{"id":19388,"date":"2021-03-03T17:08:20","date_gmt":"2021-03-03T11:38:20","guid":{"rendered":"https:\/\/mcq-questions.com\/?p=19388"},"modified":"2022-03-02T10:51:02","modified_gmt":"2022-03-02T05:21:02","slug":"ncert-solutions-for-class-12-accountancy-chapter-1","status":"publish","type":"post","link":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-accountancy-chapter-1\/","title":{"rendered":"NCERT Solutions for Class 12 Accountancy Chapter 1 Accounting for Not for Profit Organisation"},"content":{"rendered":"

Detailed, Step-by-Step NCERT Solutions for 12 Accountancy<\/a> Chapter 1 Accounting for Not for Profit Organisation Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.<\/p>\n

Accounting for Not for Profit Organisation NCERT Solutions for Class 12 Accountancy Chapter 1<\/h2>\n

Accounting for Not for Profit Organisation Questions and Answers <\/span>Class 12 Accountancy Chapter 1<\/h3>\n

Do it Yourself
\n<\/span>Test Your Understanding-I [Page No. 20]<\/span><\/p>\n

Question 1.
\nState with reasons whether the following statements are TRUE or FALSE
\n(i) Receipt and Payment Account is a summary of all capital receipts and payments.<\/p>\n

(ii) If there appears a sports fund, the expenses incurred on sports activities will be shown on the debit side of Income and Expenditure Account.<\/p>\n

(iii) A credit balance of Income and Expenditure Account denotes excess if expenses over incomes.<\/p>\n

(iv) Scholarships granted to students out of funds provided by Government will be debited to Income and Expenditure Account.<\/p>\n

\"NCERT<\/p>\n

(v) Receipt and Payment Account records the receipts and payments of revenue nature only.<\/p>\n

(vi) Donations for specific purposes are always capitalized.<\/p>\n

(vii) Opening balance sheet is prepared when the opening balance of capital fund is not given.<\/p>\n

(viii) Surplus of Income and Expenditure Account is deducted from the capital\/general fund.<\/p>\n

(ix) Receipt and Payment Account is equivalent to profit and loss account. Receipt and Payment Account year shown in liabilities side of Balance Sheet.<\/p>\n

(x) Does not differ with capital and revenue receipts.
\nAnswer:
\n(i) False\u2014Because Receipt and Payment Account is a summary of all cash transactions whether they are capital receipts and payments or revenue receipts and payments.<\/p>\n

\"NCERT<\/p>\n

(ii) False\u2014Because Sports Fund is a special fund of capital nature, so the expenses incurred on sports activities will be deducted from Sports Fund in the Balance Sheet.<\/p>\n

(iii) True\u2014Because excess of income over expenditure denotes surplus.<\/p>\n

(iv) False\u2014Because Funds provided by the Government is of capital nature, therefore scholarships granted out of funds directly deducted from this fund in the Balance Sheet.<\/p>\n

(v) False\u2014Because Receipt and Payment Account is a summary of all cash transactions whether they are capital receipts and payments or revenue receipts and payments.<\/p>\n

(vi) True\u2014Because donations for specific purposes are non-recurring in nature so they are always capitalized.<\/p>\n

(vii) True\u2014Because opening capital fund is must to ascertain the actual financial position of the organisation.<\/p>\n

(viii) False\u2014Because surplus of Income and Expenditure Account increases the capital\/general fund of the organisation, so it must be added to capital\/general fund.<\/p>\n

(ix) False\u2014Because Receipt and Payment Account is merely – summary of cash transactions, it does not disclose any information regarding the income\/deficit of the organisation.<\/p>\n

\"NCERT<\/p>\n

(x) True\u2014Because Receipt and Payment Account is a summary of all cash transactions whether they are capital receipts and payments or revenue receipts and payments.<\/p>\n

