Tag: prepration of income and expenditure account and balance sheet

Questions Related to prepration of income and expenditure account and balance sheet

Specific donations received will appear on ____________.

book keeping and accountancy accounts of 'not for profit' concerns prepration of income and expenditure account accounting treatment for npo's special issues associated with accounts of non-trading concerns receipts and payments receipts and payments account financial accounting and reporting accounting procedure for not-for-profit organisations balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations prepration of income and expenditure account and balance sheet

  1. Debit side of Receipt & Payment A/c

  2. Asset side of the Balance Sheet

  3. Debit side of Income & Expenditure A/c

  4. Liabilities side of the Balance Sheet

Show answer
Correct Option: D
Explanation:

Specific donations are the amount received by organisaton as funding. The amount is not received for any work and hence has to be considered as a liability and to be recorded under liabilities head in the balance sheet.

Rs. 1,00,000 received as the annual membership subscription. Out of this Rs. 20,000 is pertaining to the previous accounting period, whereas Rs. 10,000 is receivable at the end of the current accounting period. Calculate the amount of subscription that will be shown in the income and expenditure account for this accounting year.

book keeping and accountancy accounts of 'not for profit' concerns prepration of income and expenditure account accounting treatment for npo's special issues associated with accounts of non-trading concerns receipts and payments receipts and payments account financial accounting and reporting accounting procedure for not-for-profit organisations balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations prepration of income and expenditure account and balance sheet

  1. 80,000

  2. 90,000

  3. 1,20,000

  4. 1.00,000

Show answer
Correct Option: B
Explanation:

Subscription amount to be shown in income and expenditure account can be calculated using the formula given below:

 $Subscription\quad amount=\quad Subscription\quad received\ \quad \quad Add:\quad Subscription\quad received\quad at\quad end\quad of\quad year\ \quad Less:\quad Outstanding\quad subscription\quad for\quad previous\quad year$
Substitute values in the above equation
$Subscription\quad amount=\quad Rs1,00,000\ \quad \quad Add:\quad Rs10,000\ \quad Less:\quad Rs20,000\quad =Rs90,000$.

Given : Stock of stationery on Jan. 1, 2015 Rs 200; payments for stationery during 2015 Rs 1,000; and stock of stationery on Dec. 31, 2015 Rs 50.
What will be the amount posted to Income and Expenditure A/c for the year ending Dec. 31, 2015?

book keeping and accountancy accounts of 'not for profit' concerns prepration of income and expenditure account accounting treatment for npo's special issues associated with accounts of non-trading concerns receipts and payments receipts and payments account financial accounting and reporting accounting procedure for not-for-profit organisations balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations prepration of income and expenditure account and balance sheet

  1. Rs 750

  2. Rs 850

  3. Rs 1,150

  4. Rs 1,250

Show answer
Correct Option: C
Explanation:

Stationery amount to be shown in income & expenditure account can be calculated using the formula given below:

$Stationery\quad amount=\quad Opening\quad stock-Closing\quad stock+Payments\quad made$
Substitute values in the above equation
$Stationery\quad amount=\quad Rs200-Rs50+Rs1000\quad =Rs1,150$.

Income and Expenditure Account records income and expenditure item of ____________________.

book keeping and accountancy accounts of 'not for profit' concerns prepration of income and expenditure account accounting treatment for npo's special issues associated with accounts of non-trading concerns receipts and payments receipts and payments account financial accounting and reporting accounting procedure for not-for-profit organisations balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations prepration of income and expenditure account and balance sheet

  1. Booth capital and revenue nature.

  2. Only capital nature.

  3. Only revenue nature.

  4. Only revenue nature related to a particular accounting period.

Show answer
Correct Option: D
Explanation:

Income and Expenditure Account is prepared on an accrual basis. All incomes and expenses relating to the accounting year, whether they are actually received and paid or not, are taken into consideration. Expenditure is recorded on the debit side and income is recorded on the credit side. A distinction is made between capital and revenue items and only revenue items are included in this account.

