NCERT Solutions for Class 11 Accountancy Financial Accounting Part-2 Chapter 4

Accounting for Not-for-Profit Organisation Class 11

Chapter 4 Accounting for Not-for-Profit Organisation Exercise Solutions

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Short answers : Solutions of Questions on Page Number : 474

Q1 :  

State the meaning of 'Not-for-Profit' Organisations.


Answer :

Not-for-Profit Organisations (NPO) are set up with the prime objective of providing services and not to earn profit thereby enhancing the welfare of society. Such organisations include schools, hospitals, trade unions, religious organisations, etc. The person/s or the groups of individuals who govern and manage the working of an NPO are known as trustees. NPO's main sources of income are donations, subscriptions, life membership fees, grants etc. As these organisations are not set up with profit motive, they do not prepare Trading and Profit and Loss Account. Instead, they maintain Receipt and Payments Account, Income and Expenditure Account and Balance Sheet. 

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Q2 :  

State the meaning of Receipt and Payment Account.


Answer :

Receipts and Payments Account is a summary of the Cash Book. All cash receipts are recorded on the Receipts side (i.e. Debit side) and all cash payments are recorded on the Payments side (i.e. Credit side) of Receipts and Payments Account. It is prepared on the basis of cash and bank transactions recorded in the Cash Book. It begins with the opening balance of cash and bank and ends with the closing balances of cash and bank (balancing figure) at the end of the accounting period. It records all cash and bank transactions both of capital and revenue nature. It not only records the cash and bank transactions relating to the current accounting period, but also the cash and bank receipts (or payments) received during the current accounting period that may be related to the previous or next accounting period.

This account only helps us to ascertain the closing balance of the cash and bank and helps in assessing the cash position of an NPO.

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Q3 :  

State the meaning of Income and Expenditure Account.


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Q4 :  

What are the features of Receipt and Payment Account?


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Q5 :  

What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?


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Q6 :  

What is subscription? How is it calculated?


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Q7 :  

What is Capital Fund? How is it calculated?


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<< Previous Chapter 3 : Accounts from Incomplete Records Next Chapter 5 : Applications of Computers in Accounting >>

Numerical questions : Solutions of Questions on Page Number : 474

Q1 :  

From the following particulars taken from the Cash Book of a health club, prepare a Receipts and Payments Account.

Particulars

Rs

Opening balance:

 

Cash in Hand

5,000

Cash at Bank

25,000

Subscriptions

1,65,000

Donations

35,000

Investment Purchased

80,000

Rent Paid

20,000

General Expenses

21,500

Postage and stationery

2,000

Courier charges

1,000

Sundry Expenses

2,500

Closing Cash in Hand

12,000

 


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Q2 :  

The Receipt and Payment Account of Harimohan charitable institution is given:

Receipt and Payment Account for the year ending March 31, 2007

Receipts

Amount

Rs

 Payments

Amount

Rs

Balance b/d:

 

Furniture

3,000

Cash at Bank

22,000

Investments

55,000

Cash in Hand

 8,800

Advance for building

20,000

Donations

32,000

Charities

 60,000

Subscriptions

50,200

Salaries

10,400

Endowment Fund

 60,000

Rent and Taxes

4,000

Legacies

24,000

Printing

1,000

Interest on Investment

 3,800

Postage

300

Interest on Deposits

 800

Advertisements

1,100

Sale of old newspapers

500

Insurance

4,800

 

 

Balance c/d:

 

 

 

Cash at Bank

32,000

 

 

Cash in Hand

10,500

 

2,02,100

 

2,02,100

 

 

 

 

Prepare the Income and Expenditure Account for the Year ended on March 31, 2007 after considering the following:

(i)

It was decided to treat Fifty per cent of the amount received on account of Legacies and Donations as income.

(ii)

Liabilities to be provided for are:

 

Rent Rs 800; Salaries Rs 1,200; advertisement Rs 200.

(iii)

Rs 2,000 due for interest on investment was not actually received.

