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FS of Non Profit Organisation Test - 6

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FS of Non Profit Organisation Test - 6
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  • Question 1
    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 2
    1 / -0

    Subscriptions received during the year were Rs.26000 including Rs.2000 for previous year and Rs.11000 for the next year. State the amount to be transferred as subscription to Income and expenditure account for current year

    Solution

    Total amount received = 26000

    - Subscription or previous year= 2000

    - Subscriptiom for next year= 11000

    Amount to be shown in income and expenditure = 13000

  • Question 3
    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 4
    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 5
    1 / -0

    On 1st April 2011 a club owned a building valued at Rs.200000, computer Rs.45000, furniture Rs.30000 and cash balance of Rs.2000. Subscription and salaries due on that date were Rs.1000 and Rs.2000. State the amount of capital fund on 1st April 2011.

    Solution

    On 1 April, 2011

    Total Assets= Building + Computer + Furniture + Cash + Subscription Due(outstanding)

    Total Assets = 200000+45000+30000+2000 +1000

    Total Assets = Rs. 278000

    Total Liabilities= Salary Due (outstanding)

    Total Liabilities = Rs. 2000

    So,

    Capital Fund = Total Assest - Total Liabilities

    Capital fund = 278000-2000

    Capital fund = Rs. 276000

  • Question 6
    1 / -0

    How will you treat the following. Poor girl’s marriage fund- Rs.500000, Donation received towards fund- Rs.50000, expenditure during the year on Poor girl’s marriage fund – Rs.600000

    Solution

    Since the amount of Expenditure is more than receipt and fund amount , so it will be recorded on the Dr. side of Income and expenditure side. Calculation will be as follow:- 

    Poor girl marriage exp= 600000

    - Poor girl marriage fund= 500000

    - donation amount = 50000

    Amount to be shown on Dr. of I/E A/c = 50000

  • Question 7
    1 / -0

    Manik has instituted a separate fund of Rs.100000 in a school. The school kept the funds in a separate bank account out of which it withdrew money every year and spent it on the sports activities. The fund had a balance of Rs.15000 as on 31st March 2012 it spent Rs.17500 in organizing the sports events. How much amount to be debited to sports fund

    Solution

    There is balance of Rs. 15000 in sports fund and and expense on sport event is Rs. 17500 which means maximum Rs. 15000 can be debited from the sports fund and the excess of Rs. 2500 (Rs. 17500-Rs. 15000) will be shown in the Income and Expenditure account on debit side(Expenditure side).

  • Question 8
    1 / -0

    Manik has instituted a separate fund of Rs.100000 in a school. The school kept the funds in a separate bank account out of which it withdrew money every year and spent it on the sports activities. The fund had a balance of Rs.15000 as on 31st March 2012 it spent Rs.17500 in organizing the sports events. How will you show account of expenses

    Solution

    There is balance of Rs. 15000 in sports fund and and expense on sport event is Rs. 17500 which means maximum Rs. 15000 can be debited from the sports fund and the excess of Rs. 2500 (Rs. 17500-Rs. 15000) will be shown in the Income and Expenditure account on debit side(Expenditure side).

  • Question 9
    1 / -0

    Match the following. Options are as follows:

    Solution

    Endowment fund is set up to grant loan for specific purpose.

    Annuity Fund is received assets from donors with condition to pay specified amount periodically.

    Loan fund - Arising out of bequest of gift.

    Prize fund is set up use for distribution of prizes.

  • Question 10
    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 11
    1 / -0

    Calculate the amount to be recorded on the liabilities side of balance sheet. Tournament fund – Rs.20000, Tournament expenses- Rs.6000, Tournament Receipts - Rs.8000

    Solution

    Tournament fund =20000

    +tournament receipt= 8000

    - Tournament exp= 6000

    amount recorded on Liability = 22000

  • Question 12
    1 / -0

    Prize fund Rs.10000, Interest on prize fund investments Rs.1000, Prize paid Rs.2000, Prize fund investment Rs.8000.What will be its treatment

    Solution

    Calculation of balance sheet will be like this:- 

    Prize fund - 9000

    Add:- Interest on prize fund investment 1000

    Less:- Prize paid 2000

    Amount on Liability side = Rs. 9000

    Prize fund investment Rs. 8000 will be shown on asset side.

  • Question 13
    1 / -0

    Balance on tournament fund as on 01/04/2011 was Rs.80000.During the year 2011-2012 Tournament expenses- Rs.28000, and receipt from tournament were Rs.18500. State the amount to be shown on liability side

    Solution

    Balance of Tournament fund = 80000

    + Receipt of tournament = 18500

    - Tournament expense= 28000

    Net Amount of tournament fund= 70500

    This amount is to be shown in balance sheet on liability side.

  • Question 14
    1 / -0

    Receipt from sale of consumable item is accounted as __________

    Solution

    Receipt from sale of consumables is in recurring nature and this will be a revenue item or Revenue Receipt which is to be shown on income side of income and expenditure account.

  • Question 15
    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.

  • Question 16
    1 / -0

    How will you treat the Billiard Match expenses of Rs.2500

    Solution

    Billiard Match expenses of Rs.2500 will be shown on the dr. side of income and expenditure account as this is an recurring expense.

  • Question 17
    1 / -0

    Second hand furniture worth Rs.6000 was purchased. It was repaired for Rs.600 and installed by the workers to whom Rs.200 were paid as wages. For what amount should the furniture be capitalized

    Solution

    Any amount spent on Fixed assets purchased and till the time of its installation every expense is to be cpaitalized to that assets. Hence , Total of Rs. 6800 Will be capitalized to furniture account.

  • Question 18
    1 / -0

    There are 60 members of a Not-for-profit Organization and each member is required to pay a sum of 300 per annum to continue his/her membership. Hence this amount is known as

    Solution

    Subscription is the amount paid by the members to keep their mem­bership alive.hence the amount received will be Subscription.

  • Question 19
    1 / -0

    Expenditure on construction of Pavilion is Rs.600000. The construction work is in progress and has not yet completed. Pavilion fund as at 31st March 2011 is Rs.1000000 and Capital fund as at 31st March 2011 is Rs.2000000. Calculate the amount to be shown on liability side as Pavilion fund

    Solution

    Pavilion fund is a spcific fund whiich is for construction for pavilion hence it is an liability. Any expendtiure to construct will be deducted from this fund .

    So, Expenditure on construction is deducted from pavilion fund and added to capital fund and it is also shown on assets side as work in progress.

    Amount to be shown on liability side of balance sheet as Pavilion fund = Balance in pavilion fund - Expenditure on construction of pavilion 

    Amount to be shown on liability side of balance sheet as pavilion fund = 10,00,000-6,00,0000= Rs. 4,00,000

  • Question 20
    1 / -0

    Expenditure on construction of Pavilion is Rs.600000. The construction work is in progress and has not yet completed. Pavilion fund as at 31st March 2011 is Rs. 1000000 and Capital fund as at 31st March 2011 is Rs. 2000000 Amount to be shown on income and expenditure account

    Solution

    Since, Expenditure on construction of pavilion is a capital expenditure it is to be decucted from Pavilion fund. The amount deducted will be added to capital fund too and with that there is work in progress which increase the assets of the balance sheet with Rs. 6,00,000. 

    Hence , No amount is to be charged to income and expenditure account. There will be Increase in asset one side with Rs. 6,00,000 as work in progress as pavilion construction and On liabilitiy side this will be deduct from pavilion fund and added to capital fund.

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