Last Updated on: 17th December 2024, 12:12 pm
Not-For Profit Organisation Accounts MCQ
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Complete resources on Not for Profit Organisation
1. Which of the following is generally considered as a not for profit organization?
A) Charitable organization
B) Corporation
C) Audit firms
D) Insurance companies
Charitable organizations are generally considered as a not for profit organization. So, option (A) is correct
2. Not-for-profit organizations prepare all of the following accounts except the
A) Receipts and payment accounts
B) Income and Expenditure accounts
C) Balance sheet
D) Income statement
Not-for-profit organizations normally prepare, Income and Expenditure accounts & Balance sheet but do not prepare Income Statement. So, option (D) is correct
3. Expenditures greater than incomes of a not-for-profit organization give rise to a
A) Loss
B) Profit
C) Surplus
D) Deficit
Expenditures greater than incomes of a not-for-profit organization give rise to Deficit . So, option (D) is correct
4. Rent expense of a not-for-profit organization paid in advance. Which of the following is the correct classification of rent?
A) Expense
B) Liability
C) Equity
D) Asset
Rent paid in advance by a not-for-profit organization would be treated as Advance. So, option (D) is correct
5. Advance receipt of subscription from a member of the not-for-profit organization is considered as
A) Income
B) Liability
C) Equity
D) Asset
Advance receipt of subscription from a member of the not-for-profit organization is considered as Liability. So, option (B) is correct
6. Which of the following is to be recorded in an income and expenditure account?
A) Purchase of a fixed asset
B) Capital expenditure incurred on a fixed asset
C) Profit on the sale of a fixed asset
D) Sale of a fixed asset
Profit on Sale of Fixed Asset is recorded in an income and expenditure account. So, option (C) is correct
7. Honorarium paid by not-for-profit organization to non-employee is treated as :
A) It’s a revenue expenditure
B) It’s a Capital expenditure
C) It is not recorded in the books of accounts
D) None of the above
Honorarium paid by not-for-profit organization to non-employee is treated as Revenue Expenses.
So, option (A) is correct
8. The capital of a not-for-profit organization is generally known as
A) Equity
B) Accumulated fund
C) Cash fund
D) Financial reserve
The capital of a not-for-profit organization is generally known as Accumulated fund. So, option (B) is correct.
9. When Cash is received for life membership, the entry is :
A) Cash Debit and capital Credit
B) Life membership Debit and cash Credit
C) Investment Debit and cash Credit
D) Cash Debit and life membership fund Credit
When Cash is received for life membership, the entry is Cash Debit and life membership fund Credit. So, option (D) is correct.
10. XYZ club runs a Bar that maintains a separate trading account for its trading activities. Profit & Loss of Bar for Trading activities is :
A) Profit or loss is directly shown in the balance sheet
B) Profit or loss is to be presented in income and expenditure account
C) Profit and loss is credited in income statement
D) Profit or loss is added to accumulated fund
XYZ club runs a Bar that maintains a separate trading account for its trading activities. Profit & Loss of Bar for Trading activities is to be presented as in income and expenditure account. So, option (B) is correct.
11. Which of the following is the accounting equation for a not-for-profit organization?
A) Asset = Capital + Liabilities
B) Capital + Liabilities = Assets
C) Accumulated fund + Liabilities = Assets
D) Liabilities = Asset + Accumulated fund
Accounting equation for a not-for-profit organization is Accumulated fund + Liabilities = Assets. So, option (C) is correct.
12. Subscription received but not yet earned is considered as
A) Asset
B) Liability
C) Income
D) Expenditure
Subscription received but not yet earned (received in advance) is considered as Liability. So, option (B) is correct.
13. A not-for-profit organization received Rs.10,000 as the entrance fee of a new member. If 20% of the fee has to be capitalized, what is the amount of fee needs to be shown in the income and expenditure account?
A) Rs.2000
B) Rs.8000
C) Rs.9000
D) Rs.10,000
2000 (20% of 10000) is Capitalised and Balance 8000 is treated as Income. So, option (B) is correct.
14. Rs.10,000 received as the annual membership subscription. Out of this, Rs.2000 is pertaining to the previous accounting period whereas Rs.1000 is receivable at the end of the current accounting period. Calculate the amount of subscription that will be shown in the income and expenditure account for this accounting.
A) Rs.10,000
B) Rs.9000
C) Rs.12,000
D) Rs.8000
Subscription treated as Income = 10000 (received) + 1000 (receivable) – 2000 (previous year). So, option (B) is correct.