 


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Q3 :  

From the following particulars, prepare Income and Expenditure account:

Details

Amount Rs

Fees collected, including Rs 80,000 on account of the previous year

5,20,000

Fees for the year outstanding

30,000

Salary paid, including Rs 5,000 on account of the previous year

68,000

Salary outstanding at the end of the year

3,000

Entertainment expenses

8,000

Tournament expenses

25,000

Meeting Expenses

18,000

Traveling Expenses

7,000

Purchase of Books and Periodicals, including Rs 31,000 for purchase of Books

40,000

Rent

15,000

Postage, telegrams and telephones

6,000

Printing and Stationery

18,000

Donations received

25,000

 


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Q4 :  

Following is the information given in respect of certain items of a Sports Club. Show these items in the Income and Expenditure Account and the Balance Sheet of the Club:

Particulars

Rs

Sports Fund as on 1.4.2005

 35,000

Sports Fund Investments

35,000

Interest on Sports Fund

4,000

Donations for Sports Fund

15,000

Sports Prizes awarded

10,000

Expenses on Sports Events

4,000

General Fund

80,000

General Fund Investments

80,000

Interest on General Fund Investments

8,000

 


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Q5 :  

How will you deal with the following items while preparing for the Bombay Women Cricket Club its income and expenditure account for the year ending 31.3.2007 and its Balance Sheet as on 31.3.2007:

 

Rs

(a)

Donation received during the year for the construction of a permanent Pavilion

12,25,000

 

Expenditure incurred up to 31.3.2007 on its construction

10,80,000

 

The total estimated expenditure on construction of Pavilion being

25,00,000

 

 

 

(b)

Tournament Fund:

 

 

Balance as on 1.4.2006

10,700

 

Subscriptions for tournament received during the year

65,800

 

Expenditure incurred during the year on conducting tournaments

72,400

 

 

 

(c)

Life Membership fee received during the year

28,000

Give reasons for your answers


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Q6 :  

From the following receipts and payments and information given below, Prepare Income and Expenditure Account and opening Balance Sheet of Adult Literacy Organisation as on December 31, 2006.

Receipt and Payment Account for the year ending 

as on December 31, 2006

Receipts

Amount

Rs

Payments

Amount

Rs

Balance b/d

 

 

General Expenses

3,200

Cash in hand

 

4,000

News paper

1,850

Cash at Bank

 

 15,550

Electricity

3,000

Subscriptions

 

 

Fixed deposit with bank

(on 31.06.2006) @ 10% p.a.

18,000

2005

1,200

 

2006

26,500

 

Books

7,000

2007

500

28,200

Salary

3,600

Sale of old newspapers

 

1,250

Rent

6,500

Govt. grant

 

12,000

Postage charges

300

Sale of old furniture (book value Rs5000)

 

 3,700

Furniture (purchased)

10,500

Interest received on FD

 

 450

Balance c/d

 

 

 

 

Cash in Hand

 3,000

 

 

 

Cash at Bank

8,200

 

 

65,150

 

65,150

 

 

 

 

 

Information:

(i)    Subscription outstanding as on 31.12.2005 Rs 2,000 and on December 31, 2006 Rs 1,500.

(ii)   On December 31, 2006 Salary outstanding Rs 600, and one month Rent paid in advance.

(iii)  On Jan. 01, 2005 organisation owned Furniture Rs 12,000, Books Rs 5,000.


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Q7 :  

The following is the account of cash transactions of the Nari Kalayan Samittee for the year ended December 31, 2006:

Receipts

Amount

Rs

Payments

Amount

Rs

Balance from last year

2,270

Rent 

6,600

Subscriptions

32,500

Electric charges

3,200

Life membership fee

3,250

 Lecturer's fee

730

Donation

2,500

Office expenses

1,480

Profit from entertainment

7,250

Printing and Stationery

1,050

Sale of old Books (books value Rs1,000)

750

Legal fee

1,870

Interest

350

Books

6,500

 

 

Furniture purchased

 8,600

 

 

Expenses on Nukar Drama

1,300

 

 

Cash in Hand

8,040

 

 

Cash at Bank

9,500

 

 

 

 

 

48,870

 

48,870

 

 

 

 

You are required to prepare an Income and Expenditure Account after the following adjustments:

(a) Subscription still to be received are Rs 750, but subscription include Rs 500 for the year 2007.