Test Your Understanding-II [Page No. 29]<\/span><\/p>\n

1. How would you treat the following items in the case of a ‘not-for-profit’ organisation?
\n1. Tournament Fund Rs. 40,000. Tournament Expenses Rs. 14,000. Receipts from Tournament Rs. 16,000.
\n2. Table Tennis match expenses Rs. 4,000.
\n3. Prize Fund Rs. 22,000. Interest on Prize Fund Investments Rs. 3,000. Prizes given Rs. 5,000. Prize Fund Investments Rs. 18,000.
\n4. Receipts from Charity Show Rs. 7,000. Expenses on Charity Show Rs. 3,000.
\nAnswer:
\n(i) Here Tournament Fund is a specific fund. The accounting treatment is as under\u2014<\/p>\n

\"NCERT<\/p>\n

(ii) Table Tennis match expenses is independent of any specific fund. The accounting treatment is as under\u2014
\n\"NCERT<\/p>\n

\"NCERT<\/p>\n

(iii) There is a specific fund i.e. Prize Fund. The accounting treatment is as under\u2014
\n\"NCERT<\/p>\n

(iv) There is no specific fund regarding Charity. The accounting treatment is as under\u2014
\n\"NCERT<\/p>\n

Do it Yourself [Page No. 25]<\/span><\/p>\n

Question 1.
\nSubscriptions received by the health club during the year 2006 were as under-
\n\"NCERT
\nAnswer:
\n\"NCERT<\/p>\n

\"NCERT<\/p>\n

Question\u00a0 2.
\nDuring the year 2006, subscriptions received by a sports club were Rs. 80,000. These included Rs. 3,000 for the year 2005 and Rs. 6,000 for the year 2007. On December 31, 2005 the amount of subscriptions due but not received was Rs. 12,000. Calculate the amount of subscriptions to be shown in Income and Expenditure Account as income from subscription.
\nAnswer:
\n\"NCERT<\/p>\n

Question 3.
\nSubscriptions received during the year ended December 31, 2006 by Royal Club were as under\u2014
\n\"NCERT
\nThe Club has 500 members each paying @ Rs. 200 as annual subscriptions. Subscriptions outstanding as on December 31, 2005 are Rs. 6,000. Calculate the amount of subscriptions to be shown as income in the Income and Expenditure Account for the year ended December 31, 2006 and show the relevant data in the Balance Sheet as on that date.
\nAnswer :
\n\"NCERT<\/p>\n

\"NCERT<\/p>\n

Do it Yourself [Page No. 30]<\/span><\/p>\n

Question 1.
\nFind out the cost of medicines consumed during 2005-06 from the following information\u2014
\n\"NCERT
\nAnswer:
\n\"NCERT<\/p>\n

\"NCERT<\/p>\n

Question 2.
\nWhat amount of sports material will be posted to Income and Expenditure Account for the year ended March 31, 2007 as expenditure?
\n\"NCERT
\nAnswer:
\n\"NCERT<\/p>\n

Short Answer Type Questions (Textual)<\/span><\/p>\n

Question 1.
\nState the meaning of ‘Not-For-Profit’ Organisations.
\nAnswer :
\nMeaning of ‘Not-For-Profit’ Organisations\u2014
\nAll trading and business organisations are profit organisations since their main objective is to earn profit. ‘Not-For-Profit’ Organisation are those organisation whose main aim objective is to provide services to their members or the society at large and not the earning of profits.<\/p>\n

\"NCERT<\/p>\n

These organisation refer to the organisations that set-up for the welfare of the society, as a charitable institution, which run without- profit motive. Their main aim is to provide services to its members or the society at large. The funds raised by such organisations are represented as capital fund or General Fund.<\/p>\n

The main source of their income usually are subscription from their members, donations, grants, income from investment etc. These organisation keeps the accounting records to meet the statutory requirements and controlling utilisation of their funds. They usually prepare them at the end of financial year to ascertain their income and expenditure and the financial position of the organisation and submit them to the statutory authority i.e. Registrar of Societies.<\/p>\n

Question 2.
\nState the meaning of Receipt and Payment Account.
\nAnswer:
\nReceipt and Payment Accounts\u2014
\nA receipt and payment account is a summary of cash transaction. It is prepared at the end of the accounting period from the cash receipts journals and cash payment journals.<\/p>\n

“Receipt and Payment Account is nothing more than a summary of the Cash Book (Cash and Bank transactions) over a certain period, analysed and classified under suitable heading. It is the form of account most commonly adopted by the treasures of societies, clubs, associations etc. when preparing the results of the year’s working.” \u2014William Pickles<\/p>\n

