Tag: accounts of 'not for profit' concerns

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Questions Related to accounts of 'not for profit' concerns

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

A sports club is a trading concern.

  1. True

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

Trading concern is an entity that derives its products for sale, thereby revenue, through purchasing products for sale from other producers /manufacturers for resale to their customers base. A sports club is not a trading concern as it does not perform any such tasks. 

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

A not-for-profit entity has all of the following characteristic except that it will ______________.

  1. operate for purposes other than to provide goods or service at a profit

  2. not have a positive fund balance

  3. not possess ownership interests like a corporation

  4. receive significant contributions from providers who do not expect returns.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As the name suggest not-for-profit entity works to provide social services and doesn't relate any of its activity with profit.


A positive fund balance is obtained when the entity earns profits due an economic transaction. Since, the company is not involved in any kind of profit and hence it will not have a positive fund balance.

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

The accounting information provided by such organisations is meant for the _______ and potential contributors meet the statutory requirement.

  1. past

  2. present

  3. future

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Not-for-Profit organisations refer to the organisations that are used for the welfare of the society and are set up as charitable institutions which function without any profit motive. Their main aim is to provide service to a specific group or the public at large. Normally, they do not manufacture, purchase or sell goods and may not have credit transactions. Hence, they need not maintain many books of account (as the trading concerns do) and Trading and Profit and Loss Account. The funds raised by such organisations are credited to capital fund or general fund. The major sources of their income usually are subscriptions from their members, donations, grants-in-aid, income from investments, etc.

The main characteristic of such organisation is the accounting information provided by such organisations is meant for the present and potential contributors and to meet the statutory requirement.

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Not-for-profit organisations are organised as charitable trusts and subscribers to such organisation are called _________.

  1. owners

  2. members

  3. shareholders

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

b'

Not for Profit organisations are formed for providing service to specific group or public at large such as education, health care, sports and so on. These are organised as charitable trusts/ societies and subscribers to such organisations are called members. These organisations have service as the main objective. Normally these organisations do not undertake any business activity and are managed by trustees/executive committee. They also have to maintain proper accounts and prepare financial statements. 

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Multiple choice book keeping and accountancy accounts of 'not for profit' concerns accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Non-profit earning companies are mostly formed as ______________.

  1. Companies limited by shares

  2. Companies limited by guarantee

  3. Unlimited companies

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

Limited by guarantee companies are formed by not for profit organisations, such as sports clubs, charitable organisations etc. A company limited by guarantee does not have any shares or stakeholders but is owned by guarantors who agree to pay a set amount of money towards company debts. In case of NPO, this amount is known as subscription. Each member is responsible towards NPO till the subscription amount only. 

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

The surplus generated in the form of excess of income over expenditure is not distributed amongst the _________.

  1. owners

  2. members

  3. directors

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

Not-for-Profit organisations refer to the organisations that are used for the welfare of the society and are set up as charitable institutions which function without any profit motive. Their main aim is to provide service to a specific group or the public at large. Normally, they do not manufacture, purchase or sell goods and may not have credit transactions. Hence, they need not maintain many books of account (as the trading concerns do) and Trading and Profit and Loss Account.

The surplus generated in the form of excess of income over expenditure is not distributed amongst the members. It is simply added in the capital fund. This is one of the main characteristic of such organisations

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

The surplus generated in the form of excess of income over expenditure is simply ________ in the capital fund.

  1. added

  2. subtracted

  3. divided

  4. multiplied
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Not-for-Profit organisations refer to the organisations that are used for the welfare of the society and are set up as charitable institutions which function without any profit motive. Their main aim is to provide service to a specific group or the public at large. Normally, they do not manufacture, purchase or sell goods and may not have credit transactions. Hence, they need not maintain many books of account (as the trading concerns do) and Trading and Profit and Loss Account.

The surplus generated in the form of excess of income over expenditure is not distributed amongst the members. It is simply added in the capital fund. This is one of the main characteristic of such organisations