4. Non-profit organization ( Class Test)

NPO Accounts · Class Test · 35 min

Name

Roll No

Section

Not-for-Profit Organisation (NPO) – Financial Statements
Full Marks: 65 (20 MCQ + 15 Match + 30 Difference Tables) · Time: 35 minutes
📌 Attempt all questions carefully.
📌 After submission, correct answers and explanations will appear.
📌 The correct Difference answers will appear below each Difference Table for cross-verification.

📝 Multiple Choice Questions 20 Marks

🔗 Match the Column – Set 1 5 Marks

Match Column A (Adjustment) with Column B (Treatment).

Column A

(a) Outstanding Subscription

(b) Subscription Received in Advance

(d) Prepaid Expenses

Column B

(i) Add to income; show as Current Asset

(ii) Deduct from income; show as Current Liability

(iii) Add to expense; show as Liability

(iv) Deduct from expense; show as Current Asset

A a(i), b(ii), c(iii), d(iv) B a(ii), b(i), c(iv), d(iii) C a(iii), b(iv), c(i), d(ii) D a(iv), b(iii), c(ii), d(i)

🔗 Match the Column – Set 2 5 Marks

Match Column A (Adjustment) with Column B (Treatment).

Column A

(a) Sale of Fixed Asset (Profit)

(b) Depreciation on Fixed Assets

(d) Specific Donation

Column B

(i) Credit to I&E A/c as income

(ii) Debit to I&E; deduct from asset value

(iii) Credit to I&E A/c (revenue receipt)

(iv) Add to specific fund

A a(i), b(ii), c(iii), d(iv) B a(ii), b(i), c(iv), d(iii) C a(iii), b(iv), c(i), d(ii) D a(iv), b(iii), c(ii), d(i)

🔗 Match the Column – Set 3 5 Marks

Match Column A with Column B.

Column A

(a) Entrance / Admission Fee (Revenue)

(b) Life Membership Fee

(d) Sale of Old Newspapers / Scrap

Column B

(i) Credit to I&E A/c as revenue income

(ii) Add to Capital Fund

(iii) Capital receipt

(iv) Credit to I&E A/c if revenue in nature

A a(iv), b(ii), c(iii), d(i) B a(i), b(ii), c(iii), d(iv) C a(ii), b(iii), c(iv), d(i) D a(iii), b(i), c(ii), d(iv)

📊 Receipt & Payment A/c vs Cash Book 10 Marks

Write the difference on each basis. Sufficient space is provided for each answer.

Basis of Difference	Receipt & Payment Account	Cash Book
1. Nature
2. Purpose
3. Basis of preparation
4. Period covered
5. Opening balance
6. Closing balance
7. Treatment of capital and revenue items
8. Treatment of non-cash transactions
9. Detailed record of transactions
10. Status / form of account

✅ Correct Difference — Receipt & Payment A/c vs Cash Book

Basis	Receipt & Payment Account	Cash Book
1. Nature	Summary of the cash book.	Detailed book of original entry for cash and bank transactions.
2. Purpose	Prepared to summarise all cash and bank receipts and payments of an NPO.	Prepared to record cash and bank transactions systematically.
3. Basis of preparation	Prepared on cash basis.	Records transactions when cash or bank transactions occur.
4. Period covered	Usually prepared for an accounting period, generally one financial year.	Records transactions continuously throughout the year.
5. Opening balance	Begins with opening cash and bank balances.	Begins with opening cash/bank balance brought forward.
6. Closing balance	Shows closing cash and bank balances.	Shows closing cash and bank balances after recording transactions.
7. Capital and revenue items	Includes both capital and revenue receipts and payments.	Records all cash/bank transactions, whether capital or revenue.
8. Non-cash transactions	Non-cash transactions are not recorded.	Only transactions affecting cash/bank are recorded; non-cash transactions are not recorded.
9. Detailed record of transactions	Generally presents a summarised form.	Provides a detailed chronological record of transactions.
10. Status / form of account	Final account prepared by an NPO.	Book of original entry and ledger-type account for cash/bank.

📊 Income & Expenditure A/c vs Profit & Loss A/c 10 Marks

Write the difference on each basis. Use complete accounting points.

