Please refer to MCQ Questions for Class 12 Accountancy Chapter 1 Accounting for Not for Profit Organisation with answers below. These multiple-choice questions have been prepared based on the latest NCERT book for Class 12 Accountancy. Students should refer to MCQ Questions for Class 12 Accountancy with Answers to score more marks in Grade 12 Accountancy exams. Students should read the chapter Accounting for Not for Profit Organisation and then attempt the following objective questions.

MCQ Questions for Class 12 Accountancy Chapter 1 Accounting for Not for Profit Organisation with answers

MCQ Questions for Class 12 Accountancy Chapter 1 provided below covers all important topics given in this chapter. These MCQs will help you to properly prepare for exams.

Question. A not-for-profit organisation has all of the following characteristics, except that it will
(a) operate for purposes other than to provide goods or service at a profit
(b) have a positive fund balance
(c) not possess ownership interests like a corporation
(d) receive significant contributions from provides who do not expect returns

Question. Excess of income over expenditure is in the balance sheet. .capital fund
(a) added to
(b) deducted from
(c) not added to
(d) not deducted from

Question. On What basis receipts and payments account is made
(a) Cash basis
(b) Accrual basis
(c) Both Cash & Accrual basis
(d) None of the above

Question. A not for profit organisation prepares:
(a) Receipts and Payments Account.
(b) Trading Account.
(c) Income and Expenditure Account.
(d) Both (a) and (c)

Question. Subscription received by a school for organising annual function is treated as:
(a) Capital receipt (i.e. Liability)
(b) Revenue receipt (i.e. Income)
(c) Assets.
(d) Earned income.

Question. Capital Receipts are represented in:
(a) Balance Sheet.
(b) Trading Account.
(c) Profit and Loss Account.
(d) Manufacturing Account.

Question. Receipt and payment account is a summary of
(a) income and expenses
(b) cash receipts and payments
(c) balances of various ledger accounts
(d) None of the above

Question. The receipt and payment account is a .. account in nature.
(a) nominal
(b) real
(c) personal
(d) None of these

Question. A not for profit organisation includes:
(a) Religious Organisations
(b) Trade unions
(c) Clubs
(d) Educational institutions
(e) All of the above

Question. “The surplus of non-profit organisations are distributed among members”. The above statement is
(a) false
(b) True
(c) Partly true
(d) Partly false

Question. All receipts of capital nature are as shown in….
(a) Income and Expenditure A/c
(b) Balance Sheet
(c) P. & L. A/c
(d) None of these

Question. Subscription receives during the year Rs. 5, 00000….
Subscriptions outstanding at the end of the year Rs. 80, 000; Subscription outstanding at the beginning of the year Rs. 60,000 Net Income from subscription will be—
(a) 4,80,000
(b) 6,40,000
(c) 5,20,000
(d) 3,60,000

Question. In non-profit accounting, sal. of old newspapers is generally considered as a/an
(a) income
(b) expenses
(c) capital receipt
(d) None of these

Question. Income and expenditure account is based on
(a) cash accounting
(b) accrual accounting
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Question. Resources of a non-profit organisation’s unrestricted fund that have been set aside for a specific purpose by the Board of Directors of the organisation are accounted for in
(a) unrestricted fund
(b) endowment fund
(c) restricted current fund
(d) annuity fund

Question. At the beginning of an accounting year a club has assets of Rs. 19,000 and liabilities of Rs.5,000. Rs. 1,800 is the debit balance of the income & expenditures account. The opening capital fund is
(a) Rs. 18,000
(b) Rs.11,200
(c) Rs.15,800
(d) Rs. 24,800

Question. No cash transaction will be excluded from
(a) Balance Sheet
(b) Profit & Loss A/c
(c) Receipts and Payments
(d) Income and Expenditure A/c

Question. Subscription received during the year 2019-20: Rs. 1,50,000. Outstanding Subscription as on 31st March, 2019: Rs. 1,00,000. The amount shown as subscription receipt will be
(a) Rs. 50,000.
(b) Rs. 1,50,000.
(c) Rs. 1,00,000.
(d) Rs. 1,25,000. 

Question. Out of the following, which is Unrestricted Fund?
(a) Annuity Fund
(b) Sports Fund
(c) Capital Fund
(d) Endowment Fund

Question. Which of the following is an example of not-profit-organisation:
(a) Public hospitals
(b) Corporations
(c) Audit firm
(d) Insurance companies.

Question. The Receipts and Payments Account is a summary of:
(a) Debit and Credit balance of Ledger Accounts
(b) Cash Receipts and Payments
(c) Expenses and Incomes
(d) Assets and Liabilities 

Question. Identify capital receipt from the following:
(a) Life Membership Fees
(b) Rent Receipt
(c) Entrance fees
(d) Sports expenses.

