Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev

Principles and Practice of Accounting

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CA Foundation : Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev

The document Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev is a part of the CA Foundation Course Principles and Practice of Accounting.
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Ques 1. Scholarship granted to students out of specific funds provided by Government will be debited to
(a) Income and Expenditure Account.  
(b) Receipts and payments Account.
(c) Funds.
 (d) None of the three.
Ans: (c)

Ques 2. In case of NPO, excess of total assets over liabilities is known as 
(a) Profits.
(b) Surplus.
(c) Capital Fund.
(d) Accumulated Fund.
Ans: (c)

Ques 3.  General donations and legacies are credited to 
(a) Receipts and Payments Account.
(b) Income and Expenditure Account.
(c) Capital Fund.
(d) Fund Account.
Ans: (b)

Ques 4.  Interest on prize funds is

(a) Credited to Income and Expenditure Account.
(b) Credited to Receipts and Payments Account.
(c) Capital Fund.
(d) Added to prize fund.
Ans: (d)


Ques 5.  Special aids are 
(a) Treated as capital receipts.
b) Treated as revenue receipts.
(c) Added to Capital Fund.
(d) Both (a) and (c).

Theory Questions
Ques 1. Distinguish Between Receipt and Payment and Income and Expenditure Account.
Ans: Non-profit making organizations such as public hospitals, public educational institutions, clubs etc., conventionally prepare Receipt and Payment Account and Income and Expenditure Account to show periodic performance for a particular accounting period. For distinguishing features of both the accounts, Refer para 3.1.
Practical Questions
Ques 1. The following is the Receipts and Payments Account of Lion Club for the year ended 31st March, 2016.
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
The assets and liabilities as on 1.4.2015 were as follows:
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
The following adjustments are to be made while drawing up the accounts:
(i) Subscription received in advance as on 31st March, 2016 was Rs 18,000.
(ii) Outstanding subscription as on 31st March, 2016 was Rs 7,000.
(iii) Outstanding expenses are salaries Rs 8,000 and electricity Rs 15,000.
(iv) 50% of the entrance donation was to be capitalized. There was no pending membership as on 31st March, 2016. 

(v) The cost of assets sold net as on 1.4.2015 was Rs 10,000.
(vi) Depreciation is to be provided at the rate of 10% on assets.
(vii) A sum of Rs 20,000 received in October 2015 as entrance donation from an applicant was to be refunded as he has not fulfilled the requisite membership qualifications. The refund was made on 3.6.2016.
(viii) Purchases made during the year amounted Rs 15,00,000.
(ix) The value of closing stock was Rs 2,10,000. 

(x) The club as a matter of policy, charges off to income and expenditure account all purchases made on account of crockery, cutlery, glass and linen in the year of purchase.
You are required to prepare an Income and Expenditure Account for the year ended 31st March, 2016 and the Balance Sheet as on 31st March, 2016 along with necessary workings.
Income and Expenditure Account of Lion Club for the year ended 31st March, 2016
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
Balance Sheet of Lion Club as on 31st March, 2016
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev

Working Notes:
 Opening Balance Sheet Balance Sheet of Lion Club as on 1st April, 2015

Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
2.  Subscription
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
3.  Entrance donation
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
4.  Loss on sale of asset
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
5.  Depreciation
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev

6.  Salaries
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
7.  Electricity charges
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
8.  Interest
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev

9. Profit from operations
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
10.  Insurance
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
11.  Sundry creditors
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
12.  Outstanding expenses
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
13.  Fixed assets
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
14.  Capital fund
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev

Ques 2.  During the year ended 31st March, 2016, Sachin Cricket Club received subscriptions as follows:
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
There are 500 members and annual subscription is Rs 1,500 per member.
On 31st March, 2016, a sum of Rs 15,000 was still in arrears for subscriptions for the year ended 31st March, 2015.  Ascertain the amount of subscriptions that will appear on the credit side of Income and Expenditure Account for the year ended 31st March, 2016. Also show how the items would appear in the Balance Sheet as on 31st March, 2015 and the Balance Sheet as on 31st March, 2017.

Ans: Income & Expenditure Account (An extract) of Sachin Cricket Club For the year ended 31st March, 2016
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
Balance Sheet of Sachin Cricket Club as on 31st March, 2015 (An extract)
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev

Balance Sheet of Sachin Cricket Club as on 31st March, 2016 (An extract)
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev


Ques 3.  Summary of receipts and payments of Bombay Medical Aid society for the year ended 31.12.2016 are as follows: 
Opening cash balance in hand Rs 8,000, subscription Rs 50,000, donation Rs 15,000 (raised for meeting revenue expenditure), interest on investments @ 9% p.a. Rs 9000, payments for medicine supply Rs 30,000 Honorarium to doctor Rs 10,000, salaries Rs 28,000, sundry expenses Rs 1,000, equipment purchase Rs 15,000, charity show expenses Rs 1,500, charity show collections Rs 12,500.
Additional information:
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
You are required to prepare receipts and payments account and income and expenditure account for the year ended 31.12.2016 and balance sheet as on 31.12.2016.
Ans: Receipts and Payments Account of Bombay Medical Aid Society for the year ended 31st December, 2016
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
Income and Expenditure Account of Bombay Medical Aid Society for the year ended 31st December, 2016

Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
Balance Sheet of Bombay Medical Aid Society as on 31st December, 2016

Liabilities



Assets



Capital fund:

Opening balance

1,80,300


Building

Less: Depreciation

50,000

(2,000)

48,000

Add: Surplus

10,200

1,90,500

Equipment

21,000


Subscription received in advance

 

700

Add: Purchase

15,000


Amount due for medicine supply

 

13,000

 

36,000


 

 

 

Less: Depreciation

(6,000)

30,000

 

 

 

Stock of medicine


15,000

 

 

 

Investments


1,00,000

 

 

 

Subscription receivable


2,200

 

 

 

Cash in hand


9,000

 

 

2,04,200



2,04,200

 

 





Working Notes:
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev
Balance Sheet of Medical Aid Society as on 1st January, 2016
Financial Statements of Not-for-Profit Organizations (Question with Answer) CA Foundation Notes | EduRev


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