The income and expenditure account is prepared on the basis of __________ system of accounting.

book keeping and accountancy accounts of 'not for profit' concerns prepration of income and expenditure account accounting treatment for npo's special issues associated with accounts of non-trading concerns receipts and payments receipts and payments account financial accounting and reporting accounting procedure for not-for-profit organisations balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations prepration of income and expenditure account and balance sheet

  1. Basic

  2. Main

  3. Cash

  4. Mercantile

Show answer
Correct Option: A
Explanation:

Financial Accounting is based on dual system of accounting.Income & expenditure account is also based on this basic system of accounting.

Surplus revealed by Income and expenditure account ___________.

commercial applications financial accounting and reporting balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations accounting procedure for not-for-profit organisations prepration of income and expenditure account and balance sheet income and expenditure account prepration of income and expenditure account accounting treatment for npo's

  1. is shown as deduction in accumulated fund at the balance sheet

  2. is transferred to an account called capital fund

  3. is distrusted among the members of the non-profit organization

  4. must be donated to other non-profit organization

Show answer
Correct Option: B
Explanation:

b'Income and expenditure account can be defined as an account that reveals surplus or deficit of a non-trading concern by matching incomes and expenses of a specified accounting period. The balance of income and expenditure account is transferred to the balance sheet. Surplus balance is added to the capital fund in balance sheet. '

Income and Expenditure Account is prepared on ____________.

commercial applications financial accounting and reporting balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations accounting procedure for not-for-profit organisations prepration of income and expenditure account and balance sheet income and expenditure account prepration of income and expenditure account accounting treatment for npo's

  1. Cash basis

  2. Accrual basis

  3. Hybrid basis

  4. Either (A) or (B)

Show answer
Correct Option: B
Explanation:

Income and expenditure account is prepared on Accrual basis. Accrual basis of accounting is wherein all the expenses that are actually incurred and incomes actually earned are recorded. Its recorded when its realised and not when received.

Professional people like solicitors, doctors, company secretary, cost accountant, chartered accountants etc., prepare for themselves ___________ which is a modified form of Income & Expenditure A/c prepared by non-trading concerns. 

commercial applications financial accounting and reporting balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations accounting procedure for not-for-profit organisations prepration of income and expenditure account and balance sheet income and expenditure account prepration of income and expenditure account accounting treatment for npo's

  1. Receipt & Expenditure A/c

  2. Income & Payment A/c

  3. Profit & Loss A/c

  4. Any of the above

Show answer
Correct Option: C
Explanation:

Income and Expenditure account prepared by non-trading concerns is very much like the profit and loss account prepared by trading concerns. Both accounts show the expenditure incurred and income earned during the year. In the end balance is calculated. In Income and Expenditure account balance is termed surplus or deficit and in Profit and loss account it is termed "Net Profit" or "Net Loss".

Income and Expenditure Account is equivalent to ____________.

commercial applications financial accounting and reporting balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations accounting procedure for not-for-profit organisations prepration of income and expenditure account and balance sheet income and expenditure account prepration of income and expenditure account accounting treatment for npo's

  1. Profit and Loss Account

  2. Receipts and Payments Account

  3. Balance Sheet

  4. Receipts and Expenditure Account

Show answer
Correct Option: A
Explanation:

Income and Expenditure account prepared by non trading concerns is very much like the profit and loss account prepared by trading concerns. Both account shows the expenditure incurred and income earned during the year. In the end balance is calculated. In Income and Expenditure account balance is termed surplus or deficit and in Profit and loss account it is termed "Net Profit" or "Net Loss".

Which of the following is the accounting equation for a non-profit organization ?

commercial applications financial accounting and reporting balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations accounting procedure for not-for-profit organisations prepration of income and expenditure account and balance sheet income and expenditure account prepration of income and expenditure account accounting treatment for npo's

  1. Asset = Capital + Liabilities

  2. Capital + Liabilities = Assets

  3. Accumulated fund + Liabilities = Assets

  4. Liabilities = Asset + Accumulated fund

Show answer
Correct Option: C
Explanation:

Accounting equation is a statement representing a relationship between a company's assets, liabilities and its capital.

The accounting equation for non-profit organisation is the sum of company's liabilities and the accumulated fund or capital fund which equals to the assets possessed by organisation.
$Accumulated\quad fund+Liabilities=Assets$.