Question. Salary paid in cash during the current year was Rs. 80,000; Outstanding salary at the end was Rs.4,000; Salary paid in advance last year pertaining to the current year was Rs.3,200; paid in advance during current year for next year was Rs.5,000. The amount debited to Income and Expenditure Account will be:
(a) Rs.85,800
(b) Rs.77,800
(c) Rs. 82,200
(d) Rs. 74,200

Question. How much amount will be shown in Income and Expenditure Account in the following case? 1-4-2019 31-3-2020 Creditors for Stationery 8,000 6,000 Stock of Stationery 3,000 3,200During 2019-20 payment made for Stationery was Rs.60,000.
(a) Rs.57,800
(b) Rs.62,200
(c) Rs.61,800
(d) Rs.5 8,200 

Question. Income and Expenditure Account is prepared on
(a) Cash Basis.
(b) Accrual Basis.
(c) Both (a) and (b).
(d) Sales Basis,

Question. Main source of Income for a Not-for-Profit Organisation is
(a) Rent.
(b) Salaries.
(c) Donations and Subscriptions.
(d) Sale of Assets

Question. Credit purchase of stationery is Rs. 64,000, which is 80% of total purchase, compute cash purchase of stationery,
(a) Rs. 16,000
(b) Rs. 24,000
(c) Rs. 8,000
(d) Rs. 40,000

Question. Subscription received in advance during the current year is
(a) an income.
(b) an asset.
(c) a liability.
(d) None of these. 

Question. Receipts and Payments Account is prepared on
(a) Cash Basis.
(b) Time Basis.
(c) Accrual Basis.
(d) Sales Basis.

Question. Amount received from sale of grass by a club should be treated as :
(a) Capital Receipt
(b) Revenue Receipt
(c) Asset
(d) Earned Income 

Question. Legacy Donation received by NPO to be used for specific purpose is accounted as
(a) Revenue Receipt.
(b) Capital Receipt.
(c) an Asset.
(d) is decided by the Management

Question. The amount of ‘Entrance Fees’ received by a Non-profit organisation (if it is received regularly) is shown in which of the following?
(a) Liability side of Balance Sheet
(b) Assets side of Balance Sheet
(c) Debit side of Income and Expenditure Account
(d) Credit side of Income and Expenditure Account 

Question. Furniture as on 31st March, 2019 Rs. 4,40,000. Furniture (having Book value as on 1st April, 2018 of Rs. 40,000) sold at a loss of 20% on 31st December, 2018. Furniture is depreciated @ 10% p.(a) Furniture costing Rs. 3,00,000 was also purchased on 1st October, 2018. Calculate Loss on sale of furniture.
(a) Rs. 9,400
(b) Rs. 6,400
(c) Rs. 8,000
(d) Rs. 7,400 

Question. Receipts and Payments Account is a summary of
(a) Debit and Credit balances of Ledger Account.
(b) Cash receipts and payments.
(c) incomes and Expenses.
(d) Balances of assets and liabilities.

Question. The opening balance of Prize Fund was Rs.32,800. During the year, donations received towards this fund amounted to Rs. 15,400; amount spent on prizes was Rs. 12,300 and interest received on prize fund investment was Rs.4,000. The closing balance of Prize Fund will be :
(a) Rs. 56,500
(b) Rs.64,500
(c) Rs.39,900
(d) Rs. 31,900

Question. Choose NPO from the following:
(a) Reliance Industries Limited
(b) Indian Hoc Important Federation
(c) Infosys Lt(d)
(d) Private Hospital 

Question. Title of the account which shows Surplus/Deficit of NPO is
(a) Cash Book.
(b) Income and Expenditure Account.
(c) Receipts and Payments Account.
(d) Balance Sheet. 

Question. Out of the following items, which one is shown in the ‘Receipts and Payments Account’ of a not for profit organisation?
(a) Accrued subscription
(b) Outstanding salary
(c) Depreciation
(d) None of these

Question Income and Expenditure Account reveals:
(a) Surplus or Deficiency
(b) Cash in Hand
(c) Net Profit
(d) Capital Account 

Question. Salary paid for the year ended 31st March, 2020 amounted to Rs.75,000. How much amount will be recorded in Income and Expenditure Account in the following case?

