Questions for Chapter-Accounting for Not-for-Profit Organisations 

MCQ-Based Questions for CUET Accountancy chapter-Accounting for Not-for-Profit Organisations 

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Practice Questions for CUET Accountancy chapter-Accounting for Not-for-Profit Organisations SET-1

Accounts - MCQ on Accounting for Not-for-Profit Organisations

Class XII

Q.1. Outstanding income will be recorded on

a. assets side of the balance sheet.

b. liabilities side of the balance sheet.

c. receipts side of the receipts and payments account.

d. debit side of the income and expenditure account.

Answer:

(a)

Explanation: Outstanding incomes will be recorded on the assets side of the balance sheet, as income is due but yet not received.

Q.2. Calculate subscription outstanding at the end of 2001.

Receipts	Rs.	Payments	Rs.
To subscriptions 2000 Rs. 5,000 2001 Rs. 45,000 2002 Rs. 2,500

There are 500 members each paying the annual subscription of Rs. 100. Outstanding subscription on date 1. 1. 2001 was Rs. 5,500.

a. Rs 50,000.

b. Rs 45,000.

c. Rs 10,500.

d. Rs 5,500.

Answer:

(d)

Explanation: Outstanding subscription for 2001 is Rs. 5,000 and outstanding subscription for 2000 is Rs. 5,00 (5,500 – 5,000).

Q.3. Income received in advance will be shown in

a. liabilities side of the balance sheet.

b. assets side of the balance sheet.

c. debit side of the income and expenditure account.

d. credit side of the receipts and payments account.

Answer:

(a)

Explanation: Income received in advance is shown on the liabilities side of the balance sheet, as it is income received but yet not earned.

Q.4. Amount received from the sale of old fixed assets will be recorded in

a. receipts and payments account.

b. income and expenditure account.

c. profit and loss account.

d. balance sheet.

Answer:

(a)

Explanation: The amount received from the sale of old fixed assets will be recorded on the receipts side of receipts and payments account. However profit or loss on sale of fixed assets will be shown in the income and expenditure account.

Q.5. A club provided the following information about the subscriptions:

Receipts	Rs.	Payments	Rs.
To subscriptions 2004 Rs. 2,000 2005 Rs. 24,000 2006 Rs. 2,500

There are 2500 members each paying the annual subscription of Rs. 10. The subscription to be shown in Income and Expenditure account for the year 2005 is

a. Rs. 4,500.

b. Rs. 24,000.

c. Rs. 25,000.

d. Rs. 28,500.

Answer:

(c)

Explanation: When, number of members and their annual subscription is given, we will calculate the due subscription by multiplying them.

Q.6. The following information are provided by a Sports Club:

Receipts	Rs.	Payments	Rs.
To subscriptions 2005 2,000 2006 40,000 2007 2,500

Subscription outstanding as on 1-1-2006 was Rs. 2, 500. The amount of outstanding subscription in the balance sheet dated 31. 12. 2006 will be

a. Rs. 500.

b. Rs. 2,000.

c. Rs. 2,500.

d. Rs. 4,500.

Answer:

( a )

Explanation: The subscription outstanding at the beginning of the year was Rs. 2,500 and it was Rs. 2,000 for the previous year subscription. Hence, Rs. 500 is still outstanding for subscription.

Q.7. Outstanding expenses will be recorded in

a. assets side of the balance sheet.

b. liabilities side of the balance sheet.

c. receipts side of the receipts and payments account.

d. credit side of the income and expenditure account.

Answer:

(b)

Explanation: Outstanding expenses are recorded on the liabilities side of the balance sheet. They are the liabilities for the organisation.

Q.8. Profit making organisation includes

a. charitable institution.

b. religious organisation.

c. a garment manufacturing company.

d. welfare society.

Answer:

(c)

Explanation: A company-manufacturing garment is a profit-making organisation.

Q.9. The regular source of income for not-for-profit organisations is

a. subscriptions.

b. donations.

c. life membership fees.

d. legacy.

Answer:

(a)

Explanation: Periodic subscription from members is the regular source of income for the not-for-profit organisations.

Q.10. A club has 500 members and each of the members pays the monthly subscription of Rs. 50 each. The subscription outstanding at the end of the month was Rs. 2,500. The amount to be shown in receipts and payments account is

a. Rs 22,500.

b. Rs 25,000.

c. Rs 27,500.

d. Rs 50,000.

Answer:

(a)

Explanation: The organisation should receive Rs. 25,000 (500x50) but it did not receive Rs. 2,500. So, the amount to be shown in receipts and payments account will be Rs. 25,000 - 2,500 = Rs 22,500

Q.11. While calculating the consumption of stationery

a. closing stock will be added.

b. prepaid amount at the end of the period will be added.

c. outstanding amount at the beginning of the period will be added.

d. purchases of stationery during the period will be added.

Answer:

(d)

Explanation: Purchases of stationery during the period will be added while calculating the consumption of stationery.

