Accounting for Not-for-Profit Organisation MCQ

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Question 1

Rent expense of a non-profit organisation paid in advance is classified as a/an ____

A.Expense

B.Liability

C.Equity

D.Asset

SOLUTION

Solution : D

Rent paid in advance is classified as an asset

Question 2

Income and expenditure account is based on ___

A.Cash accounting

B.Accrual accounting

C.Government accounting

D.All of these

SOLUTION

Solution : B

Income and expenditure account is based on accrual accounting

Question 3

Which of the following is to be recorded in an income and expenditure account?

A.Purchase of a fixed asset

B.Sale of fixed asset

C.Profit on sale of fixed asset

D.All of these

SOLUTION

Solution : C

Profit on sale of fixed asset is shown in income and expenditure account

Question 4

Income and expenditure account shows ___

A.Cash available to an organisation

B.Surplus or deficit for the current accounting period

C.Closing capital of an organisation

D.None of these

SOLUTION

Solution : B

Income and expenditure accounts shows surplus or deficit for the current accounting period.

Question 5

If the expense side exceeds the income side in the income and expenditure account, there will be ___

A.surplus

B.deficit

C.profit

D.loss

SOLUTION

Solution : B

If the expense side exceeds the income side in the income and expenditure account, there will be deficit

Question 6

The balance sheet of a non profit organisation such as a charitable hospital doesn’t contain ____

A.Liabilities

B.Assets

C.Debts

D.Owner’s equity

SOLUTION

Solution : D

Owner’s Equity is not a part of the balance sheet of non profit organisation

Question 7

Lifetime membership fees is shown in which side of balance sheet?

A.Assets side

B.Liabilities side

C.Not shown in Balance Sheet

D.None of these

SOLUTION

Solution : B

Lifetime membership fees is shown on liabilities side of balance sheet.

Question 8

In accounting for non profit organisation, the sale of old newspapers is generally considered as a/an

A.Asset

B. Expenditure

C.Income

D.Liability

SOLUTION

Solution : C

In accounting for non profit organisation, the sale of old newspapers is generally considered as an income.

Question 9

The accounts of non-trading concerns are generally maintained according to:

A.Mercantile accounting system

B. Cash accounting system

C.Double entry book keeping system

D. Single entry system

SOLUTION

Solution : C

The accounts of non-trading concerns are generally maintained according to double entry book keeping system.

Question 10

The main source of income for non-trading concern is:

A.Subscription

B.Sales

C.Dividend on investment

D.Entrance fee

SOLUTION

Solution : A

The main source of income for non-trading concern is subscription