                                          31-3-2019                   31-3-2020

Outstanding Salary                6,500                               6,000

Prepaid Salary                       1,200                                1,000

(a) Rs.75,700
(b) Rs.74,300
(c) Rs.75,300
(d) Rs.74,700   

Question. Receipts and Payments Account is a
(a) Real Account.
(b) Nominal Account.
(c) Personal Account.
(d) Revenue Account 

Question. Subscription received by a school for organising annual function is treated as:
(a) Capital Receipt (i.e., Liability)
(b) Revenue Receipt (;.e., Income)
(c) Asset
(d) Earned Income

Question. Choose NPO from the following:
(a) Reliance Industries Limited
(b) Indian Hoc Important Federation
(c) Infosys Lt(d)
(d) Private Hospital 

Question. Donation received for a special purpose:
(a) Should be credited to Income and Expenditure Account
(b) Should be credited to separate account and shown in the Balance Sheet
(c) Should be shown on the assets side
(d) Should not be recorded at all. 

Question. Calculate the amount of credit purchase from the following information:
Particulars                         1st April, 2019(Rs.)             31st March, 2020 (Rs.)
Creditors for Stationery              4,600                             11,800

During the year ended 31st March, 2020, payment made to creditors of Rs. 56,800.
(a) Rs. 54,000
(b) Rs. 64,000
(c) Rs. 74,000
(d) Rs. 44,000

Question. Out of the following items, which is not shown in the ‘Receipts and Payments A/c’ of a not for profit organisation?
(a) Subscription received in advance
(b) Subscription due
(c) Last year subscription received
(d) All of the above 

Question. Subscription received in advance during the current year is :
(a) an income
(b) an asset
(c) a liability
(d) none of these

Question. If there is a ‘Match Fund’, then Match Expenses and Match Incomes are transferred to
(a) Income and Expenditure A/(c)
(b) Assets side of Balance Sheet.
(c) Match Fund in Liabilities side of Balance Sheet.
(d) Both Income and Expenditure A/c and to Balance Sheet.

Question. Identify revenue receipt from the following:
(a) Donations for Building
(b) Subscription
(c) Life Membership Fees
(d) Legacy donation for Library. 

Question. Subscription received in cash during the year amounted to Rs.5,00,000; subscription outstanding at the end of previous year was Rs.20,000 and outstanding at the end of current year was Rs.25,000. Subscription received in advance for next year was Rs. 8,000 and received in advance during previous year was Rs.7,000. The amount credited to Income & Expenditure Account will be :
(a) Rs.5,04,000
(b) Rs.5,06,000
(c) Rs.4,96,000
(d) Rs.4,94,000

Question. Compute Rent for the year ended 31st March, 2020 from the following:

                                     1.4.2019        31.3.2020
Outstanding Rent Rs.      19,000          Rs. 14,000
Prepaid Rent                  Rs. 5,600      Rs. 10,400
                                                                       

                      

Question. Income and Expenditure Account records transactions of:
(a) Revenue nature only
(b) Capital nature only
(c) Both revenue and capital nature
(d) Income of only revenue nature and expenditure of revenue and capital nature.

Question. Receipts and Payments Account is a :
(a) Personal Account
(b) Real Account
(c) Nominal Account
(d) Real and Nominal Account, both 

Question. Salaries paid during the year ended 31st March, 2020 is Rs. 36,000. Salaries paid in advance at the end of previous year were Rs. 54,000. The amount of Salaries to be debited to income and Expenditure Account for the year ended 31st March, 2020 will be
(a) Rs. 54,000.
(b) Rs. 36,000.
(c) Rs. 90,000.
(d) Rs. 18,000.

Question. Subscriptions received during the year Rs.5,000,amount received in advance for the next year is Rs.300. Amount outstanding for current year was Rs.400. The amount to be credited to the Income and Expenditure account is
(a) 4,000
(b) 5100
(c) 4200
(d) 4600 

Question. In the Income and Expenditure Account all revenue receipts are entered on
(a) Assets side
(b) Left-hand side
(c) Right-hand side
(d) Liabilities side

Question. The Receipt and Payment account of a Non- Profit Organisation is a
(a) Nominal Account
(b) Real Account
(c) Income Statement Account
(d) Financial Statements

Question. Subscription received in advance is
(a) An asset account.
(b) A liability account.
(c) An income.
(d) An expenses.

Question. When there is a Building Fund and the construction of building is incomplete, the amount spent is:
(a) Transferred to Capital Fund
(b) Transferred to Income and Expenditure Account.
(c) Continued in the Building Fund Account.
(d) None of the above.

