Important Questions for Chapter 1- Company Accounts Financial Statements of Not-for-Profit Organisations

Important Questions with Answers for Class 12 CBSE Accountancy Chapter 1- Company Accounts Financial Statements of Not-for-Profit Organisations which is outlined by expert Accountancy teachers from the latest version of CBSE (NCERT) books.

CBSE Class 12 Accountancy Chapter – 1 Important Questions

QUESTION 1

Define Non-for-Profit Organization.

Answer: The Non-for-Profit Organization is an organization which does not intend to make any profit and are exempted from paying tax. These organizations are basically formed for religious, educational, cultural, charitable, public service to the public or special cause. The Non-for-Profit organization is also known as a Non-Profit Organization.

QUESTION 2

State funds received by the Not-for-Profit Organization.

Answer: The funds received by the Not-for-Profit Organization are a donation, membership fee or entrance fee, subscription, loans, and government and institutional grants.

QUESTION 3

Explain three features of Not-for-Profit Organization.

Answer: the features of the Not-for-Profit Organization are.

  • The purpose- Its objective is to render service to any individual or a group or work for a cause without any expectation of return or profit.
  • Ownership- The organization is established as a trust or a charitable society. Therefore, it does not have an individual or group of an individual as an owner but belongs to society.
  • Objectives- This organization does not function with the object of earning a profit, but, its motive is to serve society. However, the profit they make is used to upgrade the organization and its operation process and is not distributed among its members.

QUESTION 4

Mention the financial statements of the Not-for-Profit Organization.

Answer: The financial statements of the Not-for-Profit Organization are.

  • Payment and receipt account
  • Expenditure and Income account
  • Balance Sheet

QUESTION 5

Non-for-Profit Organisation prepare

(a) Income and Expenditure account

(b) Trading and Profit & Loss account

(c) Only the trading account

(d) None of the above

Answer: Income and Expenditure account

QUESTION 6

Receipt and payments account is a summary of

(a) Debit & Credit balance of Ledger account

(b) Cash receipts & payment

(c) Income and Expenses

(d) A balance of assets and liabilities

Answer: Cash receipts & payment

QUESTION 7

Subscription received in advance by a club are shown

(a) In the credit side of the income and expenditure account

(b) In the asset side of the balance sheet

(c) In the liabilities side of the balance sheet

(d) None of the above

Answer: In the liabilities side of the balance sheet

QUESTION 8

Donation received for a special purpose is a

(a) Liability

(b) Revenue Receipt

(c) Capital Receipt

(d) None of the above

Answer: Capital Receipt

QUESTION 9

Receipt and Payment account is

(a) Nominal Account

(b) Real Account

(c) Personal Account

(d) None of the above

Answer: Real Account

QUESTION 10

Subscription received in advance during the current year is

(a) An income

(b) An asset

(c) A liability

(d) None of the above

Answer: A liability

QUESTION 11

If there is a match fund, then match expenses and match income are transferred to

(a) Income and Expenditure Account

(b) An assets side of Balance Sheet

(c) Liabilities of the Balance Sheet

(d) None of the above

Answer: Liabilities of the Balance Sheet

QUESTION 12

Show the format of receipt and payments account.

Answer:

Dr. Receipt and Payments Account Cr.
Receipt Payment
To Balance b/d (Opening Balance)

Cash in hand

Cash in bank

To subscriptions:

For Previous Year(s) –

For the Current Year –

For Next Year(s) –

To General Donation

To Grant for Specific Purpose

To Entrance/Admission Fees

To General Grants

To Sale of Newspaper,Grass, etc

To Sale of old or Used Sports Materials

To Interest on Investments

To Income from Concerts

To Dividends

To Rent Received

To Interest Received

To Miscellaneous Receipt

To Life Membership Fee

To Subscription of Specific Purpose

To Donation for Specific Purpose

To Legacies

To Endowment Fund

To Sale of Fixed Assets

To Receipt on Account Specific Fund,

i.e Match Fund, Prize Fund,etc.

To Balance c/d (Bank Overdraft)

By Balance b/d (Opening Balance)

(in case of bank overdraft)

By Salaries

By Rent

By Postage Expense

By Advertisement Expense

By Newspaper & Magazine, etc

By Repairs

By Audit Fee

By Maintenance Expence

By Insurance

By Secretary’s Honorarium

By Honorarium

By Municipal Tax

By Prize Distributed

By Office Expense

By Expense on Show

By Miscellaneous Payment

By Purchase of Fixed Assets

By Sports Equipment

By Investment

By Books

By Loan

By Buildings

By Balance c/d (Closing Balance)

Cash in Hand

Cash in Bank


QUESTION 13

Mention two difference between the receipt and payment account and the cash book.

Answer:

Basis Receipt and Payment Account Cash Book
Basis It is a summary of the cash book and is prepared from the cash book It records every single transaction of receipt and payment separately
Period It is prepared at the end of the accounting year It is recorded on a daily basis

QUESTION 14

Mention the important features of Income and Expenditure Account

Answer: The important features of Income and Expenditure Account are

  • Entrance/Admission Fee- This fee is paid by an individual at the time of becoming a member of the Not-for-Profit Organisation. It is a revenue receipt and credit under income and expenditure account.
  • Life Membership Fee- This membership fee is recorded under capital fund and accounted as a capital receipt on the liabilities side of the balance sheet. It is not accounted for as income because it is paid once a year.
  • Special Receipt- This receipt is about a special receipt for a special occasion. Like, Annual dinner contribution, this type of contribution is credited in different account and expenses are debited to it. The balance amount is transferred to income and expenditure account.

QUESTION 15

On the basis of the information mentioned below, calculated the stationery amount to be debited to income and expenditure account of a Good Health Sports Club for the year end 31st March 2019. Stationery purchased as on 31st March 2019 is 4,70,000

Particulars 1st April 2018 31st March 2019
Stock of Stationery

Creditors for Stationery

80,000

90,000

60,000

1,10,000

Answer:

Solution

Good Health Sports Club

Income and Expenditure Account

Dr. for the year end 31st March 2019 Cr.

Particulars Income
To Stationery Consumed (WN) 4,90,000

Working Note:

Stationery Consumed (2018-19)

= Opening stock of stationery + Purchase of Stationery- Closing stock of stationery

= ₹80,000+₹4,70,000-₹60,000= ₹4,90,000

Since stationery purchased during the given year is given, creditors are already adjusted in it and, therefore, no treatment is given to creditors.