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12th Accountancy - Accounts of Not-For-Profit Organisation Two Marks Questions

Published on: 16/09/2019

Accounts of Not-For-Profit Organisation

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Questions:

Generic 2

11 x 2 = 22

Distinguish between income and expenditure account and profit and loss account

Every receipt and Payments, whether capital or revenue and irrespective of the period is recorded in receipts and payments accounts why? Give reason.

Can the balance in receipts and payments account be treated as income of the period? If it shows credit balance what does it mean?

Chennai tennis club had Match fund showing credit balance of Rs. 24,000 on 1^st April, 2018. Receipt to the fund during the year was Rs. 26,000. Match expenses incurred during the year was Rs. 33,000. How these items will appear in the final accounts of the club for the year ended 31^st March, 2019?

Show how the following items appear in the income and expenditure account of Sirkazhi Singers Association?

	Rs.
Stock of stationery on 1.4.2018	2,600
Purchase of stationery during the year	6,500
Stock of stationery on 31.3.2018	2,200

From the following particulars, show how the item ‘subscription’ will appear in the Income and Expenditure Account for the year ended 31-12-2018? Subscription received in 2018 is Rs.50,000 which includes Rs.5,000 for 2017 and Rs.7,000 for 2019. Subscription outstanding for the year 2018 is Rs 6,000. Subscription of Rs.4,000 was received in advance for 2018 in the year 2017.

Give four examples for revenue receipts of not–for–profit organisation.

What is receipts and payments account?

State the meaning of not–for–profit organisation

10.

How will the following appear in the final accounts of a club for the year 2017 – 2018?

Particulars	Rs.
Prize fund on 1.4.2017	60,000
Prize fund investment on 1.4.2017	60,000
Interest received on prize fund investment	6,000
Prizes distributed	8,000
Donation received for prize fund	12,000

11.

From the following details calculate the amount that will be shown as subscription in Income and Expenditure Account for the year ending 31^stMarch, 2017.
Subscription received for Rs. 2015-16 7,500 2016-17 60,000 2017-18 1,500 69,000 Subscription outstanding for the year 2016-17 is Rs. 2,400. Subscription for 2016-17 received in 2015-16 was Rs.1,000

Generic 3

4 x 3 = 12

12.

Compute capital fund of Salem Sports Club as on 1.4.2019.

Particulars	Rs.	Particulars	Rs.
Sports equipment	30,000	Prize fund	10,000
Computer	25,000	Prize fund investments	10,000
Subscription outstanding for 2018-19	5,000	Cash in hand	7,000
Subscription received in advance for 2019-20	8,000	Cash at bank	21,000

13.

Compute income from subscription for the year 2018 from the following particulars relating to a club

Particulars	1.1.2018 Rs.	31.12.2018 Rs.
Outstanding subscription	3,000	5,000
Subscription received in advance	4,000	7,000

Subscription received during the year 2018: Rs.45,000.

14.

How will the following items appear in the final accounts of a club for the year ending 31st March 2017? Received subscription of Rs. 40,000 during the year 2016-17. This includes subscription of Rs. 5,000 for 2015 - 16 and Rs. 3,000 for the year 2017-18. Subscription of 1,000 is still outstanding for the year 2016 - 17.

15.

Compute income from subscription for the year 2018 from the following particulars relating to a club

Particulars	1.1.2018 Rs.	31.12.2018 Rs.
Outstanding subscription	10,000	7,000
Subscription received in advance	3,000	5,000

Subscription received during the year 2018: Rs.1,50,000

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Answers Key:

Generic 2

11 x 2 = 22

The difference between income and expenditure account and profit and loss account are

Basis	Income and Expenditure Account	Profit and Loss Account
Preparation	Income and Expenditure account is prepared by non-profit organisation.	Profit and loss account is prepared by organization whose main objective is to earn profit
Basis of preparation	It is prepared on the basis of receipts and payments account.	It is prepared on the basis of trial balance and additional information
Objective	Its main objective is to ascertain surplus or deficit	Its main objective is to ascertain net profit or loss
Balance	The balance in this account is either surplus or deficit	The balance in this account is either net profit or net loss.