15. Balance Sheet of a not-for-profit organization (like charitable hospital) doesn’t contain
A) Assets
B) Building
C) Debts
D) Owner’s equity
The Balance Sheet of a not-for-profit organization normally doesn’t contain Owner’s equity. So, option (D) is correct.
16. Income and expenditure accounts show
A) Cash available to an organization
B) Closing capital of an organization
C) Cash available in the bank account
D) Surplus or deficit for the current accounting period
Income and expenditure accounts show Surplus or deficit for the current accounting period. So, option (D) is correct.
17. On what basis the receipts and payments account is prepared?
A) Cash basis
B) Accrual basis
C) Both accrual and cash basis
D) None of the above
In Not-for-Profit organisation, Receipts and Payments account is prepared on Cash Basis. So, option (D) is correct.
18. Investment in sinking fund by a not-for-profit organization is
A) Liability
B) Accumulated fund
C) Asset
D) Equity
Investment in sinking fund by a not-for-profit organization is treated as Asset. So, option (C) is correct.
19. In not-for-profit accounting, the sale of old newspapers is treated as
A) Expenses
B) Expenditure
C) Income
D) Capital receipt
Sale of old newspapers is treated as Income. So, option (C) is correct.
20. Which of the following is a distinguishing characteristic of a not-for-profit organization?
a.Its revenues do not exceed its expenses
b.There is no ownership interests that can be sold, transferred, or redeemed
c.It does not depreciate its capital assets
d. It does not charge fees for any of its services In not-for-profit, there is no ownership interests that can be sold, transferred, or redeemed
21. Sale of old newspapers is—
(A) Capital Receipt
(B) Revenue Receipt
(C) Asset
(D) Profit
Correct Option is (b)
22. Income and expenses related to the prize fund is shown in
(A) Income and Expenditure Account
(B) Assets side of the Balance Sheet
(C) Liabilities side of the Balance Sheet
(D) Cash Account
Correct Option is (a)
23. Life membership fees of non-trading concern is
(A) Capital Receipts
(B) Revenue Receipts
(C) Both
(D) None of these
Correct Option is (a)
24. Legacies should be treated as—
(A) Liability
(B) A Revenue Receipt
(C) A Capital Receipt
(D) None of these
Correct Option is (c)
25. Payment of Honorarium to secretary is treated as—
(A) Capital Expenditure
(B) Revenue Expenditure
(C) Cash Expenses
(D) None of these
Correct Option is (b)
26. Specific donation received is—
(A) Capital Receipt
(B) Revenue Receipt
(C) Asset
(D) None of these
Correct Option is (a)
27. Income and Expenditure Account records—
(A) Capital items
(B) Revenue items
(C) A and B both
(D) None of these
Correct Option is (b)
28. Outstanding subscription is —
(A) Income
(B) Asset
(C) Liability
(D) None of these
Correct Option is (b)
29. Entrance fee, unless otherwise stated, is treated as—
(A) Revenue Receipts
(B) Capital Receipts
(C) Liability
(D) None of these
Correct Option is (a)
30. Life membership fee received by a Club is—
(A) Revenue Receipt
(B) Capital Receipt
(C) A and B both
(D) None of these
Correct Option is (b)
31. All receipts of capital nature are shown in—
(A) Income and Expenditure A/c
(B) Balance Sheet
(C) P. & L. A/c
(D) None of these
Correct Option is (b)
32. All items of revenue in nature are shown in—
(A) Income and Expenditure A/c
(B) Balance Sheet
(C) A and B both
(D) None of these
Correct Option is (a)
33. Which of the following is not a not-for-profit organisation—
(A) School
(B) Hospital
(C) Club
(D) Partnership Firm
Correct Option is (d)
34. The excess of assets over liabilities in non-profit concerns is treated as—
(A) Capital Fund
(B) Capital
(C) Profit
(D) Net Profit
Correct Option is (a)
35. Subscriptions received in advance by a Club are shown on ………. side of the Balance Sheet—
(A) Assets Side
(B) Liabilities Side
(C) Debit Side
(D) Credit Side
Correct Option is (b)
36. Which of the following is not an income—
(A) Subscription
(B) Donation
(C) Sale of Ticket
(D) Endowment Fund
Correct Option is (d)
37. Income and Expenditure A/c includes—
(A) Revenue Items
(B) Capital Items
(C) Both (A) and (B)
(D) None of these
Correct Option is (a)
38. The main object of non-profit organisation is—
(A) To earn the Profit
(B) To Serve the Society
