salary paid in advance for the next year (+) Salary paid in advance in last year for current year

  3. Staff Salary paid (+)Salary paid in advance for the next year (+)Salary paid In advance in last year for current year

  4. Staff Salary paid (-)Salary paid in advance for the next year (-) Salary paid in advance in last year for current year

Show answer
Correct Option: B
Explanation:

Salary paid to staff is divided into two parts, salary paid in advance for current and the previous year.


When salary account is prepared the salary the actual salary is added to salary paid in advance for previous year and deducting salary paid for the current year.


Salary paid in advance for current year is deducted because it is which related to next year and has to written off from this year's accounts.

Salary paid in advance for previous year has to be added because this salary which was paid last year but actually was related to this year.
$Salary\quad paid(+)salary\quad paid\quad in\quad advance\quad for\quad previous\quad year(-)salary\quad paid\quad in\quad advance\quad for\quad current\quad year$.

Purchase of a fixed asset by a non-profit organization will be shown in _____________.

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. Receipts and Payments Account

  3. Both (A) and (B)

  4. Neither (A) nor (B)

Show answer
Correct Option: B
Explanation:

Receipt and payment account records all cash receipts and cash payments during the year whether related to current year, previous year or future year. It records both capital and revenue nature receipts and payments. Purchase of fixed assets includes cash. It is recorded in Receipts and Payments Account. It is not a revenue nature item. It is not recorded in Income and Expenditure Account.

In accounting of non-profit organizations, the sale of old newspapers is generally considered as a/an ______________.

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 expense

  2. Capital expenditure

  3. Revenue income

  4. Capital receipt

Show answer
Correct Option: C
Explanation:

Sale of old newspapers is a type of revenue income or receipt. This is because it neither created any liability for firm nor reduces any asset of the firm. Thus, such incomes are revenue receipts.

Admission fee income should be ____________.

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. Capitalized

  2. Treated as a Revenue

  3. Treated as revenue unless the amount is pretty large

  4. Treated as a Liability

Show answer
Correct Option: C
Explanation:

Admission fees is a revenue receipt and should be recorded as revenue item. If its a large amount , the treatment may be different according to the policy of the organization.


Admission Fees :-

(a) The organization shall follow the rules or by-laws regarding this.

(b) In the absence of such rules, add the admission or entrance fees that the members pay only once for acquiring a membership to the Capital Fund.

(c) If such fees are of small amounts covering the expenses of admission only, we may credit the fees to Income & Expenditure Account.

Preliminary expenses are an example of ________.

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. Deferred Revenue Expenditure

  2. Revenue Expenditure

  3. Capital Expenditure

  4. Common Expenditure

Show answer
Correct Option: A
Explanation:
Where a certain revenue expenditure incurred is of such a nature that its benefit is likely to be spread over a certain number of years, or where it is of non-recurring and special nature and large in amount, in such circumstances, instead of debiting the entire amount to the profit and loss account of the year in which it has been incurred, it may be spread over a number of years, a proportionate amount being charged to each year's profit and loss account. 

The remaining portion of the expenditure is carried forward and is known as capital expenditure or or deferred revenue expenditure and is shown as an asset in the balance sheet. 

Item such as preliminary expenses, cost of issue of debentures are examples of deferred revenue expenditure.



Excess of expenses over income 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. Income

  2. Surplus

  3. Loss

  4. Expenses

Show answer
Correct Option: C
Explanation:

Income and Expensiveness account is the summary of income and expenditure for the accounting year. It is just like a profit and loss account prepared on accrual basis in case of the business organisations. It includes only revenue items and the balance at the end represents surplus or deficit. The Income and Expenditure account serves the same purpose as the profit and loss account of a business organisation. All the revenue items relating to the current period are shown in this account, the expenses and losses on the expenditure side and incomes and gains on the income side of the account. It shows the net operating result in the form of surplus (i.e. excess of income over expenditure) or loss (i.e. excess of expenditure over income), which is transferred to the capital fund shown in the balance sheet.

Which of the following items should be entered in the Receipts and Payment Account of a club ?
1. Sale of old newspapers.
2. Loss in sale of some assets.
3. Payments for investments.
Select the correct answer from the codes given below:

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. 1 , 2 and 3

  2. 1 and 3

  3. 1 and 2

  4. 2 and 3

Show answer
Correct Option: B
Explanation:

Receipts and payments account records the inflow and outflow of cash during a period. 

1. Sale of old newspapers is a routine activity which results in inflow of cash, hence should be entered in the receipts and payments account.
2. Loss in the sale of some assets do not result in flow of cash, hence should not be entered.
3. Payments for investments require outflow of cash, hence should be entered in the receipts and payments account.

Receipt and Payment account includes all receipts and payments whether they are of __________ nature or of _________ nature.

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, Non-cash

  2. Capital, Revenue

  3. Fixed, Fluctuating

  4. Deferring, Non-deferring

Show answer
Correct Option: B
Explanation:

Receipt and Payment account is the summary of cash and bank transactions which helps in preparation of Income and Expenditure account. All receipts and payments whether of capital or revenue nature are included in Receipt and Payment account. This is one of the salient feature of Receipt and Payment account.

A Club is of 100 members Subscription per member is Rs. 2,500 p.a. 2,18,000 received during the year 2016-2017 which includes 20,000 and 15,000 subscription for the years 2015-2016 and 2017-2018 respectively. At the end of the year 2016- 2017, the amount of outstanding subscription will be ____________.

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. Rs. 32, 000

  2. Rs. 52, 000

  3. Rs. 36, 000

  4. Rs. 67, 000

Show answer
Correct Option: D
Explanation:

Subscription Received during the year = 2,18,000
Less : Received for year 2015-16           = 20,000
less : Received for year  2017-18           = 15000
Subscription received for the year 2016- 17 =
2,18,000 - 20,000 - 15000 
 = 1,83,000


Total subscription = 2500* 100 = 2,50,000
Subscription Received = 1,83,000
Subscription outstanding = Rs. 67,000.

From the following particulars, calculate the amount of subscription to be credited to Income & Expenditure A/c for die year end March 2018. 

Particulars 31.3.2017 31.3.2018
Outstanding subscription 1, 500 1, 200
Subscription received in advance 900 540

A sum of Rs, 14,670 was received as subscription during the year ended 31st March 2018.

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. 15,930

  2. 14,730

  3. 14,610

  4. 14,010

Show answer
Correct Option: B
Explanation:

Subscription Received during the year = Rs. 14,670 
less: Outstanding subscription in the beginning = Rs. 1500
less: Advance subscription in the end = Rs 540
Add: Outstanding subscription in the end = 1200
Add: Advance subscription in the beginning = 900
Amount to be credited to income and expenditure a/c = Rs. 14,730.