Test: Accounting for Not-for-Profit Organizations- Assertion & Reason Type Questions


4 Questions MCQ Test Accountancy Class 12 | Test: Accounting for Not-for-Profit Organizations- Assertion & Reason Type Questions


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Attempt Test: Accounting for Not-for-Profit Organizations- Assertion & Reason Type Questions | 4 questions in 8 minutes | Mock test for Commerce preparation | Free important questions MCQ to study Accountancy Class 12 for Commerce Exam | Download free PDF with solutions
QUESTION: 1

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): Endowment Fund is recorded only in the Balance Sheet.

Reason (R): Endowment is treated as capital receipt hence shown on the liabilities side of Balance Sheet

Solution: Endowment fund arises from bequest or gift, the income generated from it is utilized for the specific purpose while the original amount is kept intact other forever for a specific period. It is shown on the liabilities side of the balance sheet.
QUESTION: 2

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): The Income and Expenditure Account is like the cash book.

Reason (R): Income and Expenditure Account shows the surplus or deficit that is earned during the financial year by the non-profit organisation.

Solution: The Income and Expenditure Account is like the Profit and loss Account of the Business or Profit Making Firms.
QUESTION: 3

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): The Subscription received during the year is recorded in the Receipts and Payments Account.

Reason (R): Receipts and Payments Account records all the cash transactions whether pertaining to the current year or previous year.

Solution: Subscriptions received from the members on different dates which appear on the debit side of the cash book, shall be shown on the receipts side of the Receipt and Payment Account as one item with its total amount.
QUESTION: 4

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): The amount of subscription of ₹ 15,000 was paid out of which ₹ 3,000 is pertaining to the next year. The amount of subscription to be recorded in the Income and Expenditure Account is ₹ 15,000.

Reason (R): The Income and Expenditure Account records all the transactions that are relevant only for the current financial year.

Solution: The amount of subscription to be recorded in the Income and Expenditure Account is ₹ 12,000.

As the amount of ₹ 3,000 is related to the next year, and is the subscription received in advance, it will be deducted from the total amount received and the balance amount comes in the Income and Expenditure account.

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