Q.12. Capital fund implies

a. difference between assets and outside liabilities.

b. funds for special purpose.

c. total of assets only.

d. total of liabilities only.

Answer:

( a )

Explanation: Capital fund means owners fund, it is the difference between assets and outside liabilities.

Q.13. Amount paid to the person, who is not the regular employee of the organisation, is called

a. donations for special purpose.

b. honorarium.

c. refreshment expenses.

d. subscriptions.

Answer:

b

Explanation: Honorarium is the amount paid to the person who is not the regular employee of the organisation.

Q.14. A member paid Rs 1,000 at the time of joining a club. This amount is called as

a. donations for special purpose.

b. legacies.

c. endowment fund.

d. entrance fees.

Answer:

(d)

Explanation: Entrance fees is the fee that is paid only once by the member at the time of joining the organisation.

Q.15. The donation received for special purpose is

a. an expense.

b. an asset.

c. a capital receipt.

d. a revenue receipt.

Answer:

(c)

Explanation: Donations received for special purpose is a capital receipt. It is shown in the liabilities side of the balance sheet.

Practice Questions for CUET Accountancy chapter-Accounting for Not-for-Profit Organisations SET-2

Q.16. While recording expenditure in income and expenditure account from receipts and payments account, the item to be ignored is

a. rent.

b. salary.

c. bank balance.

d. repair of ground.

Answer:

(c)

Explanation: Bank balance is not transferred as it is of capital nature.

Q.17. One of the features of receipts and payments account is that

a. it is maintained on daily basis.

b. the transactions are recorded in it in order of dates.

c. it is prepared by all organisations.

d. it is prepared at the end of the accounting period.

Answer:

(d)

Explanation: Receipts and payments account is prepared at the end of accounting period and not prepared date wise.

Q.18.Donations of small amount for general purpose will be recorded in

a. debit side of income and expenditure account.

credit side of income and expenditure account.

assets side of balance sheet.

liabilities side of balance sheet.

Answer:

(b)

Explanation: Donations of small amount for general purpose is shown in the credit side of income and expenditure account.

Q.19. One of the following, which is ignored while recording income in income and expenditure account from receipts and payments account, is

a. subscriptions.

b. rent received.

c. interest on investment.

d. sale of investment.

Answer:

( d )

Explanation: Sale of investment is not an income and therefore will be deducted from the amount of investment.

Q.20. Legacy means the amount

a. distributed among the members of NPO.

b. received as per the will of a person.

c. for fixed assets of the company.

d. paid at the time of entrance of a member.

Answer:

(b)

Explanation: Legacy is the amount received as per the will of a deceased person. It is the donation for special purpose and hence to be capitalised.

Q.21. Receipts from the sale of old asset is recorded in

a. income and expenditure account.

b. receipts and payments account.

c. balance sheet.

d. it is added to the respective assets account.

Answer:

(b)

Explanation: Receipts from the sale of old assets will be shown on the receipt side of the receipts and payments account.

Q.22. Tournament fund Rs. 20,000; tournament expenses Rs. 6,000; receipts from tournament Rs. 8,000. The amount recorded for Tournament fund in the Balance sheet will be

a. Rs. 34,000.

b. Rs. 22,000.

c. Rs. 28,000.

d. Rs. 20,000.

Answer:

(b)

Explanation: Tournament fund will be shown on the liabilities side of the balance sheet (20,000+8,000-6,000).

Q.23. While calculating the consumption of stationery, the item to be deducted will be

a. opening stock.

b. purchases.

c. closing stock.

d. outstanding amount at the end of the period.

Answer:

(c)

Explanation: Consumption of stationery is equal to the opening stock plus purchases minus closing stock. In this resultant amount outstanding amount at the end of the period is added.

Q.24. The income that arises from a gift meant for special purpose is called

a. subscriptions.

b. legacies.

c. endowment fund.

d. entrance fees.

Answer:

(c)

Explanation: The fund arising from bequest or gift, the income of which is devoted for a specific purpose is called endowment fund.

Q.25. State the amount that will be shown in income and expenditure account from the following information.

Salary paid Rs. 80,000 (including Rs. 15,000 for previous year). Salaries outstanding at the end of the period Rs. 5,000.

a. Rs.1,00,000.

b. Rs.90,000.

c. Rs.70,000.

d. Rs.60,000.

Answer:

(c)

Explanation: 80,000-15,000+5,000 = Rs 70,000

Since Rs. 15,000 belongs to previous year, it will be deducted.

Q.26. ‘Interest on tournament fund investment’ received will be

a. added to tournament fund.

b. shown on the credit side of I & E account.

c. shown on the debit side of I & E account.

d. subtracted from tournament fund .

Answer:

(a)

Explanation: Interest on tournament fund will be added to the tournament fund. This income is related to the tournament.

Q.27. The amount received as per the will of a deceased person is called

a. donation for special purpose.

b. legacy.

c. endowment fund.

d. entrance fees.

