Accounting for Not-for-Profit Organisations Test 9

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Accounting for Not-for-Profit Organisations Test 9

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Weekly Quiz Competition

Question 1
1 / -0

A non-profit organization received 210,000 as the entrance fee of a new member. If 50% of the fees has to be capitalized, what is the amount of fees needs to be shown in the income and expenditure account ?

A
1,10,000

B
1,05,000

C
2,10,000

D
None of the above

Solution

Entrance fees received = 2,10,000.
Fees to be capitalized = 50%
It means rest of the 50% will be shown in Income and Expenditure Account.
50% of 2,10,000 = Rs. 1,05,000.
Question 2
1 / -0

From the following, find out the amount of subscriptions to be included in the Income & Expenditure Account for the year ended 31st March 2009.
Subscription were received during the year 2008 - 2009 as follows:
For the year 2008 - 2009 30,000
For the year 2009 - 2010 3,000
Subscription outstanding as on 31st March 2008 were Rs. 3,500 out of which Rs.500 were considered to be irrecoverable. On the same date, Subscription received in advance for 2008-2009 were Rs. 2,000.

A
32,000

B
37,000

C
33,000

D
39,000

Solution

Option A is correct.
Subscription received for the year 2008-09 = Rs. 30000
Add : Subscription received in advance = Rs. 2000
Amount to be shown in Income and Expenditure Account =
30000+2000
32000.
Question 3
1 / -0

Investment in sinking fund by a non profit organization is a/an ______________.

A
Liability

B
Accumulated fund

C
Asset

D
Equity

Solution

Investment is that amount which a company invests in sources other than raw material purchasing.
Investment is considered as an asset because it is that amount which will benefit the company in future.
Question 4
1 / -0

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

A
Operate for purposes other than to provide goods or service at a profit

B
Not have a positive fund balance

C
Not possess ownership interests like a corporation

D
Receive significant contributions from providers who do not expect returns.

Solution

As the name suggest, the 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 to an economic transaction. Since, the company is not involved in any kind of profit and hence it will not have a positive fund balance.
Question 5
1 / -0

The accounting information provided by not-for-profit organizations is meant for the _______ and potential contributors to meet the statutory requirement.

A
Past

B
Present

C
Future

D
None of the above

Solution

The main characteristic of Not-for-profit organization is the accounting information provided by such organizations is meant for the present and potential contributors and to meet the statutory requirement.
Question 6
1 / -0

From the following details calculate the Land & Building purchased during the year -
Land & Building on 1.4.2018 = 2,00,000
Land & Building on 313.2019 = 2,13,750
Depreciation provided on land & building during the year was Rs. 11,250.

A
Rs. 25000

B
Rs. 2,500

C
Rs. 13,750

D
Nil

Solution

Land and building is calculated after deducting the depreciation.Hence, the land & building on 31.3.2019 is inclusive of depreciation.
The land & building purchased during the year can be calculated using the formula given below:
$$Land\& Building\quad purchased=\quad Closing\quad balance+Depreciation-Opening\quad balance$$
Substitute values in the above equation
$$Land\& Building\quad purchased=\quad Rs2,13,750+Rs11,250-Rs2,00,000\quad =Rs25,000$$
Thus, the land & building purchased during the year is Rs25,000.
Question 7
1 / -0

Admission fees received during the year should be treated ______________.

A
As capital income

B
As revenue income

C
As revenue, unless the amount involved is large

D
As capital, except for large amounts involved
Question 8
1 / -0

Rs. 1,00,000 received as the annual membership subscription. Out of this Rs. 20,000 is pertaining to the previous accounting period, whereas Rs. 10,000 is receivable at the end of the current accounting period. Calculate the amount of subscription that will be shown in the income and expenditure account for this accounting year.

A
80,000

B
90,000

C
1,20,000

D
1.00,000

Solution

Subscription amount to be shown in income and expenditure account can be calculated using the formula given below:
$$Subscription\quad amount=\quad Subscription\quad received\\ \quad \quad Add:\quad Subscription\quad received\quad at\quad end\quad of\quad year\\ \quad Less:\quad Outstanding\quad subscription\quad for\quad previous\quad year$$
Substitute values in the above equation
$$Subscription\quad amount=\quad Rs1,00,000\\ \quad \quad Add:\quad Rs10,000\\ \quad Less:\quad Rs20,000\quad =Rs90,000$$.
Question 9
1 / -0

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

A
added

B
subtracted

C
divided

D
multiplied

Solution

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
Question 10
1 / -0

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

A
owners

B
members

C
shareholders

D
directors

Solution

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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Accounting for Not-for-Profit Organisations Test 9

Result

Accounting for Not-for-Profit Organisations Test 9

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Rank

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SHARING IS CARING

Question 1

1,10,000

1,05,000

2,10,000

None of the above

Solution

Question 2

32,000

37,000

33,000

39,000

Solution

Question 3

Liability

Accumulated fund

Asset

Equity

Solution

Question 4

Operate for purposes other than to provide goods or service at a profit

Not have a positive fund balance

Not possess ownership interests like a corporation

Receive significant contributions from providers who do not expect returns.

Solution

Question 5

Past

Present

Future

None of the above

Solution

Question 6

Rs. 25000

Rs. 2,500

Rs. 13,750

Nil

Solution

Question 7

As capital income

As revenue income

As revenue, unless the amount involved is large

As capital, except for large amounts involved

Question 8

80,000

90,000

1,20,000

1.00,000

Solution

Question 9

added

subtracted

divided

multiplied

Solution

Question 10

owners

members

shareholders

directors

Solution

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