Tag: prepration of income and expenditure account and balance sheet

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

According to sub-section 2 of Section 182 of the Companies Act 2013, which of the following is regarded as contribution for political purpose?

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. Subscription given

  2. Donation given

  3. Expenditure incurred on advertiement

  4. All of the above

Show answer
Correct Option: D
Explanation:

As per section 182(2) of the companies act 2013 subscription, donation given and expenditure incurred on advertisement are all regarded as contribution for political purposes. 

Which of the following consisting  the final account of a non-profit organization_____________.

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. Trading and Profit & Loss A/c and Balance Sheet

  2. Income Statement and Statement of Financial Position

  3. Receipts & Payments A/c and Income & Expenditure A/c

  4. Receipts & Payments A/c Income & Expenditure A/c and Balance Sheet

Show answer
Correct Option: D
Explanation:
The statements prepared by Non-for-profit organisations are:-
1) Receipt and payments account - It is a real account just like cash account. Its prepared at the end of the year. All receipts are recorded on the debit side and expenses on the credit side. 
2) Income and expenditure account - Its a nominal account and is just like a profit and loss account. All the expenses are recorded on the debit and side and incomes on the credit side. 
3) Balance sheet - Balance sheet is prepared normally. The difference between assets and liabilities is shown as capital fund or general fund. 

Entrance fee of Rs. 20,000 received by a club 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. capital receipt

  2. revenue receipt

  3. capital expenditure

  4. revenue expenditure

Show answer
Correct Option: A
Explanation:

Clubs normally charge two kind of fee. Entrance fee and yearly contribution. 

Entrance fee is part of capital receipt and yearly contribution is revenue receipt. 

Entrance fee of Rs.20000 received by a club is a capital receipts. 

Statement I: Receipt & Payment A/c starts with the opening balance of cash in hand and at bank.
Statement II: Income & Expenditure A/c have no opening balance.
Select the correct answer the options given below.

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. Statement I is Correct while statement II is Incorrect.

  2. Both Statement I and II are incorrect

  3. Statement II is Correct while statement I is incorrect.

  4. Both Statement I and II are correct

Show answer
Correct Option: D

An advance receipt of subscription from a member of the non profit organization is considered as a/an _______________.

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. Expense

  2. Liability

  3. Equity

  4. Asset

Show answer
Correct Option: B
Explanation:

Subscription is the amount that is paid by members of NPO every year. It is the primary source of income of NPO. It is generally paid every month. It is the amount paid by members to keep their membership alive. An advance receipt of subscription from a member is an income received in advance. So it is treated as liability. 

The ______________ is the summary of cash and bank transactions which helps the preparation of Income and Expenditure account and Balance Sheet.

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. income and expenditure account

  2. balance sheet

  3. receipts and payments account

  4. both a and b

Show answer
Correct Option: C
Explanation:

The Not-for-Profit Organisations are required to prepare financial statements at the end of the each accounting period and the general principles of accounting  are fully applicable in their preparation. The final accounts of a not-for-profit organisations consist of the following:

(i) Receipt and Payment Account
(ii) Income and Expenditure Account
(iii) Balance Sheet
The Receipt and Payment account is the summary of cash and bank transactions which helps in the preparation of Income and Expenditure Account and the Balance Sheet. Besides, it is a legal requirement as the Receipts and Payments Account has also to be submitted to the Registrar of Societies along with the Income and Expenditure Account, and the Balance Sheet.

Receipts and payment account shows ___________.

book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

  1. income and expenditure

  2. cash receipts and payments

  3. assets and liabilities

  4. profit on sale

Show answer
Correct Option: B
Explanation:

Receipts and payments account is prepared by taking the information from cash book. It records all the cash receipts and payments including revenue and capital.

Expenditure incurred by a publisher for acquiring copyrights is an example of _______________.

book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

  1. Capital expenditure

  2. Revenue expenditure

  3. Deferred revenue expenditure

  4. None of the above

Show answer
Correct Option: A
Explanation:

A capital expenditure is a expenditure to acquire and maintain long term assets. Capital expenditure is done on more valuable assets that have long term use in the business. Long term usually means more than a year. Expenditure incurred by a publisher for acquiring copyrights is an example of Capital expenditure.

Which of the following accounts mostly begins with an opening balance?

book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

  1. Receipts and payments account

  2. Income and expenditure

  3. Both of the above

  4. None of the above

Show answer
Correct Option: A
Explanation:

Receipts and payments account mostly begin with an opening balance as it is nothing but cash account. A receipts and payment account is just like a cash account hence it begins with opening balance and ends with closing balance of cash.

The total of all payments irrespective of their nature (whether capital or revenue) and whether they pertain to past, current and future periods are to be shown on its credit side is step ____ in preparation of Receipt and Payment Account.

book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

  1. 1

  2. 2

  3. 3

  4. 4

Show answer
Correct Option: C
Explanation:

The third step in preparation of Receipt and Payment account is showing the total amounts of all payments on credit side whether of capital or revenue nature and whether pertaining to past, current and future periods.