Tag: prepration of income and expenditure account and balance sheet

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

The capital of a non-profit organization is generally known as __________.

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. Equity

  2. Accumulated fund/Capital fund

  3. Cash fund

  4. Financial reserve

Show answer
Correct Option: B
Explanation:

The capital for a non-profit organisation is not funded by the owner and thus has to be mentioned as capital fund. This is because capital fund is that account which records all those transactions which are related to capital nature.

Surplus of Income and Expenditure Account is deducted from the capital/general fund.

book keeping and accountancy accounting for not-for-profit organisation financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations prepration of income and expenditure account

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

False. Surplus of Income and expenditure account is added to the capital/general fund. Surplus is arrived when there is excess of income over expenditure hence it is addition to the and fund and should be added to the capital fund. 

State True or False:
Scholarships granted to students out of funds provided by government will be debited to Income and Expenditure Account. 

book keeping and accountancy accounting for not-for-profit organisation financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations prepration of income and expenditure account

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

False. Scholarships granted to students out of funds provided by government will be deducted from the fund provided by government. If there appears any fund respective incomes/expenses will added/deducted from the respective fund. 

If there appears a sports fund, the expenses incurred on sports activities will be shown on the debit side of Income and Expenditure Account. 

book keeping and accountancy accounting for not-for-profit organisation financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations prepration of income and expenditure account

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

False. If there appears a sports fund, the expenses incurred on sports activities will be deducted from the sports fund. If there appears any fund respective incomes/expenses will added/deducted from the respective fund. 

Income and expenditure accounts show ______________.

book keeping and accountancy accounting for not-for-profit organisation financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations prepration of income and expenditure account

  1. Cash available to an organization

  2. Closing capital of an organization

  3. Cash available in the bank account

  4. Surplus or deficit for the current accounting Period

Show answer
Correct Option: D
Explanation:

Income and Expenditure account is prepared to calculate the surplus or deficit with the company for current accounting period. The previous year transaction and the various cash transactions are not considered while preparing this account beacuse such transaction are related to receipt and payment account.

Given : Stock of stationery on Jan. 1, 2015 Rs 400
Stock of stationery on Dec. 31, 2015 Rs 100
Payment for stationery during 2015 Rs 1,200
Creditors for stationery on Dec. 31, 2015 Rs 150.
What is the amount of stationery that will be posted to the Income and Expenditure A/c for the year ending Dec. 31, 2015?

book keeping and accountancy accounting for not-for-profit organisation financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations prepration of income and expenditure account

  1. Rs 1,150

  2. Rs 1,650

  3. Rs 850

  4. Rs 1,050

Show answer
Correct Option: B
Explanation:

Calculation of Amount of stationary for the year ended 31st March, 2015

Opening stock of stationary ,1st Jan 2015  =   400
+ Payment made during the year                =  1200
+ Creditors for stationary on 31st Dec         =  150
-  Closing stock as on 31st Dec ,2015          =  (100)
                                                                       =  1650 Rs.

Subscription is paid___________.

book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

  1. on weekly basis

  2. on daily basis

  3. on monthly basis

  4. on annual basis

Show answer
Correct Option: D
Explanation:

Subscription is a payment made to receive or be given access to certain services or information for a specific period of time. It is usually paid on annual basis. 

Any donation received for a specific purpose is a ___________.

book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

  1. Liability

  2. Assets

  3. Revenue Receipts

  4. Capital Receipts

Show answer
Correct Option: D
Explanation:

If donation is received without a specific purpose, it is a revenue receipt. But if donation is received for a specific purpose, this is considered as capital receipts and all expenses incurred towards the specific purpose should be set off from this receipt.

In case a sports fund is kept, expenses on account of sports events should be ____________.

book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

  1. charged to sports fund

  2. charged to the income and expenditure account

  3. taken to the balance sheet on the asset side

  4. taken to the balance sheet on the liability side

Show answer
Correct Option: A
Explanation:

Specific funds are utilized for the specific activities only. If any sports events is organized, all expenses pertains to such event should be debited to sports fund account.

What is Subscription?

book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

  1. Life time fees

  2. Membership fee

  3. Cash

  4. Expence

Show answer
Correct Option: B
Explanation:

Subscription is an agreement to receive something for providing access to something. Membership fees is a subscription as a person pays money to become a member of an organisation and is usually paid annually.