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

Test: Principles And Practice of Accounting- 2 for CA Foundation 2024 is part of CA Foundation 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.
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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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