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CA Foundation Exam  >  CA Foundation Notes  >  Accounting for CA Foundation  >  Past Year Questions: Financial Statements of Not-for-Profit Organizations

Past Year Questions: Financial Statements of Not-for-Profit Organizations | Accounting for CA Foundation PDF Download

Q 1. State with reasons, whether the following statements are True or False: (2 Marks Each)

(i) If a society (Non-profit organisation) has a separate trading activity, the profit/loss from the trading account shall be transferred to the Income and Expenditure Account at the time of consolidation. (May 2025)

Answer: True. Where in case of the trading activities, the profit /loss from such activity to be transferred to the Income and expenditure account in case of consolidated accounts. 

(ii) A Non-Profit Organization registered under Section 8 of Companies Act, 2013 can distribute its surplus among its members. (May 2025)

Answer:  False. A Non-profit organization s registered under section 8 of the Companies Act, 2013 can’t distribute surplus to its members. The surplus must be credited to General fund for furtherance of its charitable objectives. 

Q 2. From the following income and expenditure account of a Club for the year ending 31st March, 2024, you are required to prepare receipt and payment account for the year ending 31st March, 2024 and Balance Sheet as on 1st April, 2023. (10 Marks, Jan 2025)

INCOME AND EXPENDITURE ACCOUNT
For the year ending 31st March, 2024

Past Year Questions: Financial Statements of Not-for-Profit Organizations

Additional Information:

Past Year Questions: Financial Statements of Not-for-Profit Organizations

Stationery was depreciated by 25% and Sports material by 50%.

Answer: Receipts and Payments Account of Club for the year ended   31st March, 2024 Past Year Questions: Financial Statements of Not-for-Profit OrganizationsBalance Sheet of Club as at 1st April, 2023Past Year Questions: Financial Statements of Not-for-Profit OrganizationsWorking Notes: 1.  Calculation of Stationary
Stationary Account  Past Year Questions: Financial Statements of Not-for-Profit Organizations* Total Stationary during the year = ₹ 1,500 / 25% = ₹ 6,000.  Since stationary worth ₹ 4,000 is the opening stock, stationary of ₹ 2,000   (6,000 - 4,000) would be considered as purchased during the year.  

2. Calculation of Sports Material 
Sports Material Account Past Year Questions: Financial Statements of Not-for-Profit OrganizationsPast Year Questions: Financial Statements of Not-for-Profit Organizations

**Total Sports Material during the year = ₹ 22,000 / 50% = ₹ 44,000.   Since Sports Material worth ₹ 30,000 is the opening stock, Sports Material of ₹ 14,000 (44,000-30,000) would be considered as purchased during the year.

Note: The Income and Expenditure account shows the gain of second-hand sports material for ₹ 2,400.  In the absence of any further information, it is assumed that written down value of second-hand sports material is Nil, and it does not appearing in the opening balance of the Stock of the Sports Material as on   1st April, 2023. 

Q 3. The Receipts and Payments Account of ABC Club for the year ended March 31, 2025 was as follows: (12 Marks, May 2025)
(Figures are in '000)

Past Year Questions: Financial Statements of Not-for-Profit Organizations

You are given the following additional information:
(Figures are in '000)

Past Year Questions: Financial Statements of Not-for-Profit Organizations

For the year ended March 31, 2025, the honorarium to the Secretary and Treasurer are to be increased by a total of ₹ 3,00,000.

Prepare the Income and Expenditure Account and Balance Sheet for the period ending March 31, 2025.

Income and Expenditure Account of ABC Club for the year ending 31st March, 2025 Past Year Questions: Financial Statements of Not-for-Profit OrganizationsPast Year Questions: Financial Statements of Not-for-Profit OrganizationsBalance Sheet of ABC Club as on 31st March, 2025Past Year Questions: Financial Statements of Not-for-Profit OrganizationsWorking Note 1:
Balance Sheet of ABC Club as on 1st April, 2024 Past Year Questions: Financial Statements of Not-for-Profit OrganizationsPast Year Questions: Financial Statements of Not-for-Profit Organizations

Q 4. From the following Receipts and Payments Account of Delhi Club, prepare Income & Expenditure Account for the year ended 31.12.2023 and its Balance Sheet as on that date. (10 Marks, Sep 2024)

Past Year Questions: Financial Statements of Not-for-Profit Organizations

Information:
(1) Subscriptions in Arrear for 2023 ₹ 1,200, subscription in advance for 2024 ₹ 550.
(2) Insurance Premium outstanding ₹ 80, Miscellaneous Expenses prepaid ₹ 90.
(3) 50% of Donation is to be capitalized.
(4) Entrance fee are to be treated as Revenue Income.
(5) 8% Interest has accrued on Investments for 5 months.
(6) Billiards Table costing ₹ 30,000 were purchased during the last year and ₹ 20,000 were paid for it.