(C) To Prepare Profit & Loss A/c
(D) All the above
Correct Option is (b)
39. In not-for-profit organisations, excess of expenditure over income is called—
(A) Loss
(B) Profit
(C) Deficit
(D) Surplus
Correct Option is (c)
40. Subscription received by non-profit organisation is—
(A) Capital Receipt
(B) Revenue Receipt
(C) Both ‘A’ and ‘B’
(D) None of the above
Correct Option is (b)
41. Entrance fees received by a Club is treated as—
(A) Revenue Receipt
(B) Capital Receipt
(C) Revenue Expenditure
(D) None of these
Correct Option is (a)
42. Receipts and Payments A/c is a summary of—
(A) All Capital Receipts and Payments
(B) All Revenue Receipts and Payments
(C) All Revenue and Capital Receipts and Payments
(D) None of the above
Correct Option is (c)
43. Subscription received during the year Rs. 50,000; Subscriptions outstanding at the end of the year Rs. 8,000; Subscription outstanding at the beginning of the year Rs. 6,000. Net Income from subscription will be—
(A) Rs. 48,000
(B) Rs. 64,000
(C) Rs. 52,000
(D) Rs. 36,000
Correct Option is (c)
44. Subscription received during the year Rs. 1,80,000; Subscriptions outstanding at the end of the year Rs. 20,000; Subscriptions received in advance at the end of the year Rs. 10,000. The amount of subscription to be credited to Income and Expenditure Account will be—
(A) Rs. 2,10,000
(B) Rs. 1,90,000
(C) Rs. 1,70,000
(D) Rs. 2,00,000
Correct Option is (b)
45. In case specific fund is maintained, the expenses exceeding the amount of the funds, should be recorded on—
(A) Liabilities side of the Balance Sheet
(B) Debit side of the Income and Expenditure Account
(C) Credit side of the Income and Expenditure Account
(D) Assets side of the Balance Sheet
Correct Option is (b)
46. All receipts from sale of consumable items are treated as—
(A) Capital Receipts
(B) Revenue Receipts
(C) Both ‘A’ and ‘B’
(D) None of these
Correct Option is (b)
47. Subscriptions received in cash during the year Rs. 5,000, amount received in advance for the next year is Rs. 300. Amount outstanding for current year was Rs. 400. The amount to be credited to the
Income and Expenditure Account is—
(A) Rs. 4,000
(B) Rs. 5,100
(C) Rs. 4,200
(D) Rs. 4,600
Correct Option is (b)
48. If income is Rs. 16,000 and ‘deficit’ debited to capital fund is Rs. 4,300, then expenditure is—
(A) Rs. 16,000
(B) Rs. 4,300
(C) Rs. 20,300
(D) None of these
Correct Option is (c)
49. Balance of Income and Expenditure Account shows—
(A) Cash in hand
(B) Capital Fund
(C) Net Profit
(D) Excess of Income over Expenditure or vice-versa
Correct Option is (d)
50. Property received as a result of the will of the deceased person is called –
(A) Legacy
(B) Honorarium
(C) Donation
(D) Subscription
Correct Option is (a)
51. Legacies should be treated as—
(A) A Liability
(B) A Revenue Receipts
(C) An Income
(D) None of these
Correct Option is (a)
52. Life membership fees received by Club is shown in—
(A) Income and Expenditure A/c
(B) Balance Sheet
(C) Receipts and Payments A/c
(D) None of these
Correct Option is (b)
53. For non-trading organisation honorarium paid is—
(A) A Capital Expenditure
(B) A Revenue Expenditure
(C) An Income
(D) None of these
Correct Option is (b)
54. Receipts & Payments A/c is a—
(A) Personal A/c
(B) Real A/c
(C) Nominal A/c
(D) None of these
Correct Option is (b)
55. Income & Expenditure A/c is a—
(A) Personal A/c
(B) Real A/c
(C) Nominal A/c
(D) None of these
Correct Option is (c)
56. Income and Expenditure Account is prepared—
(A) By Business Organisation
(B) By Industrial Organisation
(C) By Not-for-profit Organisation
(D) By all Organisations
Correct Option is (c)
57. Income and Expenditure Account generally indicates—
(A) Surplus/Deficit
(B) Cash Balance
(C) Capital Fund
(D) Net Profit/Loss
Correct Option is (a)
58. Donation received for specific objective will be shown—
(A) In Income and Expenditure A/c
(B) On Liabilities side of B/S
(C) On Assets side of B/S
(D) In none of these
Correct Option is (b)
59. The excess of assets over liabilities in non-trading concerns is treated as—
(A) Capital Fund
(B) Capital
(C) Profit
(D) Net Profit
Correct Option is (a)
60. In non-trading concerns, excess of income over expenditure is called—
(A) Profit
(B) Surplus
(C) Loss
(D) Deficit
Correct Option is (b)
