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Accounting for Not-for-Profit Organisations Test 8

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Accounting for Not-for-Profit Organisations Test 8
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Weekly Quiz Competition
  • Question 1
    1 / -0
    The term 'funds' as used in fund flow statement means ________________.
    Solution
    Fund flow statement is a statement of cash inflows and cash outflows. There are persons who feel that the funds are cash or working capital which represent the excess of current assets over current liabilities. The term flow means movement and includes both inflows and outflows of resources.And the funds used in the flow statement is a current assets.
  • Question 2
    1 / -0
    Taking all ______ assets with additions after charging depreciation and showing them on the assets side is one step adopted in preparation of balance sheet.
    Solution
    Balance sheet show the financial position of the business. All the assets and liabilities are recorded in it. Assets are of two types: fixed and current. Fixed assets are subject to depreciation. Fixed assets are recorded after deducting depreciation. Recorded fixed assets after charging depreciation and showing them on the assets side is one of the steps involved in preparation of balance sheet.
  • Question 3
    1 / -0
    Income & Expenditure A/c is prepared by transfer of :
    (I) Nominal accounts
    (II) Real accounts
    (III) Personal accounts
    The correct answer is ___________________.
    Solution
    Option D is correct. Nominal account is related to expenses or losses and incomes or gains. Income and Expenditure account is an account prepared by non trading concerns to ascertain surplus or deficit of income over expenditure for a particular period. So Income and Expenditure account is a Nominal account.
  • Question 4
    1 / -0
    Which of the following is generally considered as a non-profit oriented organization?
    Solution
    A Charitable organization is an organization whose main objective is social well-being. Charitable organizations often depend on donations. Corporation, audit firms and Insurance companies work for profit motive. They can not be considered as Non- profit organizations. 
  • Question 5
    1 / -0
    A Club is of 150 members. Subscription per member is Rs. 500 per month. Subscription of 8 members of whole years was not received and subscription from 5 members has been received In advance for 6 months of the next year. The amount of subscription to be shown in Receipts & Payments Account will be ________________.
  • Question 6
    1 / -0
    On the basis of following information calculate the amount will appear in the item 'stationery consumed' in Income and Expenditure Account for the year ending 31st March, 2009. 
    Stock of stationary on 1.4.2008                                                     
    		12, 000
    Amount paid for stationary during the year ended 31.3.2009
    		1,40,000
    Stock of stationary on 31.3.2009
    		23,000
    Solution
    Stationary consumed = Opening balance + stationary purchased during the year - closing balance
                                         = 12000+1,40,000-23000
                                        = 1,29,000.

  • Question 7
    1 / -0
    When cash is received for life membership,which one of the following double entries is passed ?
    Solution

    Some organisations provide its members an option to pay a lump sum amount to become members for the whole life. The members opting for the life membership are not required to pay periodic subscription. As this is received only once it is transferred to the Capital fund Account in Balance Sheet. As cash is received, cash account is debited and it is a liability, so capital/ General fund is credited. 

  • Question 8
    1 / -0
    Rent expense of a nonprofit organization paid in advance. Which of the following is the correct classification of rent paid in advance ?
    Solution
    Rent paid in advance means rent amount which is not yet due is already paid. It is an asset as non profit organisation will not be required to pay when it will actually due. It will give benefit to future. Anything that gives benefit in future is an asset for firm. So, it is an asset. 
  • Question 9
    1 / -0
    Comparing items on _________ side of the Receipts and Payment Account with ________ side of the Income and Expenditure account is one of the step adopted in preparation of balance sheet.
    Solution
    Receipts and Payments Account records all the amounts received and paid during the year. Income and Expenditure records all incomes and expenses relating to this year whether actually income received or not and expenses paid or not. 
    Comparing items on receipt side of Receipt and Payment Account with income side of Income and Expenditure Account tells us about whether any income is outstanding or received in advance. 

    Outstanding income is recorded on asset side of balance sheet and income received in advance is recorded on liabilities side of balance sheet. 
  • Question 10
    1 / -0
    In case of a non profit organization life membership fee is treated as _____________.
    Solution

    Some organisations provide its members an option to pay a lump sum amount to become members for the whole life. The members opting for the life membership are not required to pay periodic subscription. As this is received only once it is transferred to the Capital fund Account in Balance Sheet because it creates liability for organisation.

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