Answer: Delhi Club 
Income and Expenditure Account for the year ending   31st December,2023 Past Year Questions: Financial Statements of Not-for-Profit OrganizationsBalance Sheet of Delhi Club as at 31st December, 2023 Past Year Questions: Financial Statements of Not-for-Profit OrganizationsPast Year Questions: Financial Statements of Not-for-Profit OrganizationsWorking Notes: 1. Calculation of capital fund                
Balance Sheet of Delhi Club as at 31st December, 2022Past Year Questions: Financial Statements of Not-for-Profit Organizations

2. Calculation of amount of subscription shown in Income and expenditure accountPast Year Questions: Financial Statements of Not-for-Profit Organizations

Alternatively, this working of calculation of amount of subscription can also be presented in the form of ledger A/c. 

Q 5. The Receipts and Payments Account of Vandana Sports Club for the year ended 31st March, 2024 are as follows: (12 Marks, Jun 2024)

Receipts and Payments Account

Past Year Questions: Financial Statements of Not-for-Profit Organizations

Details of other assets and liabilities are furnished as follows:

Past Year Questions: Financial Statements of Not-for-Profit Organizations

The closing values of furniture and sports equipment are to be determined after charging depreciation at 10% and 15% respectively inclusive of additions, if any during the year. The Club’s library books are revalued at the end of every year and the value at the end of 31st March, 2024 was ₹ 30,000. 60% of the Entrance fee is to be capitalized.

You are required to prepare:
(i) Income and Expenditure Account for the year ended 31st March, 2024
(ii) Balance Sheet as on 31st March, 2024

Answer:  In the books of Vandana Sports club. 
Income and Expenditure Account for the year ending 31st March, 2024Past Year Questions: Financial Statements of Not-for-Profit OrganizationsBalance Sheet as on 31st March, 2024 Past Year Questions: Financial Statements of Not-for-Profit OrganizationsPast Year Questions: Financial Statements of Not-for-Profit OrganizationsAlternatively, the capitalised portion of entrance fee of ₹ 30,000 may be shown separately in the liability side.

Working Notes: 1. Balance Sheet as on 31st March, 2023 Past Year Questions: Financial Statements of Not-for-Profit OrganizationsPast Year Questions: Financial Statements of Not-for-Profit Organizations2.Past Year Questions: Financial Statements of Not-for-Profit OrganizationsPast Year Questions: Financial Statements of Not-for-Profit Organizations 


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FAQs on Past Year Questions: Financial Statements of Not-for-Profit Organizations - Accounting for CA Foundation

1. What are the key components of financial statements for not-for-profit organizations?
Ans. The key components of financial statements for not-for-profit organizations typically include the Statement of Financial Position, which shows the organization's assets, liabilities, and net assets; the Statement of Activities, which details revenues and expenses; the Statement of Cash Flows, which outlines cash inflows and outflows; and notes to the financial statements that provide additional context and disclosures.
2. How do not-for-profit organizations recognize revenue in their financial statements?
Ans. Not-for-profit organizations recognize revenue based on the nature of the income. Contributions are recognized when received or promised if unconditional. Revenue from programs or services is recognized when earned, and grants are recognized as revenue when the conditions have been met.
3. What is the purpose of the Statement of Activities for a not-for-profit organization?
Ans. The Statement of Activities serves to summarize the revenues and expenses of a not-for-profit organization over a specific period. It provides insights into how resources are generated and utilized, highlighting the organization’s financial performance and its ability to fulfill its mission.
4. How do not-for-profit organizations report their net assets?
Ans. Not-for-profit organizations report their net assets in three categories: unrestricted, temporarily restricted, and permanently restricted. Unrestricted net assets can be used for any purpose, temporarily restricted net assets have donor-imposed restrictions that will expire over time, and permanently restricted net assets are those that must be maintained intact in perpetuity.
5. Why is it important for not-for-profit organizations to prepare financial statements?
Ans. Preparing financial statements is crucial for not-for-profit organizations as it ensures transparency and accountability to donors, stakeholders, and regulatory bodies. It helps in assessing the organization's financial health, aids in decision-making, and demonstrates the effective use of resources to fulfill the organization’s mission.
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