Q.1 Which of the following organizations is generally classified as a Not-for-Profit Organization?
Bank
Hospital
Cinema Hall
Supermarket
Explanation - Hospitals often operate as Not-for-Profit Organizations, serving society without the primary objective of earning profits.
Correct answer is: Hospital
Q.2 What is the main objective of a Not-for-Profit Organization?
Profit Maximization
Wealth Creation
Service to Society
Shareholder Returns
Explanation - Not-for-Profit Organizations aim to provide services to society rather than earn profits.
Correct answer is: Service to Society
Q.3 Which statement is prepared instead of a Profit and Loss Account in Not-for-Profit Organizations?
Balance Sheet
Receipts and Payments Account
Income and Expenditure Account
Trading Account
Explanation - Not-for-Profit Organizations prepare Income and Expenditure Accounts instead of Profit and Loss Accounts to show surplus or deficit.
Correct answer is: Income and Expenditure Account
Q.4 Which account records only cash and bank transactions in a Not-for-Profit Organization?
Income and Expenditure Account
Receipts and Payments Account
Capital Account
Donation Account
Explanation - Receipts and Payments Account records all cash and bank transactions during the year, whether capital or revenue in nature.
Correct answer is: Receipts and Payments Account
Q.5 A Life Membership Fee received by a club is treated as:
Revenue Income
Capital Receipt
Liability
Deferred Income
Explanation - Life Membership Fee is a one-time receipt and treated as capital since it provides long-term benefit.
Correct answer is: Capital Receipt
Q.6 What does 'Subscription Received in Advance' represent?
Asset
Income
Liability
Capital
Explanation - Subscription received in advance is a liability as the service is yet to be rendered.
Correct answer is: Liability
Q.7 Outstanding expenses in the Income and Expenditure Account are shown as:
Asset
Liability
Capital
Revenue Income
Explanation - Outstanding expenses are unpaid obligations and hence treated as liabilities.
Correct answer is: Liability
Q.8 Donation received for a specific purpose is shown in:
Receipts and Payments Account only
General Income
Liability side of Balance Sheet
Revenue Receipt
Explanation - Specific donations are treated as liabilities as they must be used only for the specified purpose.
Correct answer is: Liability side of Balance Sheet
Q.9 General donations received are treated as:
Capital Receipt
Revenue Receipt
Liability
Prepaid Income
Explanation - General donations are treated as revenue receipts unless specified otherwise.
Correct answer is: Revenue Receipt
Q.10 What does the term ‘Honorarium’ mean in Not-for-Profit Accounts?
Payment to staff
Payment to members
Payment to guests/experts
Payment to suppliers
Explanation - Honorarium is a payment made to guests or experts for services rendered voluntarily.
Correct answer is: Payment to guests/experts
Q.11 Receipts and Payments Account is similar to:
Trial Balance
Cash Book
Income Statement
Balance Sheet
Explanation - Receipts and Payments Account is just a summary of the Cash Book, showing receipts and payments during a period.
Correct answer is: Cash Book
Q.12 Subscription due but not received is shown in the Balance Sheet as:
Liability
Asset
Revenue
Capital
Explanation - Subscriptions due but not received are assets since they represent amounts receivable.
Correct answer is: Asset
Q.13 What type of account is a Legacy received by a Not-for-Profit Organization?
Revenue Income
Capital Receipt
Revenue Expense
Deferred Income
Explanation - Legacy is a donation received under a will and is treated as a capital receipt.
Correct answer is: Capital Receipt
Q.14 If a club purchases sports equipment, it will be recorded as:
Revenue Expense
Capital Expenditure
Deferred Revenue
Prepaid Expense
Explanation - Purchase of sports equipment is a capital expenditure as it provides benefit over multiple years.
Correct answer is: Capital Expenditure
Q.15 Which account helps to prepare the Balance Sheet of a Not-for-Profit Organization?
Receipts and Payments Account
Income and Expenditure Account
Cash Flow Statement
Journal
Explanation - The Income and Expenditure Account provides surplus/deficit, which is required for the Balance Sheet.
Correct answer is: Income and Expenditure Account
Q.16 Sale of old newspapers by a library is treated as:
Capital Receipt
Revenue Receipt
Deferred Income
Outstanding Income
Explanation - Sale of old newspapers is incidental income and hence a revenue receipt.
Correct answer is: Revenue Receipt
Q.17 Endowment Fund is shown under:
Liabilities in Balance Sheet
Assets in Balance Sheet
Revenue Income
Expenditure
Explanation - Endowment Fund is a capital fund shown under liabilities in the Balance Sheet.
Correct answer is: Liabilities in Balance Sheet
Q.18 What is the accounting treatment for depreciation in a Not-for-Profit Organization?
Ignored
Shown as Expense in Income and Expenditure Account
Added to Assets
Recorded in Receipts and Payments Account
Explanation - Depreciation is treated as an expense and shown in the Income and Expenditure Account.
Correct answer is: Shown as Expense in Income and Expenditure Account
Q.19 Subscriptions received during the year include:
Only current year subscription
Current, previous, and next year’s subscription
Only arrears of subscription
Only advance subscription
Explanation - Receipts and Payments Account includes all cash receipts of subscriptions, irrespective of the period.
Correct answer is: Current, previous, and next year’s subscription
Q.20 What is the treatment of a specific donation received for building construction?
Revenue Receipt
Capital Receipt
Liability
Surplus
Explanation - Specific donations for fixed assets are treated as capital receipts and shown in the Balance Sheet.
Correct answer is: Capital Receipt
Q.21 Which of the following is NOT a feature of Not-for-Profit Organizations?
Profit motive
Service motive
Separate entity
Maintains accounts
Explanation - Not-for-Profit Organizations operate with a service motive and not profit motive.
Correct answer is: Profit motive
Q.22 In Not-for-Profit Accounts, surplus means:
Excess of expenses over income
Excess of income over expenses
Total receipts
Capital fund
Explanation - Surplus arises when income exceeds expenses in an Income and Expenditure Account.
Correct answer is: Excess of income over expenses
Q.23 Which account is prepared first in Not-for-Profit Organizations?
Income and Expenditure Account
Receipts and Payments Account
Balance Sheet
Capital Fund Account
Explanation - Receipts and Payments Account is prepared first to provide the basis for other accounts.
Correct answer is: Receipts and Payments Account
Q.24 Tournament Fund is shown in:
Income and Expenditure Account
Balance Sheet
Receipts and Payments Account
Trial Balance
Explanation - Tournament Fund is a specific fund and shown as liability in the Balance Sheet.
Correct answer is: Balance Sheet
Q.25 Subscription outstanding at the beginning of the year will be:
Added to Income
Deducted from Income
Asset in Balance Sheet
Liability in Balance Sheet
Explanation - Subscription outstanding represents receivables, hence shown as an asset.
Correct answer is: Asset in Balance Sheet