Financial Management Quiz
49 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following represents a source of revenue in the provided financial content?

  • Interest on specific fund (correct)
  • Charity
  • Insurance, rent, salaries
  • Repairs

What type of expense is indicated by 'Expenses on special food to patients'?

  • Marketing expenses
  • Administrative expenses
  • Operational expenses (correct)
  • Capital expenses

Which of the following is NOT listed among the miscellaneous receipts?

  • Waste papers
  • Interest or dividends
  • Garden maintenance (correct)
  • Sale of old newspapers

What does 'Balance c/d' represent in the financial context provided?

<p>Closing balance for the period (B)</p> Signup and view all the answers

From which activity do 'Proceeds from entertainments' generate income?

<p>Fundraising events (C)</p> Signup and view all the answers

Which of the following could potentially indicate financial distress?

<p>Cash at bank overdraft (D)</p> Signup and view all the answers

Which group of expenses applies to maintaining the premises and property?

<p>Municipal taxes and gardening (C)</p> Signup and view all the answers

Which of the following corresponds with operational costs in the provided content?

<p>Bar expenses (C)</p> Signup and view all the answers

What is the treatment of profit or loss on the sale of a fixed asset?

<p>It is recorded as a capital receipt. (B)</p> Signup and view all the answers

In which account are expenses related to a specific fund, such as a sports fund, not shown?

<p>Income and expenditure account (C)</p> Signup and view all the answers

What happens to the expenses related to the sale of a fixed asset?

<p>They are deducted from the relevant asset in the balance sheet. (D)</p> Signup and view all the answers

How is depreciation treated in the context of fixed assets?

<p>It is deducted from the expenditure relevant to the asset sold. (B)</p> Signup and view all the answers

What is the treatment of municipal taxes in relation to fixed assets?

<p>They are not included in the profit and loss statement. (B)</p> Signup and view all the answers

Which statement is true regarding the inclusion of expenses in the profit and loss account?

<p>No expenses related to specific funds appear in profit and loss. (D)</p> Signup and view all the answers

What is the implication of having fund expenditures less than the related assets?

<p>The excess is accounted as a liability. (C)</p> Signup and view all the answers

Which is a correct statement regarding the income treatment of sports funds?

<p>Any expenses related to sports funds do not appear in income statements. (B)</p> Signup and view all the answers

What should be deducted from the total expenses to calculate the salary of the year?

<p>Advance paid for salaries in the current year (C)</p> Signup and view all the answers

What does the term 'Net profit on sale' actually refer to?

<p>Sale price of the asset minus book value (A)</p> Signup and view all the answers

What needs to be added to the current income when calculating profit on the sale of an asset?

<p>Sale price of the asset (B)</p> Signup and view all the answers

To find the 'Excess of Income over Expenditure', which items are primarily considered?

<p>All income sources minus all expenditure items (D)</p> Signup and view all the answers

Which factor decreases the amount of stationery consumed?

<p>Stock of stationery at the end (A)</p> Signup and view all the answers

What does the term 'Current Income' primarily include?

<p>Profit on sale of asset and specific items (B)</p> Signup and view all the answers

What should be added to calculate 'Other income and gains'?

<p>Adjustments related to past transactions (D)</p> Signup and view all the answers

What type of figure is the 'Excess of Expenditure over Income' referred to in the Balance Sheet?

<p>Loss (C)</p> Signup and view all the answers

What was the total amount in the prize fund before any distributions were made?

<p>Rs. 30,500 (A)</p> Signup and view all the answers

For the calculation of 'Net expenses of specific items', which of these factors is crucial?

<p>Actual expenses incurred minus collections (C)</p> Signup and view all the answers

What was the total expenditure on prize distribution?

<p>Rs. 50,000 (A)</p> Signup and view all the answers

What adjustment is necessary for calculating the cost of consumables like stationery?

<p>Adding current year's purchases and subtracting end stock (B)</p> Signup and view all the answers

Which of the following is included in the prize fund assets?

<p>Interest on 5% investment (C)</p> Signup and view all the answers

What was the total income from the donation for the prize fund?

<p>Rs. 20,000 (A)</p> Signup and view all the answers

What was the final balance after the distribution of the prize from the total prize fund?