Question. Which of the following is regarded as apt to show purchase of fixed asset for a non profit organisation
(a) Income & Expenditure Account
(b) Profit & Loss Account
(c) Balance Sheet
(d) None of the above

Question. Which of the following is the accounting equation for a non-profit organisation?
(a) Asset= Capital + Liabilities
(b) Capital+ Liabilities= Assets
(c) Accumulated Fund+ Liabilities= Assets
(d) Liabilities= Assets + Accumulated Fund

Question. If debit side of receipt and payment account exceeds the credit side, it represents
(a) Deficit balance
(b) Surplus Balance
(c) Cash at Bank
(d) Bank Overdraft

Question. Capital fund of non-profit organisations represents
(a) excess of expenditure over income
(b) excess of income over expenditure
(c) equality between income and expenditure
(d) None of the above

Question. Where is specific donation received shown in the final accounts of not-for-profit organisations?
(a) Liabilities side of balance sheet
(b) Assets side of balance sheet
(c) Credit side of income and expenditure account
(d) Debit side of income and expenditure account

Question. Which should be considered as capital receipt of a club
(a) Donation
(b) sale of newspaper
(c)) sale of bar items
(d) sale of furniture

Question. Receipt & Payment Account shows
(a) A debit balance
(b) A credit balance
(c) Surplus or deficit
(d) Capital fund

Question. Payments account generally shows
(a) A debit balance
(b) A credit balance
(c) Surplus or deficit
(d) Capital fund

Question. Subscription outstanding in case of a club are shown on the……….. Side of the Balance Sheet.
(a) Assets
(b) Liabilities
(c) Income
(d) None of these

Question. Second hand furniture worth Rs. 6,000 was purchased. It was repaired for Rs.600 and installed by workmen to whom Rs. 200 was paid as wages. The furniture should be capitalised for
(a) Rs.6,200
(b) Rs.6,800
(c) Rs. 6,600
(d) Rs. 6,000

Question. Amount received from the sale of old furniture by a club is treated as:
(a) Revenue Receipt
(b) Capital Receipt
(c) Asset
(d) liability

Question. The amount of subscription received in advance during the current year by an NPO is
(a) An Asset
(b) A Liability
(c) A Capital Fund
(d) None of the above

Question. The main purpose for which an NPO is formed by its promoters includes
(a) Controlling Domestic Market
(b) Winning Entrepreneurship Awards
(c) Furthering Religious and Educational Objectives
(d) Earning Profits

Question. Income and Expenditure accounts is a…
(a) Real Account
(b) Nominal Account
(c) Personal Account
(d) None of these

Question. Sources of Funds for Not-For-Profit Organisations?
(a) Donation
(b) Membership fees or Entrance fees
(c) Subscription
(d) Grants
(e) All of these

Question. Receipt and Payments acccount prepared on …
(a) Accrual Basis of accounting
(b) Cash basis of accounting
(c) Both (a) and (b)
(d) None of these.

Question. Salaries payable for the current year amount to Rs. 8,500 at the end of the year. Outstanding salaries amounted to Rs. 300. Salaries paid in advance last year pertaining to the current year amounted to Rs.500. Prepaid salaries for the next year amount to Rs.250. total amount paid for salaries during the year is
(a) Rs.7,550
(b) Rs.7,500
(c) Rs. 7,950
(d) Rs.6,500

Question. Donations received for special purpose should be
(a) Credited to a separate fund account and shown in the Balance Sheet
(b) Treated as revenue
(c) treated as revenue unless the amount is large
(d) Not recorded at all

Question. Subscription received by a school for organizing annual function is treated as
(a) Capital receipt
(b) Revenue receipt
(c) Asset
(d) Earned income

Question. Subscription received in advance during the current year is:
(a) An income
(b) An asset
(c) A liability
(d) None of these

Question. Balance of income and expenditure account represents….
(a) Net profit
(b) Net loss
(c) Surplus or deficit
(d) All of these

Question. What will be the treatment of subscription received in advance during the current year Balance Sheet of a not-for-profit organisation?
(a) Recorded on the assets sides of the current year balance sheet
(b) Recorded on the liability side of the current year balance sheet
(c) Not recorded in balance sheet
(d) None of these

Question. Donation received for specific objective will be shown …
(a) In Income and Expenditure A/c
(b) On Liabilities side of B/S
(c) On Assets side of B/S
(d) In none of these

Question. In regard to Rent expenses paid in advance of a non- profit organisation which of the following classification is correct
(a)Expense
(b) Liability
(c) Equity
(d) Assets

Question. XYZ club has a bar that maintains a separate trading account for its trading activities. Which of the following is the treatment of profit or loss on bar trading activities?
(a) Profit or loss is directly shown in the Balance Sheet
(b) Profit or loss is to be presented in income and expenditure account
(c) Profit and loss is credited in income statement.
(d) Profit or loss is added to accumulated fund