In other words, Receipt and Payment Account, simply is a summary of cash and bank transactions under various heads. On the debit side, it begins with an opening balance of cash and bank and records all the items of receipts irrespective of whether they are of capital or revenue nature or whether they pertain to the current or past or future accounting period(s). The payments are recorded on the credit side without-making any distinction between items of revenue and capital nature and whether they belong to the current or past or future accounting period(s).<\/p>\n

It may be noted that this account does not show any non-cash item like depreciation. At the end of period, this account is balanced to ascertain the balance of cash in hand or cash at bank. The annual totals of various items of receipts and payments are found from their respective accounts in the ledger or from the Cash Book and are then entered in the Receipt and Payment Account.<\/p>\n

\"NCERT<\/p>\n

Question 3.
\nState the meaning of Income and Expenditure Account.
\nAnswer:
\nIt is a nominal account of ‘Not-For-Profit’ Organisation equivalent to the profit and loss account of the trading concerns. The terms profit is substituted by the words excess of income over expenditure (surplus) and the loss is expressed as excess of expenditure over income (deficit).<\/p>\n

It reveals the surplus or deficit arising out of the organisation’s activities during an accounting period. This account is prepared on an accrual basis and includes only items of revenue nature. All the revenue items relating to the current period are shown in this account, the expenses and losses on the expenditure side (debit side) and incomes and gains on the income side (credit side) of the account. It shows the net operating result in the form of surplus or deficit, which is transferred to the capital fund shown in the balance sheet.<\/p>\n

Question 4.
\nWhat are the features of Receipt and Payment Account?
\nAnswer:
\nFeature of Receipt and Payment Account\u2014<\/p>\n

1. Real Account\u2014It is a real account, so the rule of real account i.e, ‘Debit what comes in and credit what goes out’ is followed. Thus receipts are recorded in Debit side and the payments are recorded in Credit side.<\/p>\n

2. Summary of the Cash Book\u2014It is a summary of the cash book. Its form is similar to cash book (without discount and bank column) with debit and credit sides.<\/p>\n

3. Shows Amount irrespective of period\u2014It shows the total amount of all receipts and payments irrespective of the period to which they pertain.<\/p>\n

4. No distinction between the nature (Capital or Revenue nature)\u2014It includes all receipts and payments whether they are of capital nature or of revenue nature.<\/p>\n

\"NCERT<\/p>\n

5. No distinction between mode of transaction (Cash or Bank)\u2014 No distinction is made in receipts\/payments made in cash or through bank. With the exception of the opening and closing balances, the total amount of each receipts and payment is shown in this account.<\/p>\n

6. Do not show non-cash items\u2014Non-cash items like depreciation, outstanding expenses, accrued income etc. are not shown in this account.<\/p>\n

7. Opening and Closing Balances\u2014The opening and closing balance in it respectively mean Cash in hand or Cash at bank in the beginning and at the end. The balance of Receipts and Payment Account must be debit being Cash in hand or Cash at bajnk, unless there is a bank overdraft.<\/p>\n

8. Does not reflect net income or net loss\u2014This account does not tell us whether the current incomes exceeds the current expenditure or vice versa or in other words it does not give any information of net income or net loss.<\/p>\n

Question 5.
\nWhat steps are taken to prepare Income and Expenditure Account from Receipt and Payment Account?
\nAnswer:
\nThe following steps are taken to prepare Income and Expenditure Account from Receipt and Payment Account\u2014
\n1. From the Receipt and Payment Account exclude the opening and closing balance of cash and bank as they are not an income.<\/p>\n

2. Exclude the items of capital nature as these are to be shown in balance sheet.<\/p>\n

3. Take out the revenue receipts only for the current year to be shown on the income side of Income and Expenditure Account. These are adjusted by excluded the amounts relating to the preceding and the succeeding periods and including the amounts relating to the current year not yet received.<\/p>\n

4. Take out the revenue payments only the current year to be shown on the expenditure side of Income and Expenditure Account. These are adjusted by excluded the amounts relating to the preceding and the succeeding periods and including the amounts relating to the current year not yet paid.<\/p>\n

5. Make the adjustments of non-cash items like<\/p>\n