Basis of Difference	Income & Expenditure Account	Profit & Loss Account
1. Nature of organisation
2. Objective
3. Basis of accounting
4. Nature of income and expenditure
5. Result shown
6. Treatment of surplus / profit
7. Treatment of deficit / loss
8. Capital and revenue items
9. Distribution of result
10. Closing balance

✅ Correct Difference — Income & Expenditure A/c vs Profit & Loss A/c

Basis	Income & Expenditure Account	Profit & Loss Account
1. Nature of organisation	Prepared by a Not-for-Profit Organisation.	Prepared by a profit-making organisation.
2. Objective	To determine surplus or deficit from revenue activities.	To determine net profit or net loss.
3. Basis of accounting	Prepared on accrual basis.	Generally prepared on accrual basis.
4. Nature of income and expenditure	Records revenue incomes and revenue expenses relating to the current period.	Records revenue incomes and revenue expenses of the business for determining profit or loss.
5. Result shown	Shows surplus or deficit.	Shows net profit or net loss.
6. Treatment of surplus / profit	Surplus is generally added to the Capital Fund.	Profit is transferred to capital, reserves or retained earnings according to the organisation’s requirements.
7. Treatment of deficit / loss	Deficit is deducted from the Capital Fund.	Loss is adjusted against capital/reserves or carried forward according to applicable rules.
8. Capital and revenue items	Generally includes revenue items; capital receipts and payments are excluded.	Generally includes revenue items; capital transactions are dealt with separately.
9. Distribution of result	Surplus is not distributed among members as dividend.	Profit may be appropriated according to the nature and rules of the business entity.
10. Closing balance	Net result is transferred to Capital Fund / accumulated fund.	Net profit or loss is transferred/appropriated to the relevant capital or reserve account.

📊 Receipt & Payment A/c vs Income & Expenditure A/c 15 Marks

Write the difference on all 15 prescribed bases. After submission, the reference answers will appear below for cross-verification.

Basis of Difference	Receipt & Payment Account	Income & Expenditure Account
1. Nature
2. Objective
3. Basis of accounting
4. Items recorded
5. Treatment of capital items
6. Treatment of revenue items
7. Treatment of outstanding items
8. Treatment of prepaid items
9. Opening balance
10. Closing balance
11. Result shown
12. Treatment of non-cash items
13. Period covered
14. Preparation from Cash Book / Receipts and Payments
15. Relationship with Balance Sheet

✅ Correct Difference — Receipt & Payment A/c vs Income & Expenditure A/c

Basis	Receipt & Payment Account	Income & Expenditure Account
1. Nature	A summary of cash and bank transactions.	A revenue account similar to the Profit & Loss Account of a business.
2. Objective	To summarise actual cash and bank receipts and payments.	To determine surplus or deficit for the accounting period.
3. Basis of accounting	Cash basis.	Accrual basis.
4. Items recorded	Records all actual cash and bank receipts and payments.	Records only revenue income and expenditure relating to the current period.
5. Treatment of capital items	Capital receipts and capital payments are recorded.	Capital receipts and capital payments are not recorded as revenue items.
6. Treatment of revenue items	Actual revenue receipts and payments are recorded.	Revenue income and expenditure relating to the current period are recorded.
7. Treatment of outstanding items	Not adjusted because it follows cash basis.	Adjusted and included because it follows accrual basis.
8. Treatment of prepaid items	No adjustment is made for prepaid items.	Prepaid expenses are deducted from the relevant current-period expense.
9. Opening balance	Begins with opening cash and bank balances.	Does not begin with cash/bank balance.
10. Closing balance	Shows closing cash and bank balances.	Does not show closing cash/bank balance; it shows surplus or deficit.
11. Result shown	Shows cash and bank balance.	Shows surplus or deficit.
12. Treatment of non-cash items	Non-cash items are generally excluded.	Non-cash expenses such as depreciation are included.
13. Period covered	Includes receipts and payments relating to the current period as well as earlier or future periods if actually received/paid.	Includes income and expenditure relating to the current accounting period.
14. Preparation from Cash Book / Receipts and Payments	Prepared from the Cash Book by summarising cash and bank transactions.	Prepared using information from the Receipt & Payment Account together with necessary adjustments and additional information.
15. Relationship with Balance Sheet	Closing cash and bank balances are shown in the Balance Sheet as assets.	Surplus or deficit is transferred to the Capital Fund and affects the Balance Sheet.