(b)  In the beginning of the year the Sangh owned building Rs 20,000 and furniture Rs 3,000 and Books Rs 2,000.

(c) Provide depreciation on furniture @ 5% (including purchase), books @ 10% and building @ 5%.


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Q8 :  

Following is the Receipt and Payment Account of Indian Sports Club, prepared Income and Expenditure Account, Balance Sheet as on December 31, 2006:

Receipt and Payment Account 

for the year ending December 31, 2006

Receipts

Amount

Rs

Payments

Amount

Rs

Balance b/d

7,890

Salary

11,000

Subscriptions

52,000

Electric charges

5,500

Life member ship fee

2,200

Billiard Table

17,500

Entrance fee

3,200

Office expenses

4,100

Tournament fund

26,000

Printing and Stationery

 2,300

Locker Rent

 1,250

Tournament expenses

18,500

Sale of old sports goods (Costing Rs 2,200)

2,500

Repair of ground

 2,000

Sale of Old Newspaper

 750

Furniture purchased

 7,700

Legacy

37,500

Sports equipments

12,000

 

 

Cash in Hand

12,690

 

 

Cash at Bank

 10,000

 

 

Fixed Deposit (on 1.10.06 for 10% p.a)

30,000

 

 

 

 

 

1,33,290

 

1,33,290

 

 

 

 

Other Information:

Subscription outstanding was on December 31, 2005 Rs 1,200 and Rs 3,200 on December 31, 2006. Locker rent outstanding on December 31, 2006 Rs 250. Salary outstanding on December 31, 2006 Rs 1,000.

On January 1, 2006, club has Building Rs 36,000, furniture Rs 12,000, Sports equipments Rs 17,500. Depreciation charged on these items @ 10% (including Purchase).


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Q9 :  

From the following Receipt and Payment Account of Jan Kalyan Club, prepare Income and Expenditure Account and Balance Sheet for the year ending December 31, 2006.           

Receipt and Payment Account 

for the year ending December 31, 2006

Receipts

Amount

Rs

Payments

Amount

Rs

Cash in hand as on 1.1.06

6,800

Salaries

24,000

Subscription

60,200

Traveling Expenses

6,000

Donation

3,000

Stationery

2,300

Sale of furniture (Book value Rs 6000)

4,000

Rent

16,000

Entrance fee

800

Repair

700

Life membership fee

7,000

Books purchased

 6,000

Interest on investment (@ 5% for full year)

5,000

Building purchased

30,000

 

 

Cash in Hand as 31.12.2006

1,800

 

 

 

 

 

86,800

 

86,800

 

 

 

 

Additional Information:

 

As on

1.01.2006

As on

31.12.2006

(i)

Subscription received in advance

1,000

 3,200

(ii)

Outstanding subscription

2,000

3,700

(iii)

Stock of stationery

 1,200

 800

(iv)

Books

13,500

16,500

(v)

Furniture

16,000

8,000

(vi)

Outstanding rent

1,000

2,000

 


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Q10 :  

Receipt and Payment Account of Shankar Sports club is given below, for the year ended December 31, 2006

Receipt and Payment Account 

for the year ending December 31, 2006

Receipts

Amount

Rs

Payments

Amount

Rs

Opening Cash in hand

2,600

Rent

18,000

Entrance fees

3,200

Wages

7,000

Donation for building

23,000

Billiard table

 14,000

Locker rent

 1,200

Furniture

 10,000

Life membership fee

7,000

Interest

 2,000

Profit from entertainment

3,000

Postage

1,000

Subscription

40,000

Salary

24,000

Cash in hand

4,000

 

 

 

80,000

 

 80,000

 

 

 

 

Prepare Income and Expenditure Account and Balance Sheet with help of following Information:

Subscription outstanding on 31st December 2005 is Rs 1, 200 and Rs 2,300 on 31.12.2006, opening stock of postage stamps is Rs 300 and closing stock is Rs 200, Rent Rs 1,500 related to 2005 and Rs 1,500 is still unpaid.

