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Accounting for Not-for-Profit Organisations Test 1

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Accounting for Not-for-Profit Organisations Test 1
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  • Question 1
    1 / -0
    Funds raised by Not-for-Profit Organisations through various sources is __________account.
    Solution
    Funds raised by Non-for-Profit organizations through various sources are credited to the capital fund. Capital fund is the excess of assets over liabilities. So, the excess amount which is mostly the income of the organization is the funds raised by them. Any addition in funds will be added to the capital fund/general fund. 
  • Question 2
    1 / -0
    The funds raised by not-for-profit organisations are credited to _________.
    Solution
    The funds raised by the not-for-profit-organisation are transferred to the capital fund. This is because like any other profit earning organisation they don't have a capital account to be shown in balance sheet. So, the excess of assets over liabilities is credited to capital fund. 
  • Question 3
    1 / -0
    Following item come under head fixed assets______________.
    Solution
    The items that are recorded under head fixed assets are assets purchased, added or constructed during the year. Fixed assets are the assets that are purchased for long term use of the business.
  • Question 4
    1 / -0
    Not-for-Profit Organisations do not maintain_______account.
    Solution
    Non-for-Profit organizations do not maintain Capital account. They prepare Income and Expenditure account (profit and loss account), Receipts and Payments account (cash & bank accounts), and Balance Sheet. Instead of a capital account, NPOs maintain a Capital Fund for the accumulation of surplus, general donations, subscriptions, etc.
  • Question 5
    1 / -0
    The information for the preparation of receipt and payments account is taken from _________.
    Solution
    Receipts and payment account is an extension of cash book. All receipts and payments are recorded in receipts and payment account for which all information is taken from cash book.
  • Question 6
    1 / -0
    Revenue receipts are ___________ in the business.
    Solution
    Receipts can be classified as revenue receipts and capital receipts. Revenue receipts are those which are received by firm in the normal course of business. These are recurring in nature. For example, membership fee from a club member.
  • Question 7
    1 / -0
    Non-trading institutions prepare ___________.
    Solution
    Non trading organizations like professionals i.e doctors, chartered accountants, lawyers are preparing the income and expenditure account.
  • Question 8
    1 / -0
    The closing debit balance in the receipts and payments account indicates the ________ balance at the end of the year.
    Solution
    Receipts and payments account is like a cash book which records all the receipts and payments irrespective of the period. Excess of debit over credit is a closing debit balance and it indicates the cash balance.
  • Question 9
    1 / -0
    Receipts and payment account shows ___________.
    Solution
    Receipts and payments account is prepared by taking the information from cash book. It records all the cash receipts and payments including revenue and capital.
  • Question 10
    1 / -0
    Income and expenditure account is prepared by _________ concerns.
    Solution
    Professionals like doctors, CA's, lawyers are not involved in any trading activity. Income and expenditure account is prepared to record their income and expense.
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