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NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce PDF Download

PAGE NO. 58

Q.13. Following is the information in respect of certain items of a Sports Club. You are required to show them in the Income and Expenditure Account and the Balance Sheet.
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
Ans.
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce


PAGE NO. 59

Q.14. Receipt and Payment Account of Maitrey Sports Club showed that Rs 68,500 were received by way of subscriptions for the year ended on March 31, 2017.
The additional information was as under:
1. Subscription Outstanding as on March 31, 2016 were Rs 6,500,
2. Subscription received in advance as on March 31, 2016 were Rs 4,100,
3. Subscription Outstanding as on March 31, 2017 were Rs 5,400,
4. Subscription received in advance as on March 31, 2017 were Rs 2,500.
Show how that above information would appear in the final accounts for the year ended on March 31, 2017 of Maitrey Sports Club.

Ans.
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce

Q.15. Following is the Receipt and Payment account of Rohatgi Trust :
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce

Prepare Income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that date after the following adjustments: Subscription for 2017, still owing were Rs 7,000. Interest due on defence bonds was Rs7,000, Rent still owing was Rs 1,000. The Book value of investment sold was Rs 80,000, Rs 30,000 of the investment were still in hand. Subscription received in 2017 included Rs 400 from a life member. The total furniture on January 1, 2017 was worth Rs 12,000. Salary paid for the year 2018 is Rs 2,000.
Ans.
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce


PAGE NO. 60

Q.16. Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2017
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
Prepare Income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that date after the following adjustments:
(a) 
It was decided to treat one-third of the amount received on account of donation as income.
(b)
Insurance premium was paid in advance for three months.
(c) 
Interest on investment Rs1,100 accrued was not received.
(d) 
Rent Rs600: salary Rs900 and advertisement expenses Rs1,000 outstanding as on December 31, 2017.
Ans.
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce 
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce


Q.17. From the following Receipt and Payment Account of a club, prepare Income and Expenditure Account for the year ended December 31, 2017 and the Balance Sheet as on that date.
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
Additional Information:
(a) 
The club has 100 members each paying an annual subscription of Rs 900. Subscriptions outstanding on March 31, 2016 were Rs 3,600.
(b) 
On March 31, 2017, salary outstanding amounted to Rs 1,000, Salary paid included Rs 1,000 for the year 2012.
(c) 
On April 1, 2017 the club owned land and building Rs 25,000, furniture Rs 2,600 and books Rs 6,200.
Ans.
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce


PAGE NO. 61

Q.18. Following is the Receipt and Payment Account of Women’s Welfare Club for the year ended December 31, 2017:
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
Additional Information:
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce

Prepare Income and Expenditure Account for the year ended December 31, 2017 and Balance Sheet as on that date.
Ans.
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce


PAGE NO. 62

Q.19. As at March 31,2017 the following balances have been extracted from the books of the Indian Chartered Accountants Recreation Club and you are asked to prepare (1) Trading Account for ascertaining gross profit derived from running restaurant and dining room and (2) Income and Expenditure Account for the year ended March 31, 2017 (3) and a Balance Sheet as at that date.
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
On March 31,2016 stock of restaurant consisted of Rs 900 and Rs 60 respectively. Provide depreciations Rs 60 on fixtures and fittings, Rs 390 on billiard table and Rs 560 on furniture.
Ans.
Important Note:
1. Credit side of the Trial Balance of the question is short by Rs 60. Thus, in order to tally both sides of the Trial Balance, Suspense Account will be opened with the difference amount of Rs 60.
2. In the adjustment, Closing Stock should be Rs 960 instead of Rs 900.

Books of Indian Chartered Accountants Recreation Club
Restaurant Trading Account

NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce
NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations | Additional Study Material for Commerce

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FAQs on NCERT Solution (Part - 4) - Accounting for Not for Profit Organisations - Additional Study Material for Commerce

1. What is the concept of accounting for not-for-profit organizations?
Ans. Accounting for not-for-profit organizations is a specialized branch of accounting that focuses on recording, summarizing, and reporting financial transactions and activities of non-profit entities. The main objective is to provide information about the financial health and performance of these organizations to stakeholders, such as donors, members, and government agencies.
2. How are revenues and expenses classified in the accounting records of not-for-profit organizations?
Ans. In the accounting records of not-for-profit organizations, revenues are classified into two categories: program revenues and support revenues. Program revenues are generated from activities directly related to the organization's mission, such as fees for services or sales of goods. Support revenues, on the other hand, come from sources like donations, grants, or investment income. Expenses in not-for-profit organizations are usually classified into program expenses and support expenses. Program expenses are incurred in carrying out the organization's mission, such as direct costs of providing services. Support expenses, on the other hand, include costs related to administration, fundraising, and other support activities.
3. How are the financial statements of not-for-profit organizations different from those of for-profit organizations?
Ans. The financial statements of not-for-profit organizations differ from those of for-profit organizations in several ways. Here are a few key differences: 1. Statement of Activities: Not-for-profit organizations prepare a Statement of Activities instead of an Income Statement. This statement presents revenues and expenses by program and support activities rather than by major categories like sales and costs of goods sold. 2. Statement of Financial Position: Not-for-profit organizations prepare a Statement of Financial Position instead of a Balance Sheet. This statement presents assets, liabilities, and net assets, with net assets being classified into three categories: unrestricted, temporarily restricted, and permanently restricted. 3. Statement of Cash Flows: Not-for-profit organizations prepare a Statement of Cash Flows similar to for-profit organizations, but with some variations in the classification of cash flows. For example, cash flows from operating activities may be presented either on a direct or indirect basis.
4. How are donations and grants accounted for in not-for-profit organizations?
Ans. Donations and grants in not-for-profit organizations are typically accounted for as revenue when they are received or when the organization has a legal entitlement to them. Donations that are restricted by the donor for specific purposes are recorded as temporarily restricted revenue. These funds can only be used for the specific purpose specified by the donor. Grants, on the other hand, are usually recorded as unrestricted revenue unless they are specifically restricted by the grantor. Grants may also have conditions attached, such as the completion of certain activities or the achievement of specific outcomes, which need to be fulfilled by the organization.
5. How are net assets classified in the financial statements of not-for-profit organizations?
Ans. Net assets in the financial statements of not-for-profit organizations are classified into three categories: 1. Unrestricted Net Assets: These are funds that have no donor-imposed restrictions and can be used by the organization for any purpose deemed necessary. 2. Temporarily Restricted Net Assets: These are funds that have donor-imposed restrictions for specific purposes or time periods. The restrictions may be lifted once the specified purpose or time period is fulfilled. 3. Permanently Restricted Net Assets: These are funds that have donor-imposed restrictions that must be maintained permanently. The principal amount is generally invested, and only the income generated from the investment can be used for the organization's activities.
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