On January 1, 2006 the club owned furniture Rs 15,000, Furniture valued at Rs 22,500

On 31.12.2006. The club took a loan of Rs 20,000 (@ 10% p.a.) in 2005.


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Q11 :  

Prepare Income and Expenditure Account and Balance Sheet for the year ended December 31, 2006 from the following Receipt and Payment Account and Balance Sheet of culture club:

Receipt and Payment Account 

for the year ending December 31, 2006

Receipts

Amount

Rs

Payments

Amount

Rs

Opening cash balance

 

12,000

Furniture

4,000

Subscription

 

 

Telephone expenses

800

2005

2,000

 

Salary

 

2006

22,000

24,000

2005

1,000

Entrance fees

 

2,800

2006

4,000

Locker rent

 

1,000

Newspapers

700

Life membership fee

 

1,200

Sundry expenses

 1,000

Government grant

 

11,000

Defence bonds

18,000

 

 

 

Land

20,000

 

 

 

Closing cash balance

2,500

 

 

52,000

 

52,000

 

 

 

 

 

 

Balance Sheet 

for the year ending December 31, 2005

Liabilities

Amount

Rs

Assets

Amount

Rs

Advance locker rent

200

Cash in hand

12,000

Subscription Received in Advance

1,000

Outstanding Expenses

3,000

Outstanding salary

 2,000

Building

35,000

Loan

10,000

 

 

Capital fund

 36,800

 

 

 

50,000

 

50,000

 

 

 

 

 


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Q12 :  

From the following Receipt and Payment Account prepare final accounts of a Unity Club for the year ended March 31, 2007.

Receipt and Payment Accounts 

for the year ending March 31, 2007

Receipts

Amount

Rs

Payments

Amount

Rs

Balance b/d

 

15,000

Furniture

18,000

Sale of Old furniture (costing Rs 6,000)

4,000

Library books

10,000

Subscriptions:

 

 

Salaries

 72,000

2005-06

 18,000

 

General expenses

18,000

2006-07

60,000

 

Electric charges

12,000

2007-08

 2,000

 90,000

Newspapers

33,800

Sale of old newspapers

 

10,800

Postage

 3,000

Profit from entertainment

 

44,000

Stationery

 40,000

Rent

 

84,000

Audit fee

 8,000

 

 

 

Balance c/d

33,000

 

 

2,47,800

 

2,47,800

 

 

 

 

 

 

Balance Sheet 

as on March 31, 2006

Liabilities

Amount

Rs

Assets

Amount

Rs

Outstanding Salary

6,000

Cash

15,000

Capital Fund

6,94,000

Outstanding subscription

18,000

 

 

Library Books

30,000

 

 

Furniture

37,000

 

 

Land and Building

6,00,000

 

7,00,000

 

7,00,000

 

 

 

 

Additional Information:

1.

The Club had 500 members each paying an annual subscription of Rs 150.

2.

On 31.3.2007 salaries outstanding amounted to Rs 1,200 and salaries paid included Rs 6,000 for the year 2005-06.

3.

Provide 5% depreciation on Land and Building.

 


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Q13 :  

Following is the information in respect of certain items of a Sports Club. You are required to show them in the Income and Expenditure Account and the Balance Sheet.

Details

Amount

Rs

Sports Fund as on April 1, 2005

80,000

Sports Fund Investments

80,000

Interest on Sports Fund Investments

8,000

Donations for Sports Fund

30,000

Sports Prizes awarded

16,000

Expenses on Sports Events

7,000

General Fund

2,00,000

General Fund Investments

2,00,000

Interest on General Fund Investments

 20,000

 

 


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Q14 :  

Receipt and Payment Account of Maitrey Sports Club showed that Rs 68,500 were received by way of subscriptions for the year ended on March 31, 2006.

The additional information was as under:

1. Subscription Outstanding as on March 31, 2005 were Rs 6,500,

2. Subscription received in advance as on March 31, 2005 were Rs 4,100,

3. Subscription Outstanding as on March 31, 2006 were Rs 5,400,

4. Subscription received in advance as on March 31, 2006 were Rs 2,500.

Show how that above information would appear in the final accounts for the year ended on March 31, 2006 of Maitrey Sports Club.