<p>Rs. 0 (D)</p> Signup and view all the answers

What is the total amount of subscriptions received by ABC Club?

<p>Rs. 2,680 (D)</p> Signup and view all the answers

How much did ABC Club spend on salaries during the year?

<p>Rs. 920 (D)</p> Signup and view all the answers

What was the total amount spent on rent by ABC Club?

<p>Rs. 630 (A)</p> Signup and view all the answers

What is the amount recorded as the balance carried forward from the previous period?

<p>Rs. 550 (D)</p> Signup and view all the answers

What was the total revenue generated from the sale of old newspaper?

<p>Rs. 25 (B)</p> Signup and view all the answers

What total amount did ABC Club receive from donation?

<p>Rs. 150 (D)</p> Signup and view all the answers

How much was spent on books during the year?

<p>Rs. 450 (D)</p> Signup and view all the answers

What is the sum of the electric charges incurred by ABC Club?

<p>Rs. 50 (C)</p> Signup and view all the answers

What total amount does ABC Club show for traveling expenses?

<p>Rs. 40 (D)</p> Signup and view all the answers

What is the total payment made for stationary?

<p>Rs. 120 (A)</p> Signup and view all the answers

What is the total amount allocated for the construction of the auditorium as shown in the Balance Sheet?

<p>Rs. 21,00,000 (C)</p> Signup and view all the answers

What is the total amount of donations received for the auditorium construction?

<p>Rs. 25,00,000 (B)</p> Signup and view all the answers

How much was the interest accrued from the Auditorium fund investment?

<p>Rs. 1,50,000 (C)</p> Signup and view all the answers

What is the opening balance of the Auditorium fund?

<p>Rs. 1,00,000 (D)</p> Signup and view all the answers

What adjustment is made to the Capital fund from the Auditorium fund?

<p>Rs. 21,00,000 (D)</p> Signup and view all the answers

How much was the total investment in the Auditorium fund?

<p>Rs. 2,000,000 (A)</p> Signup and view all the answers

What is the expected total cost of the auditorium?

<p>Rs. 40,00,000 (D)</p> Signup and view all the answers

What is the total balance in the Auditorium fund after accounting for donations and interest?

<p>Rs. 30,00,000 (C)</p> Signup and view all the answers

Flashcards

Profit on sale of fixed asset

The profit or loss made on selling a fixed asset such as furniture, building, or equipment.

Depreciation on sale of fixed asset

The amount of depreciation already charged on the asset being sold up to the time of sale.

Treatment of depreciation in income statement

Depreciation on sale of a fixed asset is treated as an expense in the income statement.

Treatment of profit/loss on sale in income statement

Profit or loss on sale of a fixed asset is considered a revenue item in the income statement.

Signup and view all the flashcards

Treatment of specific funds like sports fund

Funds like sports fund, prize fund, or tournament fund are treated as capital receipts.

Signup and view all the flashcards

Expenses related to specific funds

Expenses related to specific funds are not recorded in the income and expenditure account, but are deducted from the relevant fund in the balance sheet.

Signup and view all the flashcards

What happens if fund is less than expenditure?

If the fund is less than the related expenditure, the difference is shown as an expense in the balance sheet.

Signup and view all the flashcards

Treatment of extra funds

Any extra funds remaining after covering the expenditure are treated as liabilities in the balance sheet.

Signup and view all the flashcards

Revenue Receipts

Income generated from various sources, including donations, subscriptions, interest, and proceeds from events.

Signup and view all the flashcards

Interest on specific fund

Interest earned on a designated fund, often held for a specific purpose.

Signup and view all the flashcards

Proceeds from entertainments

Income generated from events like concerts, plays, and parties.

Signup and view all the flashcards

Repairs

Expenses incurred for fixing or maintaining assets, buildings, or equipment.

Signup and view all the flashcards

Insurance, rent, salaries

Recurring expenses including insurance premiums, rental fees, and employee compensation.

Signup and view all the flashcards

Expenses on special food to patients

Costs related to providing specialized meals for patients, often in a hospital setting.