Question. Sale of items such as magazines, newspapers, etc. are of recurring nature, thereby the income received from their sale is considered as
(a) Capital Receipt
(b) Continuous Income
(c) Extra-Ordinary Income
(d) Revenue Income

Question. The type of fund, the use of which is restricted either by the management of the organisation or by the donor of the funds for some specific purpose is known as
(a) General Fund
(b) Restricted Fund
(c) Limited Fund
(d) Surplus Fund

Question. Receipts and Payments A/c is the summary of a
(a) Cash Book
(b) Sales Book
(c) Purchases Book
(d) Journal

Question. Cash received by converting an asset into cash is reflected in
(a) Conversion A/c
(b) Receipts and Payments A/c
(c) Contract A/c
(d) Suspense A/c

Question. Features of income and expenditure accounts are….
(a) It is a nominal account
(b) It records income, expenditure and losses of revenue nature on a accrual basis of accounting.
(c) It does not have a opening balance.
(d) All of these

Question. Name of the account which shows the classified summary of the transactions of a cash book in a not for profit organisation….
(a) Receipts and payments account
(b) Income and expenditure Account
(c) Trading account
(d) Profit and loss account

Fill in the blanks :

Question: Amount paid by the members to keep their membership alive is termed as__________

Question: Token payment made to a person, who voluntarily undertakes a service which would normally command a fee is_______

Question: Amount received as donation by NPO under will of a deceased person is termed as______ 

Question: Receipts and Payments Account is based on__________Basis of accounting.       

Question: Life membership fees received by a NPO is a________.       

Question: Not-for-Profit Organisations do not maintain any capital account. Instead they maintain __________ that goes on accumulating due to surpluses generated, life membership fee, legacies, etc. received from year to year.

Question: In addition to Receipt and Payment Account, Income and Expenditure Account and Balance Sheet, Not-for-Profit Organisations are required to maintain a _____________ to keep complete record of all fixed assets and the consumables.

Question:  Not-for-profit organisations are managed by _________ who are fully accountable to their members and the society for the utilization of the funds raised for meeting the objectives of the organisation. They submit the financial statements to the statutory authority called __________.     

Question: The funds raised by not-for-profit organisations through various sources are credited to __________ .   

Question:  Receipts and Payments account gives summarised picture of various receipts and payments recorded in the __________, irrespective of whether they pertain to the Current/Previous/next year or whether they are of __________ nature.         

Question:  Income and Expenditure Account is just like a __________ prepared on __________ basis of accounting in case of the business organisations.
                 

True or False :

Question: Surplus or Deficit of a non-profit organisation is added to or subtracted from accumulated fund.

Question:  Building Fund, Library Fund etc. is based on____________Accounting.

Question: An advance receipt of subscription from members of Not-for–profit organisation is an Asset.

Question:Income and Expenditure account shows transactions of Capital nature for the accounting year.
       

Question: Under NPO, sale of old newspaper is shown as an income (TRUE/FALSE)

Question: Excess of Income over Expenditure in Income and Expenditure account prepared by a NPO is termed as Deficit.

Question: A NPO has a Match Fund of <1,00,000 and Match Expenses of <40,000 Match fund and Match expenses will be shown in the liabilities side of the Balance Sheet , expenses being deducted from fund.

One word Answer :

Question: Name an item that is never shown on the payment side of Receipts and Payment Account, but is shown on the debit side of the Income and Expenditure Account.

Question:  Distinguish between Income and Expenditure Account and Receipts and Payments Account on the basis of ‘period’?

Question:  Distinguish between Income and Expenditure Account and Receipts and Payment Account on the basis of Nature of items.

Question:  Distinguish between Income and Expenditure Account and Receipts and Payments Account on the basis of ‘closing balance’?

Match The Column :

1) when partnership deed does not provide interest on capital	a) interest on capital is not allowed
2) when partnership deed provides for interest on capital but is silent on whether it is charge or appropriation	b) interest on capital is allowed in all circumstances
	c) interest on capital is allowed if only profit is their

1. If actual capital employed is 5,00,000 and capitalized value of average profit is 4,00,000 good will would be	a) 1,00,000
	b) (1,00,000)
	c) Nil

1) Closing stock under valued	a) Deducted to the current year and added to the previous year
2) Closing stock over valued	b) Added to the current year and deducted from previous year
	c) No effect

1. 2016	a) 1
2. 2018	b) 2
3. 2019	c) 3
4. 2017	d) 4
	e) 5

1. Goodwill which is acquired by making a paymen	a) Inherit goodwill
	b) purchase goodwill

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