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Q15 :  

Following is the Receipt and Payment account of Rohatgi Trust :

Receipt and Payment Account 

for the year ending December 31, 2006

Receipts

Amount

Rs

Payments

Amount

Rs

Cash in hand

 

14,000

Rent

6,000

Cash at Bank

 

60,000

Salary

12,000

Subscriptions:

2005

2006

2007

 

5,000

83,000

3,000

91,000

Postage

Electricity charges

Purchase of furniture

Books

300

6,000

20,000

3,000

Sale of Investment

 

90,000

Defence Bonds

1,50,000

Interest on investment

 

2,000

Help to needy students

22,000

Sale of old furniture (book value Rs 3,000)

 3,200

Cash in hand

Cash at bank

10,900

30,000

 

 

2,60,200

 

2,60,200

 

 

 

 

 

Prepare Income and expenditure account for the year ended December 31, 2006, and a balance sheet as on that date after the following adjustments: Subscription for 2006, still owing were Rs 7,000. Interest due on defence

bonds was Rs7,000, Rent still owing was Rs 1,000. The Book value of investment sold was Rs 80,000, Rs 30,000 of the investment were still in hand. Subscription received in 2006 included Rs 400 from a life member. The total furniture on January 1, 2006 was worth Rs 12,000. Salary paid for the year 2007 is Rs 2,000.


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Q16 :  

Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2007

Receipt and Payment Account 

for the year ending December 31, 2007

Receipts

Amount

Rs

Payments

Amount

Rs

Balance b/d

 

Charity

11,500

Cash in Hand

11,500

Rent and taxes

3,200

Cash at Bank

12,600

Salary

6,000

Donation

9,000

Printing

600

Subscription

42,800

Postage

300

Legacies

18,000

Advertisements

4,500

Interest on investment

4,500

Insurances

2,000

Sale of old newspapers

200

Furniture

21,600

 

 

Investment

23,000

 

 

Balance c/d:

 

 

 

Cash in Hand

9,900

 

 

Cash at Bank

16,000

 

98,600

 

98,600

 

 

 

 

Prepare Income and expenditure account for the year ended December 31, 2006, and a balance sheet as on that date after the following adjustments:

(a)

It was decided to treat one-third of the amount received on account of donation as income.

(b)

Insurance premium was paid in advance for three months.

(c)

Interest on investment Rs1,100 accrued was not received.

(d)

Rent Rs600: salary Rs900 and advertisement expenses Rs1,000 outstanding as on December 31, 2007.

 


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Q17 :  

From the following Receipt and Payment Account of a club, prepare Income and Expenditure Account for the year ended December 31, 2006 and the Balance Sheet as on that date.

Receipt and Payment Account 

for the year ending December 31, 2006

Receipts

Amount

Rs

Payments

Amount

Rs

Balance b/d

 

3,500

General expenses

900

Subscription:

2005

2006

2007

 

1,800

70,000

3,000

75,000

Salary

Postage

Electricity charges

Furniture

16,000

1,300

7,800

26,500

Sale of old Books

 

2,000

Books

13,000

(Costing Rs 3,200)

 

 

Newspapers

600

Rent from use of hall

 

17,000

Meeting expenses

7,200

Sale of newspapers

 

400

T.V. set

16,000

Profit from entertainment

 

7,300

Balance c/d

15,900

 

 

 

 

 

 

 

1,05,200

 

1,05,200

 

 

 

 

 

Additional Information:

(a)

The club has 100 members each paying an annual subscription of Rs900. Subscriptions outstanding on December 31, 2005 were Rs 3,600.

(b)

On December 31, 2006 , salary outstanding amounted to Rs 1,000, Salary paid included Rs 1,000 for the year 2005.

(c)

On January 1, 2006 the club owned land and building Rs 25,000, furniture Rs 2,600 and books Rs 6,200.

