Tag: elements of accounts

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Multiple choice elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

Deficit as per Income and Expenditure Account is given effect as______________.

  1. Added to capital fund

  2. Deducted from capital fund

  3. Added to liabilities

  4. Deducted from liabilties
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The deficit as per Income and Expenditure Account is deducted from capital fund. Capital fund is the excess over assets over liabilities. Any addition or reduction in the fund is adjusted through the capital fund account. 

Multiple choice elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

Non-production overheads are usually omitted from stock valuation for the following reason :

  1. They are outside the control of production management.

  2. They are incurred after the stock has been brought to its present location and condition.

  3. They cannot be identified with individual products.

  4. They are fixed period costs.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

SSAP 9 defines that the valuation of stock is to be done on cost or realizable  value whichever is less. Cost is further defines as the cost of raw material, labour, expenses and overheads which are incurred for bring the stock at its location and condition.

Non- production overhead are expenses which are incurred after the stock has been brought to its present location and condition.

Multiple choice elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

In Not-for-Profit organisations effect of surplus is_____________.

  1. Deducted from capital fund

  2. Added to capital fund

  3. Deducted from asset

  4. Added to asset
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Not-for-profit organisation prepare balance sheet for ascertaining the financial position of the organisation. There will be capital fund or general fund in place of the capital, and surplus or deficit ascertained from income and expenditure account is added to/ deducted to the capital fund account.

 It is also a common practice to add some of the capitalised  items like legacies, entrance fees, and life membership fees directly in the capital fund.

Multiple choice elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

If a small amount is received as specific donation the __________.

  1. it is shown on the liabilities side of the balance sheet

  2. it is shown by way of deduction in capital fund in liability side of the balance sheet

  3. it is treated as income and credited to income and expenditure account

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

b"Donation received for specific purpose is capital receipt. Specific donation can't be used for any other purpose than the purpose for which it is given. It creates a liability for Not for Profit Organisation. That's why It is shown on the liabilities side of the balance sheet. "

Multiple choice elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

Outstanding subscription for a non-profit organization is considered as a/an ____________.

  1. Expenses

  2. Liability

  3. Equity

  4. Asset
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Subscription is a annual charge paid by the members of the organisation to receive or avail service or information. It is an income for the organisation and if income is outstanding or say yet to be received it will be an asset for the company hence, will be shown under the head current assets.

Multiple choice elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

Donations for specific purposes are always capitalized.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

True. Specific donations is a donation received for a specific purpose say for constructing a building. Specific donations are not charged to income and expenditure account rather capitalised and shown on the liabilities side and any expenses of the same are deducted from the fund. 

Multiple choice elements of accounts subsidiary books - 2 understand the method of recording cash transactions simple cash boook recording and posting of cash transactions

Rent outstanding for the month of February will appear_________.

  1. on the debit side of the cash book

  2. on the credit side of the cash book

  3. as a contra entry in the cash book

  4. no entry in the cash book
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Outstanding rent is a liability that has not yet been paid in cash. Since no cash has moved, it is not recorded in the cash book.

Multiple choice elements of accounts subsidiary books - 2 understand the method of recording cash transactions simple cash boook recording and posting of cash transactions

Withdrawl column of the Pass Book showed a wrong entry of Rs. 112. When the balance as per Cash Book is the starting point __________.

  1. Rs. 112 to be added

  2. Rs. 112 to be subtracted

  3. No adjustment in required

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

If the pass book shows a withdrawal that did not occur (or was recorded incorrectly), the pass book balance is lower than it should be. To reconcile with the cash book, you must subtract the error from the cash book balance.

Multiple choice elements of accounts subsidiary books - 2 understand the method of recording cash transactions simple cash boook recording and posting of cash transactions

A debit balance of Rs. 1,000 has been brought forward as a credit balance of Rs. 100 on the next page in the Pass Book. To ascertain the balance as per Cash Book _______________________.

  1. Rs. 900 should be added to the balance as per Cash Book.

  2. Rs. 900 should be subtracted from the balance as per Pass Book

  3. Rs. 1,100 should be added to the balance as per Pass Book

  4. None of the above.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A debit balance of 1000 brought forward as a credit balance of 100 is an error of 1100. The reconciliation requires adjusting for the difference in the pass book to match the cash book records.

Multiple choice elements of accounts subsidiary books - 2 understand the method of recording cash transactions simple cash boook recording and posting of cash transactions

One outgoing cheque of Rs. 112 recorded as Rs. 121 in the Cash Book. (Note: This cheque was presented in the Bank). When the balance as per Cash Book is the starting point.

  1. Rs. 112 to be subtracted

  2. Rs. 121 to be subtracted

  3. Rs. 9 to be added

  4. Rs. 112 to be added
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The cash book was overstated by 9 (121 - 112). Since the cash book is the starting point and it is too high, you must subtract the excess or add the difference if the logic is reversed. Wait, if cash book is the starting point and it is recorded as 121 (payment) instead of 112, the cash book balance is 9 less than it should be. Thus, 9 should be added.