📚 Cross-Verification:
Scroll through the three Difference sections above. The correct reference answers are now displayed below each student-answer table.

📚

Non-Profit Organisation — Important Account Formats

Cash Book • Receipts & Payments A/c • Income & Expenditure A/c • Balance Sheet

1️⃣

Cash Book Format

CASH BOOK
Receipts / Debit Side	Amount (₹)	Payments / Credit Side	Amount (₹)
Opening Cash Balance	xxx	Payment of Expenses	xxx
Cash Subscriptions Received	xxx	Purchase of Assets	xxx
Entrance Fees Received	xxx	Honorarium Paid	xxx
Donations Received	xxx	Rent Paid	xxx
Government Grant Received	xxx	Salaries Paid	xxx
Sale of Assets	xxx	Printing & Stationery	xxx
Interest / Dividend Received	xxx	Sports Expenses	xxx
Other Receipts	xxx	Other Payments	xxx
Total Receipts	XXX	Total Payments	XXX
		Closing Cash Balance	XXX

Remember: Cash Book records actual cash/bank receipts and payments. It does not distinguish between capital and revenue items.

2️⃣

Receipts & Payments Account Format

RECEIPTS AND PAYMENTS ACCOUNT
Receipts		Payments
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d — Cash / Bank	xxx	By Salaries	xxx
To Subscriptions	xxx	By Rent	xxx
To Entrance Fees	xxx	By Printing & Stationery	xxx
To Donations	xxx	By Sports Expenses	xxx
To Government Grant	xxx	By Insurance	xxx
To Interest / Dividend	xxx	By Purchase of Assets	xxx
To Sale of Asset	xxx	By Honorarium	xxx
To Other Receipts	xxx	By Other Expenses	xxx
Total Receipts	XXX	Total Payments	XXX
		By Balance c/d	XXX

Important: Receipts & Payments Account includes all capital and revenue receipts/payments relating to the accounting period, irrespective of the period to which they belong.

📌 Items Included in Receipts & Payments A/c

Item	Treatment
Opening Cash / Bank Balance	Added on Receipts side
Closing Cash / Bank Balance	Shown on Payments side
Capital Receipts	Recorded
Revenue Receipts	Recorded
Capital Payments	Recorded
Revenue Payments	Recorded
Outstanding Items	Not recorded until actually received/paid
Previous Year’s Receipts/Payments	Recorded if actually received/paid during current year
Next Year’s Receipts/Payments	Recorded if actually received/paid during current year

3️⃣

Income & Expenditure Account Format

INCOME AND EXPENDITURE ACCOUNT
Expenditure		Income
Particulars	Amount (₹)	Particulars	Amount (₹)
To Salaries	xxx	By Subscriptions	xxx
To Rent	xxx	By Entrance Fees — Revenue portion	xxx
To Printing & Stationery	xxx	By General Donations — Revenue portion	xxx
To Insurance	xxx	By Government Grant — Revenue portion	xxx
To Depreciation	xxx	By Interest Received	xxx
To Repairs	xxx	By Dividend Received	xxx
To Honorarium	xxx	By Rent Received	xxx
To Sports Expenses	xxx	By Profit on Sale of Asset	xxx
To Other Revenue Expenses	xxx	By Other Revenue Income	xxx
To Surplus	XXX
		By Deficit	XXX
Total	XXX	Total	XXX

📌 Income & Expenditure — Adjustment Rules

Item	Adjustment / Treatment
Current Year’s Expense Paid	ADD to expense
Outstanding Expense	ADD to expense
Prepaid Expense	SUBTRACT from expense
Current Year’s Income Received	ADD to income
Accrued Income	ADD to income
Income Received in Advance	SUBTRACT from income
Previous Year’s Outstanding Expense Paid	SUBTRACT from current year’s expense
Previous Year’s Accrued Income Received	SUBTRACT from current year’s income
Depreciation	EXPENSE — Debit I&E A/c
Profit on Sale of Asset	INCOME — Credit I&E A/c
Loss on Sale of Asset	EXPENSE — Debit I&E A/c

