Table of Contents
NON PROFIT ORGANISATION ACCOUNTS
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11. Why are adjustments for outstanding and prepaid expenses not recorded in Receipts and Payments Account?
Answer: The adjustments for outstanding and prepaid expenses are not recorded in receipts and Payments Account because the receipts and payments account is maintained on cash basis and it record all the expenses and incomes related to past, current and year year.
12. Distinguish between receipts and Payments Account and Income and Expenditure Account on the basis of ‘Depreciation’.
Answer:
| Basis of Difference | Receipts and Payments Account | Income and Expenditure Account |
| Depreciation | Depreciation being a non-cash expense is not recorded in this account. | Depreciation being a non-cash expenses is recorded in this account as Income and Expenditure Account is maintained on accrual basis. |
13. Distinguish between Receipts and Payments Account and Income and Expenditure Account on the basis of ‘Period’.
Answer:
| Basis of Difference | Receipts and Payments Account | Income and Expenditure Account |
| Period | It records all the transactions related to past, current and future year. | It records the transactions related to current year only. |
14.’Distinguish between Income and Expenditure Account and Receipts and Payments Account on the basis of ‘Closing Balance’.
Answer:
| Basis of Difference | Receipts and Payments Account | Income and Expenditure Account |
| Closing balance | The closing balance represents the closing cash in hand and closing cash in bank. | The closing balance represents the surplus and deficit. Surplus= excess of income over expenditure. Deficit= Excess of expenditure over income. |
15. Name an item that is never shown on the payment side of Receipts and Payments Account, but is shown on the debit side of the Income and Expenditure Account.
Answer: Depreciation is shown on the expenditure side of the Income and Expenditure account. As it is non-cash expense, it is not recorded on the Payment side of receipts and payment account as this account is maintained on cash basis.
NON PROFIT ORGANISATION ACCOUNTS
16. What is meant by ‘Life Membership Fees’?
Answer: Life membership fees is the amount received by the non-profit organisation from the members who wants to become the member of the non-profit organisation for the lifetime. As it is non-recurring receipt, it is recorded on the liabilities side in the Balance Sheet.
17. Calculate the amount of Subscription to be credited to Income and Expenditure Account for the year 2019-20:
| Particulars | Amount (Rs.) |
| Amount received during the year (including Rs. 20, 000 for 2018-19, Rs. 30, 000 for 2020-21 and Rs.10, 000 for 2021-21) | 7, 80, 000 |
| Subscription received in advance as on 01-04-2019 (including Rs 15, 000 for 2020-21) | 35, 000 |
| Subscription in arrears as on 01-o4-2019 | 40, 000 |
| Subscription in arrears as on 31-03-2020 | 50, 000 |
Out of subscription in arrears on 01-04-2019, Rs 15, 000 are no longer recoverable.
Ans.
Subscription Account
Dr. Cr.
| Particular | Amount (Rs.) | Particulars | Amount (Rs.) |
| To Balance b/d (arrears in beginning) | 40, 000 | By Balanced b/d (advance in beginning) | 35, 000 |
| To Income and Expenditure a/c (Balancing Figure) | 7, 85, 000 | By Receipts and Payments A/c | 7, 80, 000 |
| To Balance c/d (advance at end) | 55, 000 | By Income and Expenditure A/c | 15, 000 |
| By Balanced c/d (arrears at end) | 50, 000 | ||
| 8, 80, 000 | 8, 80, 000 |
18. How the following items for the year ended 31st March, 2018 will be presented in the financial statements of Cisko Club:
| Particular | Debit Amount (Rs.) | Credit Amount (Rs.) |
| Tournament Fund | _______ | 1, 50, 000 |
| Tournament Fund Investment | 1, 50, 000 | ________ |
| Income from Tournament Fund Investment | _______ | 18, 000 |
| Tournament Expenses | 12, 000 |
NON PROFIT ORGANISATION ACCOUNTS
Interest accrued on Tournament fund Investment Rs. 6, 000.
Ans.
Balance Sheet of the Club as at 31st March, 2018
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Tournament Fund 1, 50, 000 Add : Income from tournament Fund Investment 18, 000 Add : Accrued Interest 6, 000 Less : Tournament Expenses 12, 000 | 1, 62, 000 | Tournament Fund Investment Accrued Interest on Tournament Fund Investment | 1, 50, 000 6, 000 |
Note: In case, a student has shown Income from tournament Fund Investment as Rs. 24, 000 instead of Rs. 18, 000 and Rs. 6, 000 separately and added it to the Tournament Fund, full credit should be given.
19. From the following information, calculate the amount of ‘Sports Material’ to be debited to Income and Expenditure Account of Young Football Club for the year ended 31st March, 2018:
Rs.
Opening Stock of Sports Material 21, 000
Closing Stock of Sports Material 24, 000
Opening Creditors of Sports Material 23, 500
Closing Creditors of Sports Material 27, 000
During the year the creditors for sports material were paid 1, 10,000
Ans.
| Particulars | Amount (Rs.) |
| Amount paid to creditors Add : Closing balance of creditors Less : Opening balance of creditors Purchase of Sports Materials Add : Opening Stock of Sports Materials Less : Closing Stock of Sports Materials Sports Materials to be debited to Income and Expenditure A/c | 1, 10,000 27, 000 (23,500) |
| 1, 13, 500 21, 000 (24,000) | |
| 1, 10, 500 |
20. Calculate the amount of stationery to be debited to ‘Income and Expenditure Account’ of New Friends Club for the year ended 31st March, 2018. Also present the relevant information in the Balance Sheet of the Club as at 31st March, 2018:
| Particular | 31st March,2017 (Rs.) | 31stMarch,2018(Rs.) |
| Stock of Stationery | 25, 000 | 40, 000 |
| Creditors for Stationery | 30, 000 | 19, 000 |
NON PROFIT ORGANISATION ACCOUNTS
During the year Rs. 46, 000 were paid to the creditors for stationery and stationery of Rs. 6, 000 was purchased in cash.
Ans. (a) In the books of New Friends Club
Stock of stationary Account
Dr. Cr.
| Particulars | Amount(Rs.) | Particulars | Amount(Rs.) |
| To Balance b/d | 25, 000 | By Income &Expenditure A/c (Bal. fig.) | 26,000 |
| To Purchases : Cash Credit | 6, 000 35,000 | By Balance c/d | 40,000 |
| 66,000 | 66,000 |
Creditors for Stationery Account
Dr. Cr.
| Particulars | Amount(Rs.) | Particular | Amount (Rs.) |
| To Cash/Bank A/c | 46, 000 | By Balance b/d | 30, 000 |
| To Balance c/d | 19, 000 | By Purchase A/c (Bal. figure) | 35, 000 |
| 65, 000 | 65, 000 |
Alternative Solution for (a)
Calculation of amount of Stationery to be debited to ‘Income & Expenditure A/c’ for the year 31/03/2018
| Particular | Amount (Rs.) |
| Amount paid to Creditors during the year Add : Closing balance of Creditors Less : opening balance of Creditors Credit Purchases of Stationery Add : Cash Purchases of Stationery Add : opening stock of Stationery Less : closing stock of Stationery Amount of Stationery to be debited to Income & Expenditure Account | 46, 000 19, 000 (30,000) |
| 35, 000 6, 000 25, 000 (40, 000) | |
| 26, 000 |
Balance Sheet (an extract)
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Creditors for Stationery | 19, 000 | Stock of stationery | 40, 000 |
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