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CBSE Questions for Class 12 Commerce Accountancy Accounting For Not-For-Profit Organisations Quiz 2 - MCQExams.com
CBSE
Class 12 Commerce Accountancy
Accounting For Not-For-Profit Organisations
Quiz 2
In Income and Expenditure account all Expenditure are recorded on ______________.
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Debit side
0%
Credit side
0%
Income side
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None of the above
Explanation
In income and Expenditure account all expenditure are recorded on the debit side whereas all incomes are recorded on credit side of Income and Expenditure account.
Income and Expenditure account is ________ by balance sheet whereas Receipt and Payment account is __________by balance sheet
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0%
not accompanied, not accompanied
0%
accompanied, not accompanied
0%
not accompained, accompanied
0%
accompanied, accompanied
Explanation
Receipt and Payment is summarized statement of cash transactions during an accounting year hence it is not accompanied by balance sheet. The account through which surplus or deficit of a non-profit-seeking concern is ascertained is called Income and Expenditure account.
Which of the following accounts mostly begins with an opening balance?
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Receipts and payments account
0%
Income and expenditure
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Both of the above
0%
None of the above
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.
Which of the following is not a correct statement?
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Balance sheet indicates the financial position of the business on a particular place
0%
Balance Sheet is prepared after the preparation of trading and profit and loss account
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Assets represent debit balances in the ledger
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Liabilities are shown on the left-hand side of the balance sheet
Explanation
At the end of every financial year, business has to prepare financial statements which includes Profit & Loss account and Balance Sheet.
Profit & Loss account is prepared to know the profit/loss position of the business for a particular period i.e. normally 12 months.
Balance Sheet is prepared to know the financial position of the business on a particular date i.e. normally 31st March
Not-for-Profit organisations' affairs are usually managed by a ________.
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manager committee
0%
employees committee
0%
executive committee
0%
investors committee
Explanation
Not for Profit organizations are formed for providing service to specific groups or the public at large such as education, health care, sports, and so on. These are organized as charitable trusts/ societies and subscribers to such organizations are called members.
Normally, they do not undertake any business activity and are managed by trustees/executive committees. They also have to maintain proper accounts and prepare financial statements.
Decrease in working capital appear in fund flow statement in _________ side.
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Sources
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Application
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Both (A) and (B)
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None of the above
Explanation
Working capital is current assets less current liabilities. A decrease in the net current assets leads to increase in fund flow which needs to be included. Hence, It appear in sources.
The balance of Income and Expenditure account represents:
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The balance of cash on that date.
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The total cash receipts during the period.
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The total cash payments during the period.
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The excess of expenditure over income and vice-versa.
Explanation
Income and expenditure is a nominal account, It is similar to profit and loss account. It either represents deficit or surplus at the end of the year. Therefore, it either shows surplus that is excess of income over expenditure or deficit which is excess of expenditure over income.
The first step in preparation of Receipt and Payment Account is taking the opening balances of cash on hand and cash at bank and entering them on the _______ side; bank overdraft at the beginning of the year by entering the same on the ______ side of this account.
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credit, debit
0%
debit, credit
0%
debit, debit
0%
credit, credit
Explanation
Receipt and Payment account is a summary of cash receipts and payments during the accounting period. The first step in preparation of Receipt and Payment account is taking the opening balances of cash in hand and cash at bank and entering them on the debit side. In case, there is bank overdraft the same is entered on credit side of this account.
The organisations which are set up for providing service are called as _____.
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Profit organisations
0%
Not-for-profit organisations
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Sole trader
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Company
Explanation
The organisations which are set up for providing services are called as not-for-profit organisations. They are set up for purpose other than profit for promoting science, religion, social cause etc. Hence, the organisation meant for a social cause are categorized as Not-for-profit organisation.
The main objective of not-for-profit organisations is _________.
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Gain profit
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Provide services
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Increase owners profit
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None of the above
Explanation
The main objective of non-for-profit organisations is providing services. The services provided by the not-for-profit organisations are meant to satisfy the needs of the people like joining as member and receive medicines at very low cost.
Funds raised by Not-for-Profit organisations are credited to ________.
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Capital fund
0%
Security reserve
0%
Security premium
0%
General fund
Explanation
Funds raised by Non-for-Profit organizations through various sources are credited to
the capital fund
. Capital fund is the excess of assets over liabilities. So, the excess amount which is mostly the income of the organization is the funds raised by them.
Interest on specific fund investment given effect as _____________.
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0%
Added to asset
0%
Deducted from assets
0%
Added to liabilties
0%
Deducted from liabilties
Explanation
The interest earned by the organisation on certain investment made by people is added to the liabilities. This is because the interest earned has to be paid to the investors since it is a not-for-profit organisation.
Which of the following change(s) does / do not appear in a cash flow statement?
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Issue of equity shares
0%
Conversion of all FCDs into equity shares
0%
Bonus issue of equity shares
0%
All of the above
0%
Both (B) and (C)
Not-for-Profit Organisations earn their reputation on the basis of ________.
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customers satisfaction
0%
contribution towards the social welfare
0%
owners satisfaction
0%
all of the above
Explanation
Non-for-profit organizations earn their reputation on the basis of contributions made for social welfare. They are set up for the purpose of promoting science, commerce, social cause, education, etc. Their main purpose is not to earn profit but to provide services.