4️⃣

Balance Sheet Format

BALANCE SHEET AS AT __________
Liabilities		Assets
Particulars	Amount (₹)	Particulars	Amount (₹)
Capital Fund — Opening	xxx	Cash in Hand	xxx
Add: Surplus	xxx	Bank Balance	xxx
Less: Deficit	(xxx)	Fixed Assets	xxx
Specific Fund	xxx	Investments	xxx
Outstanding Expenses	xxx	Outstanding / Accrued Income	xxx
Subscription Received in Advance	xxx	Prepaid Expenses	xxx
Loan	xxx	Stock of Consumable Items	xxx
Other Liabilities	xxx	Other Assets	xxx
Total Liabilities	XXX	Total Assets	XXX

📌 Balance Sheet — Items to Add / Subtract

Item	Side	Treatment
Opening Capital Fund	Liability	Base amount
Surplus	Liability	ADD to Capital Fund
Deficit	Liability	SUBTRACT from Capital Fund
Outstanding Expenses	Liability	ADD
Income Received in Advance	Liability	ADD
Specific Fund	Liability	Show separately
Loan	Liability	ADD
Cash in Hand	Asset	ADD
Bank Balance	Asset	ADD
Accrued Income	Asset	ADD
Prepaid Expense	Asset	ADD
Fixed Assets	Asset	Show after depreciation
Depreciation	Asset	Deduct from asset value
Consumable Stock	Asset	Closing stock is added

🧮

Subscription — Important Formula

Subscription Income for Current Year

Subscription Received During the Year
+ Closing Outstanding Subscription
− Opening Outstanding Subscription
+ Opening Subscription Received in Advance
− Closing Subscription Received in Advance
= Subscription Income

🧾

Expense — Important Formula

Expense Paid During the Year
+ Closing Outstanding Expense
− Opening Outstanding Expense
+ Opening Prepaid Expense
− Closing Prepaid Expense
= Expense for Current Year

⚡

Quick Revision — Which Account?

Account	What is Recorded?	Main Principle
Cash Book	Actual cash/bank transactions	Cash basis
Receipts & Payments A/c	All capital + revenue cash receipts/payments	Cash basis
Income & Expenditure A/c	Revenue income + revenue expenses of current year	Accrual basis
Balance Sheet	Assets, liabilities and Capital Fund	Financial position

⭐ Golden Rules for Non-Profit Organisation

Receipts & Payments A/c records actual receipts and payments, whether capital or revenue.

Income & Expenditure A/c records only revenue items relating to the current accounting year.

Capital receipts are generally not treated as income in the Income & Expenditure Account.

Capital expenditure is generally shown as an asset in the Balance Sheet.

Surplus increases the Capital Fund.

Deficit decreases the Capital Fund.

4. Non-profit organization ( Class Test)

📘 NPO Accounts · Class Test

Column A

Column B

Column A

Column B

Column A

Column B

✅ Correct Difference — Receipt & Payment A/c vs Cash Book

✅ Correct Difference — Income & Expenditure A/c vs Profit & Loss A/c

✅ Correct Difference — Receipt & Payment A/c vs Income & Expenditure A/c

Non-Profit Organisation — Important Account Formats

Cash Book Format

Receipts & Payments Account Format

📌 Items Included in Receipts & Payments A/c

Income & Expenditure Account Format

📌 Income & Expenditure — Adjustment Rules

Balance Sheet Format

📌 Balance Sheet — Items to Add / Subtract

Subscription — Important Formula

Expense — Important Formula

Quick Revision — Which Account?

⭐ Golden Rules for Non-Profit Organisation

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📘 NPO Accounts · Class Test

Column A

Column B

Column A

Column B

Column A

Column B

✅ Correct Difference — Receipt & Payment A/c vs Cash Book

✅ Correct Difference — Income & Expenditure A/c vs Profit & Loss A/c

✅ Correct Difference — Receipt & Payment A/c vs Income & Expenditure A/c

Non-Profit Organisation — Important Account Formats

Cash Book Format

Receipts & Payments Account Format

📌 Items Included in Receipts & Payments A/c

Income & Expenditure Account Format

📌 Income & Expenditure — Adjustment Rules

Balance Sheet Format

📌 Balance Sheet — Items to Add / Subtract

Subscription — Important Formula

Expense — Important Formula

Quick Revision — Which Account?

⭐ Golden Rules for Non-Profit Organisation

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