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Test: Financial Statements Of Non Profit Organization - 1


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Test: Financial Statements Of Non Profit Organization - 1 - Question 1

A nonprofit organization's assets that have been designated by its board of directors for a specific project should be reported on the external financial statements as__________________ net assets.

Test: Financial Statements Of Non Profit Organization - 1 - Question 2

Contribution received by a Non-profit organisation is shown in the statement of activities under the caption

Test: Financial Statements Of Non Profit Organization - 1 - Question 3

Which of the following is true relating to Income and expenditure account

Detailed Solution for Test: Financial Statements Of Non Profit Organization - 1 - Question 3

The correct option is Option D.

In the normal course of business, some of the expenses may be paid in advance. However, the organization may not receive the benefits from these expenses by the end of the current accounting year. We call these expenses as prepaid expenses. We treat them as current assets.

Sometimes in the normal course of business, an enterprise may have some expenses relating to which the payment is due at the end of the year. We know these expenses as Outstanding Expenses.

Wages, salary, rent, interest on the loan, etc. are examples of such expenses that may remain due at the end of the accounting year.

Test: Financial Statements Of Non Profit Organization - 1 - Question 4

_____ is a amount received by a non profit organization as per the WILL of a deceased person

Detailed Solution for Test: Financial Statements Of Non Profit Organization - 1 - Question 4

Legacy is the amount received by a non-profit organisation when a person has mentioned about transferring his property value to such organisation on his or her death. Hence, on death of that person, his property will be taken by the non-profit organisation.

Test: Financial Statements Of Non Profit Organization - 1 - Question 5

Which form of financing is allowed for a nonprofit organization?

Test: Financial Statements Of Non Profit Organization - 1 - Question 6

Which of the following is generally considered as a non profit oriented organization?

Test: Financial Statements Of Non Profit Organization - 1 - Question 7

The receipts and payments account of a non-profit organization is a 

Test: Financial Statements Of Non Profit Organization - 1 - Question 8

Non-profit organizations prepare all of the following accounts except the

Test: Financial Statements Of Non Profit Organization - 1 - Question 9

Excess of expenditure over income of a Non-profit organisation is termed as______

Detailed Solution for Test: Financial Statements Of Non Profit Organization - 1 - Question 9

Deficit : excess of expenditure over income.

The balance of the account, if credit, indicates surplus, i.e. excess of income over expenditure.

While the balance of the account, if debit, indicates deficit, i.e. excess of expenditure over income.

Test: Financial Statements Of Non Profit Organization - 1 - Question 10

_________ is a fixed annual payment and usually continue only during the life time of the named beneficiary

Test: Financial Statements Of Non Profit Organization - 1 - Question 11

Rent expense of a non-profit organization paid in advance. Which of the following is the correct classification of rent?

Test: Financial Statements Of Non Profit Organization - 1 - Question 12

An advance receipt of subscription from a member of the non-profit organization is considered as a/an

Test: Financial Statements Of Non Profit Organization - 1 - Question 13

Income and expenditure account is based on 

Detailed Solution for Test: Financial Statements Of Non Profit Organization - 1 - Question 13

The correct option is C.

Accrual Accounting. Accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged. The term "accrual" refers to any individual entry recording revenue or expense in the absence of a cash transaction.Income and Expenditure Account is prepared on an accrual basis. All incomes and expenses relating to the accounting year, whether they are actually received and paid or not, are taken into consideration. Expenditure is recorded on the debit side and income is recorded on the credit side.

Test: Financial Statements Of Non Profit Organization - 1 - Question 14

Life Membership is a capital receipt and will be added to capital fund in _______

Detailed Solution for Test: Financial Statements Of Non Profit Organization - 1 - Question 14

The correct option is Option A.

Life Membership Fees is a capital receipt and we add it to the Capital Fund on the liabilities side of the Balance Sheet. We do not account it as an income because a life member makes a one-time payment and avails services all through his life.

Test: Financial Statements Of Non Profit Organization - 1 - Question 15

Which of the following is to be recorded in an income and expenditure account?

Detailed Solution for Test: Financial Statements Of Non Profit Organization - 1 - Question 15

The correct option is B.

Income and expenditure is a nominal account which includes all revenue expenses and incomes. It is prepared the same as a profit and loss account i.e. on accrual basis. The difference of this account will represent surplus or deficit. Purchase and sale of fixed assets is a capital expense. And profit on sale of fixed assets is a revenue income, hence it will be included in income and expenditure accounts.

Test: Financial Statements Of Non Profit Organization - 1 - Question 16

Honorarium is a kind of remuneration paid to a person who is not the employee of a non-profit organization. Which of the following statements is true about the honorarium payment?

Test: Financial Statements Of Non Profit Organization - 1 - Question 17

The capital of a non-profit organization is generally known as

Test: Financial Statements Of Non Profit Organization - 1 - Question 18

When cash is received for life membership, which one of the following double entries is passed? 

Detailed Solution for Test: Financial Statements Of Non Profit Organization - 1 - Question 18

Correct Answer :- d

Explanation : 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 a periodic subscription. As this is received only once it is transferred to the Capital fund Account in Balance Sheet. As cash is received, the cash account is debited and it is a liability, so capital/ General fund is credited.

Test: Financial Statements Of Non Profit Organization - 1 - Question 19

XYZ club has a bar that maintains a separate trading account for its trading activities. Which of the following is the treatment of profit or loss on bar trading activities?

Test: Financial Statements Of Non Profit Organization - 1 - Question 20

Which of the following statement is false regarding receipt and payment account

Detailed Solution for Test: Financial Statements Of Non Profit Organization - 1 - Question 20

Because accrual basis means recording items in advance. As it already include prepaid rent, outstanding salary etc.

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