It is so because receipts and payments account is prepared on cash basis of accounting

No, as the balance in receipt and payments account is closing cash and bank balance

Balance sheet of Chennai tennis club as on 31^st March, 2019
Liabilities	Rs	Rs
Match fund	24,000
Add: Receipt the fund	26,000
	50,000
Less: Match expenses	33,000	17,000

Dr Income and Expenditure Account of Sirkazhi singers Association Cr
Expenditure	Rs	Rs
To statonary
Consumed:
Opening stock	2,600
Add:Purchase	6,500
	9,100
Less: Closing stock	2,200	6,900

Dr Income and Expenditure Account for the year ended 31 December, 2018 Cr
Income	Rs	Rs
By Subscription received
during the year	50,000
Less: Subscription received for
2017	5000
	45,000
Less: Subscription received for 2019	7,000
	38,000
Add: Subscription due for 2018	6,000
	44,000
Add: Received in advance in
2017 for 2018	4,000	48,000

i. Subscription
ii. Interest on investment
iii. Interest as fixed deposit
iv. Sale of old sports material
v. Sale of old newspaper.

(i) Receipts and Payments account is a summary of cash and bank transactions of not-for-profit organisations prepared at the end of each financial year.
(ii) It is a real account in nature. The receipts and payments account begins with the opening balances of cash and bank and ends with closing balances of cash and bank

(i) Some organisations are established for the purpose of rendering services to the public without any profit motive.
(ii) They may be created for the promotion of art, culture, education, sports, etc. These organisations are called not-for-profit organisation.
(iii) Charitable institutions, educational, institutions, cultural societies, sports and recreation clubs, hospitals, libraries and literary associations are some of the examples of not-for-profit organisations.

10.

Balance sheet as on 31^st March, 2018
Liabilities	Rs.	Rs.	Assets	Rs.
Prize fund	60,000		Prize fund
Add: Interest received on			investment	60,000
prize fund investment
Add: Donation for prize
fund	12,000
	78,000
Less: Prizes distributed	8,000	70,000

11.

Dr. Income and Expenditure Account for the year ended 31^st March, 2017 Cr Expenditure Rs. Income Rs. Rs. By Subscription 60,000 Add: Outstanding subscription for 2016-17 2,400 Subscription received in advance in in advance in 1,000 63,400 Tutorial note
(i) Subscription for the year 2015-16 Rs. 7,500 and for the year 2017-18 Rs. 1,500 do not relate to the current year. So they should not be recorded in Income and Expenditure Account.
(ii) Subscription outstanding for the current year 2016-17 is Rs. 2,400. It should be added with the amount of subscription received during 2016-17.

Generic 3

4 x 3 = 12

12.

Balance sheet as on 31'1 March, 2019
Liabilities	Rs	Assets
Capital fund	80,000	Sports equipment	30,000
(Balancing figure)		Computer	25,000
Subscription received in		Subscription outstanding	5,000
advance	8,000	Prize fund investments	10,000
Prize fund	10,000	Cash in hand	7,000
		Cash at bank	21,000
	98,000		98,000

13.

Income expenditure A/c for the year ended 31.12.18
Particulars	Rs	Rs
By Subscription	45,000	45,000
Add: Outstanding 31.12.18	5,000
	50,000
(-) O/s sub. 1.1.2018	3,000
	47,000
(-) Subscription received in advance 31.12.18	7,000
	40,000
(+) Sub.Received. Adv. 1.1.2018	4,000	44,000

14.

Dr Income and Expenditure Account for the year ended 31^st March, 2017 Cr
Income	Rs	Rs
By Subscription	40,000
Less:
Subscription for the year
2015-2016	5,000
	35,000
Less:
Subscription for the year
2017-2018	3,000
	32,000
Add:
Outstanding subscription
for the year 2016-2017	1,000
		33,000

Balance sheet as on 31^st March, 2017
Liabilities	Rs	Assets	Rs
Subscription received in advance for the year 2017-2018	3,000	Outstanding subscription for the year 2016 - 2017	1,000

15.

Calculation of income from subscription for the year 2018

Particulars	Rs.	Rs.
Subscription received during the year 2018		1,50,000
Add: Subscription received for 2018 in 2017	3,000
Subscription outstanding for 2018	7,000	10,000
		1,60,000
Less: Subscription outstanding in 2017	10,000
Subscription received in advance in 2018	5,000	15,000
Income from subscription for the year 2018		1,45,000