 


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Q18 :  

Following is the Receipt and Payment Account of Women's Welfare Club for the year ended December 31, 2007:

Receipt and Payment Account 

for the year ending December 31, 2007

Receipts

Amount

Rs

Payments

Amount

Rs

Balance b/d

7,250

Salary

12,500

Subscriptions

81,750

Stationery

1,700

Donations

 3,000

Electricity charges

9,550

Grant from Government

15,000

Insurance

7,500

Sale of newspapers

300

Equipments

30,000

Proceeds of charity show

16,500

Petty expenses

500

Interest on investments @ 10% for full year

7,000

Expenses on charity show

12,900

Sundries income

400

Newspapers

1,000

 

 

Lectures fee

16,500

 

 

Honorarium to Secretary

12,000

 

 

Balance c/d

27,050

 

1,31,200

 

1,31,200

 

 

 

 

Additional Information:

 

01.01.2007

Rs

31.12.2007

Rs

Outstanding salaries

1,200

1,800

Insurance prepaid

700

300

Subscription outstanding

3,750

2,500

Subscription received in advanced

1,750

1,000

Electricity charges outstanding

-

1,250

Stock of stationery

2,250

 700

Equipments

25,600

50,200

Building

1,20,000

1,14,000

Prepare Income and Expenditure Account for the year ended December 31, 2007 and Balance Sheet as on that date.


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Q19 :  

As at March 31,2008 the following balances have been extrated from the books of the Indian Chartered Accountants Recreation Club and you are asked to prepare (1) Trading Account for ascertaining gross profit derived from running restaurant and dining room and (2) Income and Expenditure Account for the year ended March 31, 2008 (3) and a Balance Sheet as at that date.

Debit Balances

Rs

Credit Balances

Rs

Stock-in-hand

1170

Receipts Dining Room

87,660

Purchases

24,660

Subscriptions

9,450

Dining Room

32,370

Billiard's Receipts

7,300

Rent

10,470

Sunday Receipts

410

Wages

18,690

Interest on Fixed Deposit

270

Repairs and Renewals

5,400

Sundry Creditors

 5310

Fuel and Light

5,280

Grant from Institute (permanent)

42,000

Misc. Expenses

4,050

Income and Exp. A/c (1.4.07)

1,380

Cash in hand

560

Suspense A/c (See note)

60

Cash at bank

2,760

 

 

Fixed Deposit

8,500

 

 

Sundry Debtors

2,250

 

 

China glass, cutlery and linen

600

 

 

Billiard Table

2,070

 

 

Fixtures and Fittings

870

 

 

Furniture

4,140

 

 

Club Premises

30,000

 

 

 

1,53,840

 

1,53,840

 

 

 

 

On March 31,2008 stock of restaurant consisted of Rs 900 and Rs 60 respectively. Provide depreciations Rs 60 on fixtures and fittings, Rs 390 on billiard table and Rs 560 on furniture.


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<< Previous Chapter 3 : Accounts from Incomplete Records Next Chapter 5 : Applications of Computers in Accounting >>

Long answers : Solutions of Questions on Page Number : 474

Q1 :  

Explain the statement: “Receipt and Payment Account is a summarised version of Cash Book”.


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Q2 :  

“Income and Expenditure Account of a Not-for-Profit Organisation is akin to Profit and Loss Account of a business concern”. Explain the statement.


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Q3 :  

Distinguish between Receipts and Payments Account and Income and Expenditure Account.


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Q4 :  

Explain the basic features of Income and Expenditure Account and of Receipt and Payment Account.


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Q5 :  

Show the treatment of the following items by a Not-for-Profit Organisation:

(i)

Annual subscription

(ii)

Specific donation

(iii)

Sale of fixed assets

(iv)

Sale of old periodicals

(v)

Sale of sports materials

(vi)

Life membership fee

 


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Q6 :  

Show the treatment of items of Income and Expenditure Account when there is a specific fund for those items.


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Q7 :  

What is Receipt and Payment Account? How is it different from Income and Expenditure Account?


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Financial Accounting Part-2 - Accountancy : CBSE NCERT Exercise Solutions for Class 11th for Accounting for Not-for-Profit Organisation will be available online in PDF book form soon. The solutions are absolutely Free. Soon you will be able to download the solutions.

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