Signup and view all the flashcards

Cash at bank (Bank Overdraft)

Represents the balance in the organization's bank account, either a positive balance or an overdraft.

Signup and view all the flashcards

Balance c/d (Closing Balance)

The remaining balance in the organization's accounts at the end of a financial period.

Signup and view all the flashcards

Receipt and Payment Account

A financial statement that summarizes all cash receipts and payments of an organization during a specific period, usually a year.

Signup and view all the flashcards

Balance b/d

The beginning balance of the account, representing the amount of cash the organization had at the start of the period.

Signup and view all the flashcards

Balance c/d

The ending balance of the account, representing the remaining cash at the end of the period.

Signup and view all the flashcards

Subscription

Income received from members who pay a regular fee to belong to the organization.

Signup and view all the flashcards

Admission Fee

Income received when new members join the organization.

Signup and view all the flashcards

Rent

An expense incurred for using a building or property.

Signup and view all the flashcards

Salaries

The expense for paying the wages of employees.

Signup and view all the flashcards

Traveling Expenses

Costs incurred for transportation and travel related to the organization's activities.

Signup and view all the flashcards

Entertainment Expenses

Costs incurred for events and activities that provide entertainment for members.

Signup and view all the flashcards

Electric Charges

Expense incurred for using electricity.

Signup and view all the flashcards

Auditorium Fund

A specific fund set up by a Non-Profit organization to manage the construction and related expenses of an auditorium.

Signup and view all the flashcards

Donation Treatment

Donations received for a specific project, like an auditorium, are recorded as a liability, specifically as an addition to the relevant fund.

Signup and view all the flashcards

Auditorium Construction Expenditure

Expenses incurred during the construction of the auditorium are treated as an asset, shown as "Auditorium in Progress" in the Balance Sheet.

Signup and view all the flashcards

Auditorium Fund Investment

When a portion of the Auditorium Fund is invested, the investment is reflected as an asset, usually as "10% Auditorium Fund INVESTMENT" in the Balance Sheet.

Signup and view all the flashcards

Interest on Auditorium Fund Investment

Interest earned on the Auditorium Fund investment is recorded as "Accrued Interest on Auditorium Fund Investment" in the Balance Sheet.

Signup and view all the flashcards

Transfer to Capital Fund

When funds from a specific project fund, like the Auditorium Fund, are transferred to the general Capital Fund, the transfer is reflected as a liability.

Signup and view all the flashcards

Balance Sheet Presentation

The Balance Sheet for a Non-Profit Organization includes both liabilities and assets related to specific project funds, like the Auditorium Fund.

Signup and view all the flashcards

Relationship between Auditorium Fund and Capital Fund

The Auditorium Fund is separate from the Capital Fund. However, they are connected by the transfer of funds from one to the other.

Signup and view all the flashcards

Prize Fund

A dedicated fund set aside for awarding prizes in events or competitions.

Signup and view all the flashcards

Donation for Prize Fund

Money received as a gift specifically to be added to the prize fund.

Signup and view all the flashcards

Expenditure on Prize Distribution

The actual amount spent on awarding prizes, including the cost of the prizes themselves.

Signup and view all the flashcards

Income & Expenditure A/c

A financial statement that summarizes the revenue earned and expenses incurred by an organization during a specific period.

Signup and view all the flashcards

Balance Sheet

A financial statement that shows an organization's assets, liabilities, and equity at a specific point in time.

Signup and view all the flashcards

Income and Expenditure Account

A financial statement used by non-profit organizations to track income, expenses, and the resulting surplus (profit) or deficit (loss) over a specific period. It is similar to a profit and loss statement for businesses.

Signup and view all the flashcards

What is the purpose of the Income and Expenditure Account?

To show the financial performance of a non-profit organization by comparing total income to total expenditure over a period, resulting in a surplus (profit) or deficit (loss).

Signup and view all the flashcards

What does 'Outstanding at the end' mean in the Income and Expenditure Account?

This refers to the amount of income or expenses that have been incurred but not yet received or paid, respectively, at the end of the accounting period.

Signup and view all the flashcards

What is 'Advance received' in the Income and Expenditure Account?

This term represents money received in advance for a service or product that will be delivered or provided in a future accounting period. It's considered a liability because the organization is obligated to provide the service or product.

