Tag: accounting for not-for-profit organisation

Questions Related to accounting for not-for-profit organisation

Given : Stock of stationery on Jan. 1, 2015 Rs 400
Stock of stationery on Dec. 31, 2015 Rs 100
Payment for stationery during 2015 Rs 1,200
Creditors for stationery on Dec. 31, 2015 Rs 150.
What is the amount of stationery that will be posted to the Income and Expenditure A/c for the year ending Dec. 31, 2015?

book keeping and accountancy accounting for not-for-profit organisation financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations prepration of income and expenditure account

  1. Rs 1,150

  2. Rs 1,650

  3. Rs 850

  4. Rs 1,050

Show answer
Correct Option: B
Explanation:

Calculation of Amount of stationary for the year ended 31st March, 2015

Opening stock of stationary ,1st Jan 2015  =   400
+ Payment made during the year                =  1200
+ Creditors for stationary on 31st Dec         =  150
-  Closing stock as on 31st Dec ,2015          =  (100)
                                                                       =  1650 Rs.

Receipt and Payments Account is summary of all capital receipts and payments.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

False. Receipts and payment account records the receipts and payments of all nature. Receipts and payments account records all the cash transactions of the business. It is basically a summary of cash transactions all incomes are recorded on the credit side and expenses are shown on the debit side.  

Receipts and Payment Account does not differ between capital and revenue receipts.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

True. Receipts and payments Account does not differ between capital and revenues receipts. Receipts and payment account records the receipts and payments of all nature. It records all the cash transactions of the business and is basically a summary of cash transactions. All incomes are recorded on the credit side and expenses are shown on the debit side.  

State True or False:
Receipt and Payment Account records the receipts and payments of revenue nature only.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

This statement is false. A receipt and payment account is a summarized cash book. It records all cash transactions whether it is revenue nature or capital nature. The Receipt and Payment account has debit side to record all receipts and credit side to record all payments made by not for profit organisation during a year. It records all the receipts and payments during a year whether related to current year, previous year or next year. 

Receipt and payment Account is equivalent to profit and loss account. 

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

False. Receipts and payments accounts is equivalent to cash account. Receipts and payment account records the receipts and payments of all nature. It records all the cash transactions of the business. It is basically a summary of cash transactions all incomes are recorded on the credit side and expenses are shown on the debit side

The Receipt and Payment account starts with the opening balance of ______ and _____.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. cash, bank

  2. bank, bills receivable

  3. bills receivable, bills payable

  4. none of the above

Show answer
Correct Option: A
Explanation:

Receipt and Payment is a summarized statement of all cash transactions during an accounting year. Only cash transactions are recorded in Receipt and Payment accounts. 

In the Receipt and Payment account both capital and revenue transactions are recorded, whereas in Income and Expenditure account ________ transactions are recorded.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. Capital

  2. Deferred

  3. Revenue

  4. Cash

Show answer
Correct Option: C
Explanation:

Receipt and Payment account is a summarized statement of all cash transactions during an accounting year. The account through which surplus or deficit of a non-profit-seeking concern is ascertained is called Income and Expenditure account. 

Which of the following items are not considered in Receipt & Payment A / c but are considered Income & Expenditure A / c?

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. Outstanding and prepaid

  2. Capital & revenue

  3. Both (A) and (B)

  4. None of the above is correct

Show answer
Correct Option: A
Explanation:

The item to be mentioned in income & expenditure account is outstanding or prepaid expenses. But it is not recorded in receipt & payments account because such type of entries are of revenue nature and revenue nature entries cannot be recorded in receipt & payments account.

Donations received for a special purpose will be transferred to the ___________.

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. Income and expenditure account

  2. Asset side of the balance sheet

  3. Liabilities side of the balance sheet

  4. Debit side of the ledger

Show answer
Correct Option: A
Explanation:

The amount of general donation is an income and we credit it to Income and Expenditure Account. 

Specific Donation: It means the donation should be used only for the library, i.e., it is a specific donation. 
Specific donations are capitalized and are shown on the liabilities side of the Balance Sheet.

Which of the following items should not be entered in receipts and payments account of a club?

book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

  1. Sale of old newspaper

  2. Loss on sale of old furniture

  3. Subscriptions received in advance

  4. Expenses for previous year

Show answer
Correct Option: B
Explanation:

"A receipt and payment account is a summarized cash book (cash and bank) for a given period". 

It prepared to list down all the receipts and payments. There is no outflow of cash due to loss on sale of old furniture, hence not to be recorded in receipts and payments account.