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Financial Statements and Analysis Test - 10

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Financial Statements and Analysis Test - 10
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  • Question 1
    1 / -0

    Belle, a nongovernmental not-for-profit organization, received funds during its annual campaign that were specifically pledged by the donor to another nongovernmental not-for-profit health organization. How should Belle record these funds?

    Solution

    Belle, a non-governmental NPO when receive Funds for its annual campaign, it will be a liability for them which will be recorded in balance sheet. And if Organisation pledge this fund to another non governmental NPO , it will be an assets for Belle Non govt. oranisation which is to be recorded on the assets side of balance sheet. 

  • Question 2
    1 / -0

    Which of the following financial categories are used in a nongovernmental not-for-profit organization's statement of financial position?

    Solution

    The statement of financial position for nongovernmental not-for-profit organizations includes assets, liabilities, and net assets. "Net assets" is used rather than "retained earnings" by not-for-profits.

  • Question 3
    1 / -0

    Surplus as shown by the Income and expenditure account is

    Solution

    income and expenditure account shows surplus or deficit.Surplus of NPO is added to capital fund and deficit is deducted from capital fund.

  • Question 4
    1 / -0

    Amount received from the sale of grass of a club should be treated as

    Solution

    Sale of grass will be revenue for NPO which is to be shown on income and expenditure side of NPO hence it is an income.

  • Question 5
    1 / -0

    Entrance fee is treated as

    Solution

    Entrance Fee is an recurring item which is to be treated as revenue receipt

  • Question 6
    1 / -0

    Specific donation is shown in

    Solution

    donation received for any specific purpose is called specific donation which are to be shown in liability side of a balance sheet.

  • Question 7
    1 / -0

    General donation is credited to

    Solution

    Genral donation have no restriction hence they are to be treated as normal income and credited to income and expenditure account.

  • Question 8
    1 / -0

    Which account give an idea about the cash position of a non-profit organization

    Solution

    receipt and payment account is summary of cash book which shows actual cash received and cash paid in a year. This account shows the actual cash in beginning or at end of a year.Hence, this account shows the actual cash position of a NPO.

  • Question 9
    1 / -0

    An amount of Rs.5, 00,000 is received as Donation with condition that this amount will be invested as Fixed Deposit in a Bank. Income from this Investment will be used to distribute prizes to meritorious students of the society It is an example of

    Solution

    An endowment fund is an investment fund established by a foundation that makes consistent withdrawals from invested capital. Hence it will be an endowment fund.

  • Question 10
    1 / -0

    Mr. Shyam lal writes his will that his property will be transferred (after his death) to a Not-for-profit Organization. After death of Mr. Shyam lal, his property will be treated as capital receipt by concerned Not-for-profit Organization under the head 

    Solution

    An amount of money or property left to someone in a will is called a legacy.So, property of Mr. Shyam lal transferred will be shown in balance sheet on liability side as legacy amount

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