Signup and view all the flashcards

How are 'Expenses for specific purposes' handled?

Expenses related to specific funds (e.g., sports fund, prize fund) are not recorded in the Income and Expenditure Account. Instead, they're deducted from the relevant fund in the Balance Sheet.

Signup and view all the flashcards

What happens if a specific fund is less than its related expenditure?

The difference between the fund amount and the corresponding expenditure is treated as an expense in the Balance Sheet.

Signup and view all the flashcards

How are 'Extra funds' after covering specific expenses treated?

Extra funds remaining after covering specific expenses are treated as a liability in the Balance Sheet. This shows the organization's commitment to these funds.

Signup and view all the flashcards

What is 'Profit on sale of asset'?

The profit earned when an asset (e.g., furniture, equipment) is sold for a higher price than its book value (original cost minus accumulated depreciation).

Signup and view all the flashcards

What is 'Loss on sale of an asset'?

The loss incurred when an asset is sold for a price lower than its book value (original cost minus accumulated depreciation).

Signup and view all the flashcards

How is 'Depreciation' treated in the Income and Expenditure Account?

Depreciation, which is the gradual decline in the value of an asset over time, is treated as an expense in the Income and Expenditure Account. It reflects the cost of using the asset.

Signup and view all the flashcards

Study Notes

Accounting for Not-for-Profit Organizations

  • Not-for-profit organizations (NPOs) are voluntary organizations that promote social and charitable purposes, not profit. Examples include hospitals, schools, and religious organizations.
  • NPOs differ from profit-making organizations in their ultimate goal. NPOs aim to serve community interests, while profit-making organizations aim to earn profit.
  • NPOs receive funding from donations, subscriptions, and other sources. Profit-making organizations often receive funding from owners or partners.
  • NPO financial statements include receipts and payment accounts, income and expenditure accounts, and balance sheets. Profit-making organizations include trading account, profit and loss account, and balance sheet.
  • The net result of NPO activities is either surplus or deficit. Profit/loss is the net result for profit-making organizations.
  • A receipts and payment account is prepared based on the cash book, recording all cash transactions, whether revenue or capital in nature, and specific to a particular accounting period.
  • An income and expenditure account is similar to a profit & loss account, but it only records revenue transactions related to the current year. It's a nominal account, unlike a receipts and payment account, which is a real account.

Key Differences Between Accounts

  • Receipts and Payment Account: Records all cash transactions, whether revenue or capital, specific to a particular accounting period. It's based on the cash book and is a real account.
  • Income and Expenditure Account: Similar to a profit & loss account but only records revenue transactions pertaining to the current year. It's a nominal account.

Specific Items in Accounting for NPOs

  • Subscriptions: Periodic amounts paid by members. Treated as revenue.
  • Consumable Items: Stationery, medicine, etc. Treated as revenue expenditure.
  • General Donations: Can be used for any purpose. Treated as revenue receipt.
  • Specific Donations: Limited purpose use. Treated as capital receipt.
  • Entrance Fees: Paid when joining an organization. Treated as revenue receipt.
  • Sale of old sports material/newspaper: Recorded as revenue receipt.
  • Life Membership Fees: One-time payments for lifetime membership. Treated as capital receipt.
  • Legacy: Donations (cash or property) as per will. Treated as capital receipt.
  • Endowment Fund: Amounts dedicated to a specific purpose. Treated as capital receipt.
  • Honorariums: Payments to recognize contributions, such as guest lectures. Treated as an expense.
  • Upkeep expenses (lawn, maintenance): Treated as expenses.

Important Income Formats

  • Organizations create income, expenditure, and balance sheet statements for a specific accounting period, usually one year.
  • The formats include columns for various types of cash transactions.
  • Specific sections track outstanding amounts, prepaid amounts, and adjustments as required.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

CBSE Class 12 Accounting for Not-for-Profit Organizations Notes PDF

Description

Test your knowledge on key financial concepts with this quiz. It covers sources of revenue, types of expenses, and treatment of assets. Perfect for students studying finance or accounting.

More Like This

Use Quizgecko on...
Browser
Open
Browser
Browser