Answer:

(b)

Explanation: The amount received as per the will of a deceased person is called legacy.

Q.28. The main feature of income and expenditure account is that

a. it is prepared by trading institutions.

b. its objective is to find out net profit or loss.

c. it does not have any opening balance.

d. it is prepared on the basis of trial balance.

Answer:

(c)

Explanation: Income and expenditure account does not have any opening balance. It is prepared like profit and loss account.

Q.29. The basis of recording subscription in income and expenditure account is

a. receipt basis.

b. current period only.

c. related to past, present and future periods.

d. amount used during the period.

Answer:

(b)

Explanation: The income and expenditure account records subscription related to current period only.

Q.30. While recording expenditure in income and expenditure account from receipts and payments account, the item to be ignored is

a. locker rent.

b. honorarium.

c. postage.

d. books

Answer:

(d)

Explanation: Purchase of books is not an expense but an asset.

Q.31. An item is treated as an income, if it is

a. of capital nature.

b. not confined to any accounting year.

c. of revenue nature only.

d. not yet earned.

Answer:

(c)

Explanation: Any item having revenue nature is treated as income. Revenue nature means the cost used up.

Q.32. The item to be excluded from income and expenditure account is

a. salaries.

b. general expenses.

c. purchase of fixed assets.

d. honorarium.

Answer:

(c)

Explanation: Purchase of fixed assets will not be recorded in income and expenditure account because it is a capital expenditure.

Q.33. The revenue item includes

a. ground rent.

b. books.

c. defense bonds.

d. billiard table.

Answer:

(a)

Explanation: Rent is an asset and is shown in the balance sheet.

Q.34. Opening balance of bank overdraft will be shown in

a. debit side of receipts and payments account.

b. credit side of receipts and payments account.

c. closing balance sheet.

d. income and expenditure account.

Answer:

(b)

Explanation: Positive opening balance is shown on the debit side of receipt and payment account. Similarly, negative opening balance is shown on the credit side.

Q.35. Insurance paid during the year amounts to Rs. 2,400. Prepaid insurance at the beginning and at end of the year were Rs. 200 and Rs. 250 respectively. The amount to be recorded in income and expenditure account will be

a. Rs. 2,350.

b. Rs. 2,400.

c. Rs. 2,600.

d. Rs. 2,850.

Answer:

(a)

Explanation: 2,400+200-250

Q.36. In case of not-for-profit organisations, the amount of depreciation on fixed assets will be recorded in

a. income and expenditure account.

b. receipts and payments account.

c. balance sheet (Liabilities side).

d. profit and loss account.

Answer:

(a)

Explanation: Depreciation on fixed assets will be recorded in income and expenditure account only and will be deducted from the value of assets.

Q.37. The item to be excluded from receipts and payments account is

a. salaries and wages.

b. depreciation and bad debts.

c. ground rent.

d. postage and advertisement.

Answer:

(b)

Explanation: Depreciation and bad debts will not be recorded in receipts and payments account, as they do not involve cash/bank.

Q.38. One of the following, which is true about the nature of expenditure, is

a. it is shown in the balance sheet.

b. it is not included in final accounts.

c. it may be capital or revenue item.

d. it is confined to current accounting period only.

Answer:

(d)

Explanation: Expenditure is confined to current period only.

Q.39. The income from the following is

a. donations for building.

b. donation for prizes.

c. donation for pavilion.

d. donations of recurring nature.

Answer:

(d)

Explanation: Donations of recurring nature will be treated as an income. Special purpose donations are to be capitalised.

Q.40. Subscription received in advance is

a. an expense.

b. an income.

c. an asset.

d. a liability.

Answer:

(d)

Explanation: It is a liability, since income is received in advance.

Q.41. If there is tournament fund, then tournament expenses and incomes are transferred to

a. income and expenditure account

b. asset side of the balance sheet

c. liability side of the balance sheet

d. both income and expenditure account and balance sheet.

Answer:

(c)

Explanation: In case of tournament fund, it will be deducted and added in the capital fund.

Q.42. Entrance fees is capitalized, when

a. it is of non-recurring nature.

b. it is regular income

c. it is recurring in nature

d. it is not paid as premium

Answer:

(a)

Explanation: Entrance fees is capitalised because it is of non-recurring nature and should not be treated as an income.

Q.43. Income and expenditure account

a. records capital items only.

records revenue items only.

has an opening balance.

shows profit or loss.

Answer:

(b)

Explanation: Income and expenditure account records revenue items only.

Q.44. Interest due on investment but not yet received, is recorded in

a. receipts and payments account

b. balance sheet only

c. income and expenditure account and balance sheet

d. income and expenditure account only

Answer:

(c)

Explanation: Interest due on investment but not yet received will be recorded in income and expenditure account and balance sheet. It will not be recorded in receipts and payments account, as it does not involve cash/ bank.