Chapter 3: Accounting for Not-for-Profit Organisation — Online MCQ Test
ACCOUNTANCY · CLASS 12 INTERMEDIATE 2 YEAR · Telangana State Board
Practice Chapter 3: Accounting for Not-for-Profit Organisation with a free chapter-wise online MCQ test.
This chapter covers: Focusing on non-profit entities this chapter covers Receipts and Payments Account Income and Expenditure Account Balance Sheet preparation subscriptions life membership fees and le....
AI-generated questions from basic to board-exam level, with instant results and explanations.
Chapter 3: Accounting for 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 sell goods at higher prices
- D. To distribute dividends to shareholders
Answer: B. To provide services for the welfare of members or society
Not-for-profit organisations are formed to provide service, not to earn profit. Any surplus is used for the organisation's objectives.
Not-for-profit organisations are formed to provide service, not to earn profit. Any surplus is used for the organisation's objectives.
Which account is prepared to show the cash and bank transactions of a Not-for-Profit Organisation?
- A. Trading Account
- B. Profit and Loss Account
- C. Receipts and Payments Account
- D. Capital Account
Answer: C. Receipts and Payments Account
Receipts and Payments Account records all cash and bank receipts and payments during the accounting year.
Receipts and Payments Account records all cash and bank receipts and payments during the accounting year.
Income and Expenditure Account of a Not-for-Profit Organisation is prepared on the basis of:
- A. Cash basis
- B. Accrual basis
- C. Hybrid basis only
- D. Cost basis
Answer: B. Accrual basis
Income and Expenditure Account is prepared on the accrual basis, taking into account outstanding and prepaid items.
Income and Expenditure Account is prepared on the accrual basis, taking into account outstanding and prepaid items.
Which of the following is NOT shown in the Receipts and Payments Account?
- A. Cash received from subscriptions
- B. Cash paid for salaries
- C. Outstanding salaries
- D. Bank interest received
Answer: C. Outstanding salaries
Outstanding salaries are non-cash items and are shown in the Income and Expenditure Account and Balance Sheet, not in the Receipts and Payments Account.
Outstanding salaries are non-cash items and are shown in the Income and Expenditure Account and Balance Sheet, not in the Receipts and Payments Account.
Which of the following is the most appropriate treatment of entrance fee received by a charitable club, unless the amount is very small and regular in nature?
- A. Always revenue income
- B. Always capital receipt
- C. Shown as outstanding expense
- D. Shown only in Receipts and Payments Account
Answer: B. Always capital receipt
Entrance fee is generally treated as capital receipt because it is non-recurring in nature and not earned from regular activities.
Entrance fee is generally treated as capital receipt because it is non-recurring in nature and not earned from regular activities.