Unit 2: Accounts of Not–for–Profit Organisation — Online MCQ Test
ACCOUNTANCY · CLASS 12th · Tamil Nadu State Board
Practice Unit 2: Accounts of Not–for–Profit Organisation with a free chapter-wise online MCQ test.
This chapter covers: Focusing on non-commercial entities such as clubs educational institutions and charitable trusts this unit covers accounting for non-profit operations. Students learn to record rec....
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Unit 2: Accounts of Not–for–Profit Organisation — Important Questions & Answers
What is the main objective of a Not-for-Profit Organisation?
- A. To earn maximum profit
- B. To provide services for the welfare of members or society
- C. To trade only in goods
- D. To distribute dividends to owners
Answer: B. To provide services for the welfare of members or society
Not-for-profit organisations are formed to render services, not to earn profit. Any surplus is used for the organisation's objectives.
Not-for-profit organisations are formed to render services, not to earn profit. Any surplus is used for the organisation's objectives.
Which account shows only cash and bank transactions during a period in a Not-for-Profit Organisation?
- A. Income and Expenditure Account
- B. Receipts and Payments Account
- C. Trading Account
- D. Profit and Loss Account
Answer: B. Receipts and Payments Account
Receipts and Payments Account is a summary of all cash and bank receipts and payments during the accounting period.
Receipts and Payments Account is a summary of all cash and bank receipts and payments during the accounting period.
Which of the following items is usually excluded from the Income and Expenditure Account?
- A. Depreciation on assets
- B. Outstanding salaries
- C. Capital expenditure on furniture
- D. Subscription for the current year
Answer: C. Capital expenditure on furniture
Capital expenditure is not treated as an income or expense; it is shown in the Balance Sheet as an asset.
Capital expenditure is not treated as an income or expense; it is shown in the Balance Sheet as an asset.
Which item would appear on both the Receipts and Payments Account and the Balance Sheet, but not in the Income and Expenditure Account?
- A. Outstanding salaries
- B. Depreciation
- C. Cash balance
- D. Subscription received in advance
Answer: D. Subscription received in advance
Subscription received in advance is shown as a receipt in cash book/Receipts and Payments Account and as a liability in the Balance Sheet, but it is not income for the current year.
Subscription received in advance is shown as a receipt in cash book/Receipts and Payments Account and as a liability in the Balance Sheet, but it is not income for the current year.
Which of the following is NOT usually shown in the Income and Expenditure Account of a not-for-profit organisation?
- A. Depreciation on furniture
- B. Outstanding rent
- C. Entrance fees of a recurring nature
- D. Sale of old newspapers
Answer: C. Entrance fees of a recurring nature
Entrance fees of a recurring nature are generally treated as revenue, but non-recurring entrance fees are often treated as capital receipt or special item depending on context. The option given as not usually shown as regular income in I&E is the tricky one.
Entrance fees of a recurring nature are generally treated as revenue, but non-recurring entrance fees are often treated as capital receipt or special item depending on context. The option given as not usually shown as regular income in I&E is the tricky one.