Opening capital fund is Rs.64,000
Surplus is Rs.20,000
Life membership fess is Rs.15,000
Bank overdraft Rs.16,000
State the amount of capital fund:
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Rs.50000
0%
Rs.99,000
0%
Rs.70,000
0%
Rs.84,000
Explanation
Capital fund = Opening + life membership fees + surplus during the year.
= 64,000 + 16,000 + 20,000
= Rs-99.000.
Note:- Bank overdraft does not form a part of capital fund. It will be shown on the liabilities side separately.
Opening balance sheet is prepared when the opening balance of capital fund is not given.
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0%
True
0%
False
Explanation
True. Opening balance sheet is prepared when the opening balance of capital fund is not given. Capital fund is the excess of assets over liabilities. Hence, when its not given its calculated by using the opening balances of assets and liabilities.
A sports club is a trading concern.
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0%
True
0%
False
Explanation
A trading concern is an entity that derives revenue, by purchasing products from other producers/manufacturers for resale. A sports club is not a trading concern as it does not perform any such tasks.
_____________ is/are example(s) of revenue receipts.
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Interest on fixed deposits held with the bank
0%
Capital Grant received from Central Government for setting up new Plant.
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Short term loan raised from PSU bank to augment working capital requirement
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Proceed of debentures issued
Explanation
b'Revenue receipts are the receipts which arise through core business activities. They occur again and again however their benefits can be enjoyed only in current accounting period. Capital Grant received from government does not arise from core business activities. Short term loan raised also does not occur again and again. These are capital receipts. Interest on fixed deposit arises every year. These are part of normal business operations. This is revenue receipt. '
Net loss reduces _______.
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0%
cash in hand
0%
capital fund
0%
gross assets
0%
all the three
Explanation
Balance of Profit and loss account show net profit or net loss of the business. This balance is transferred to capital in balance sheet. Net profit is added to capital fund and increase capital fund and net loss is deducted from capital fund and it reduces capital fund.
Capital receipt are shown in _______.
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0%
Profit and loss A/c
0%
Balance sheet
0%
Trading A/c
0%
Added to capital fund
Explanation
Receipts which are non-recurring by nature and whose benefit is enjoyed over a long period are known as capital receipt e.g. sale proceeds of fixed assets etc. The benefit is enjoyed for many years in future. That's why it can not be shown in Profit and loss account. Trading account shows only direct expenses. Capital receipts does not increase the capital of owner. So it also can't be added to capital fund.
Legacies are generally ______.
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0%
treated revenue expenses
0%
product cost
0%
period cost
0%
capitalized
Explanation
Legacies are generally
capitalized
________ is/are a capital receipt.
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0%
Money raised through issue of shares
0%
Bank loan
0%
Sale of investments
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All of the above
Explanation
Option D is correct. Capital receipts refer to those receipts which either create a liability or cause a reduction in the assets of the firm. They are non-recurring or non-routine in nature. Sale of investments leads to reduction in assets. Bank loan and money raised through issue of shares create liability for the firm. All are capital receipts.
'
The day-to-day transactions of a club would be recorded in ____________.
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Cash Book
0%
Income and Expenditure A/c
0%
Receipts and Payments A/c
0%
None of the above
Explanation
A journal is divided into subsidiary books in which only the specific transactions are to be recorded like purchase book for credit purchases, sales book for credit sale, cash book for cash transactions, etc.
Sales book records only credit sale of goods made in the course of business. It does not record cash sales of goods or credit sales of assets.
________is/are example(s) of capital receipts.
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Sale proceed of fixed asset
0%
Loan raised from financial institutions
0%
Capital raised through book building process
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All of the above
Explanation
Option D is correct. Capital receipts refer to those receipts which either create a liability or cause a reduction in the assets of the firm. They are non-recurring or non-routine in nature. Sale proceeds of fixed assets leads to reduction in assets. The loan and Capital raised create liability for the firm. All are capital receipts. '
From the following details ascertain net profit od ABC club for the period ending 31.03.09 under accrual system
Items
31.03.08
31.03.09
Net profit as per cash basis
Rs.10750
Accrued subscription
550
450
Subscription received in advance
250
100
Salary outstanding
300
50
Prepaid rent
600
150
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0%
Rs.11000
0%
Rs.10450
0%
Rs.10750
0%
Rs.11050
From the following details uscertain net profit of $$ABC$$ club for the period ending on 31.03.08 under Cash basis
Items
31.03.08
31.03.09
Net profit as per Accrual basis
Rs. $$10800$$
Accrued Subscription
$$550$$
$$450$$
Subscription received in advance
$$250$$
$$100$$
Salary outstanding
$$300$$
$$50$$
Prepaid rent
$$600$$
$$150$$
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Rs. $$11000$$
0%
Rs. $$10800$$
0%
Rs. $$10950$$
0%
Rs. $$11050$$
Edownfund received by a club is a ........
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Revenue Receipt
0%
Capital Receipt
0%
Advance payment
0%
Revenue Payment
Which of these is an example of a Corporation.
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RBI
0%
LIC
0%
SBI
0%
All the three
Rs. 2,000 due from XYZ Associates was written off as bad debts in 2012-13, however in 2013-14 XYZ paid Rs. 1,500 voluntarily. This receipt will be accounted for as
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0%
Capital receipt
0%
Revenue receipt
0%
Need not be accounted for
0%
Reduction in debtors
AS-2 is not applicable in case of ___________.
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0%
plantation products
0%
work-in-progress
0%
raw material
0%
stores
Explanation
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