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CA Foundation Exam  >  CA Foundation Tests  >  Principles and Practice of Accounting  >  Test: Principles And Practice of Accounting- 2 - CA Foundation MCQ

Test: Principles And Practice of Accounting- 2 - CA Foundation MCQ


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10 Questions MCQ Test Principles and Practice of Accounting - Test: Principles And Practice of Accounting- 2

Test: Principles And Practice of Accounting- 2 for CA Foundation 2024 is part of Principles and Practice of Accounting preparation. The Test: Principles And Practice of Accounting- 2 questions and answers have been prepared according to the CA Foundation exam syllabus.The Test: Principles And Practice of Accounting- 2 MCQs are made for CA Foundation 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Principles And Practice of Accounting- 2 below.
Solutions of Test: Principles And Practice of Accounting- 2 questions in English are available as part of our Principles and Practice of Accounting for CA Foundation & Test: Principles And Practice of Accounting- 2 solutions in Hindi for Principles and Practice of Accounting course. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free. Attempt Test: Principles And Practice of Accounting- 2 | 10 questions in 15 minutes | Mock test for CA Foundation preparation | Free important questions MCQ to study Principles and Practice of Accounting for CA Foundation Exam | Download free PDF with solutions
Test: Principles And Practice of Accounting- 2 - Question 1
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What is the term used in not-for-profit organizations for 'Profit' as per their financial terminology?

Detailed Solution for Test: Principles And Practice of Accounting- 2 - Question 1
In not-for-profit organizations, the term 'Surplus' is used to denote excess of income over expenditure, which is analogous to 'Profit' in for-profit organizations.
Test: Principles And Practice of Accounting- 2 - Question 2
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Which account is equivalent to the Profit and Loss Account in a not-for-profit organization?

Detailed Solution for Test: Principles And Practice of Accounting- 2 - Question 2
The Income and Expenditure Account in not-for-profit organizations serves a similar purpose to the Profit and Loss Account in for-profit businesses, showing the surplus or deficit by matching expenses against revenue.
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Test: Principles And Practice of Accounting- 2 - Question 3
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What is the primary motive behind a not-for-profit organization?

Detailed Solution for Test: Principles And Practice of Accounting- 2 - Question 3
A not-for-profit organization operates to serve society or its members, rather than focusing on profit generation. This is a fundamental distinction from for-profit businesses that aim to maximize shareholder wealth.
Test: Principles And Practice of Accounting- 2 - Question 4
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What is NOT a feature of the Receipts and Payments Account?
Detailed Solution for Test: Principles And Practice of Accounting- 2 - Question 4
The Receipts and Payments Account does not include non-cash items like depreciation; it only records actual cash transactions.
Test: Principles And Practice of Accounting- 2 - Question 5
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Which of the following statements is true regarding the Receipts and Payments Account of a not-for-profit organization?
Detailed Solution for Test: Principles And Practice of Accounting- 2 - Question 5
The Receipts and Payments Account is a summary of all cash and bank transactions, including both capital and revenue items, without considering the accrual system of accounting.
Test: Principles And Practice of Accounting- 2 - Question 6
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Which of the following is a capital receipt for a not-for-profit organization?
Detailed Solution for Test: Principles And Practice of Accounting- 2 - Question 6
Donations for a building fund are considered capital receipts as they are meant for a specific capital purpose, unlike operational income like subscription fees or income from investments.
Test: Principles And Practice of Accounting- 2 - Question 7
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What is the main difference between Receipts and Payments Account and Income and Expenditure Account?
Detailed Solution for Test: Principles And Practice of Accounting- 2 - Question 7
The Receipts and Payments Account includes both capital and revenue transactions, whereas the Income and Expenditure Account includes only revenue items relevant to the current period.
Test: Principles And Practice of Accounting- 2 - Question 8
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What does a surplus in the Income and Expenditure Account indicate?
Detailed Solution for Test: Principles And Practice of Accounting- 2 - Question 8
A surplus in the Income and Expenditure Account indicates that the organization has an excess of income over expenditure for the period, which is a positive financial outcome.
Test: Principles And Practice of Accounting- 2 - Question 9
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Which of the following would be classified as revenue expenditure in the Income and Expenditure Account?
Detailed Solution for Test: Principles And Practice of Accounting- 2 - Question 9
Annual depreciation of equipment is a revenue expenditure as it relates to the wear and tear of assets over time, affecting the operational income and expenses.
Test: Principles And Practice of Accounting- 2 - Question 10
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In not-for-profit accounting, what is the treatment for a donation received for a specific purpose, like constructing a pavilion?
Detailed Solution for Test: Principles And Practice of Accounting- 2 - Question 10
Donations received for a specific purpose are credited to a special purpose fund, reflecting the restricted use of these funds for a designated activity, such as constructing a pavilion.

This worksheet reflects a mix of easy, medium, and difficult questions to assess understanding of the financial statements of not-for-profit organizations. The solutions provide additional context and explanation to reinforce learning.
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