Students of class 12 Accountancy should refer to MCQs Class 12 Accountancy Not for Profit Organizations with answers provided here which is an important chapter in Class 12 Accountancy NCERT textbook. These Multiple Choice Questions have been prepared based on the latest CBSE and NCERT syllabus for Class 12 Accounts. The following MCQs can help you to practice and get better marks in the upcoming class 12 accountancy examination

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 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. If Income is Rs.16,000 and deficit debited to Capital Fund is Rs.4,300 then Expenditure is:
(a) 16,000
(b) 4,300
(c) 20,300
(d) 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. Which of the following statements is not true for Receipts and Payments Account?
(a) It is a summary of the Cash Book.
(b) It records receipts and payments of revenue nature only.
(c) The receipts and payments may relate to current, preceding, or succeeding accounting periods.
(d) Depreciation is not shown in it.

Question. Income & Expenditure Account is based on
(a) Cash Accounting
(b) Accrual Accounting
(c) Government Accounting
(d) Management Accounting

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

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. Receipts and payments account makes no difference between:
(a) Capital Receipts and Capital payments
(b) Revenue receipts and revenue payments
(c) Current year and previous year
(d) All the above.

Question. Which of the following is to be recorded in an income and Expenditure Account
(a) Purchase of a fixed Asset
(b) Capital Expenditure incurred on a fixed asset
(c) Profit on the sale of a fixed asset
(d) Sale of a fixed asset

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 U

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. Which of the following is not a revenue receipt?
(a) Donations for Tournament
(b) Government Grants
(c) Subscriptions
(d) Entrance Fees

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. Donation received for special purpose is a :
(a) Liability
(b) Revenue Receipt
(c) Capital Receipt
(d) None of these U

Question. Subscription received but not yet earned is considered as
(a) Asset
(b) Liability
(c) Income
(d) Expenditure

Question. Which of the following is not a capital receipt?
(a) Donations for tournament
(b) Donations for building fund
(c) Life membership fee
(d) Entrance fees

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. Specific Donation received by NPO is shown in the
(a) Credit side of Income and Expenditure Account,
(b) Debit side of Income and Expenditure Account
(c) Liabilities side of Balance Sheet.
(d) As is decided by the management.

Question. The control of non trading concern rest in the hand of
(a) Directors
(b) managing Agents
(c) Governing body
(d) Promoters

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. Capital fUnd is calculated:
(a) Income-Expenditure
(b) Assets Liabilities
(c) Capital + Liabilities
(d) None of these

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. The nature of Receipts and Payments Account is :
(a) Nominal Account
(b) Real Account
(c) Personal Account
(d) None of these U

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. 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. Subscription received in advance during the accounting year is
(a) an income
(b) an expense
(c) Asset
(d) Liability

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

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. Receipts and Payments A/c is a summary of:
(a) All Capital Receipts and Payments
(b) All Revenue Receipts and Payments
(c) All Revenue and Capital Receipts and Payments
(d) None of the above

Question. Receipt and Payment account includes
(a) Revenue items
(b) Cash items
(c) Revenue & Cash items
(d) None of the above

Question. Income and Expenditure Account shows :
(a) Cash in hand
(b) Surplus or Deficiency
(c) Capital Account
(d) None of these R

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

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

Question. Deficit balance can be shown in balance Sheet as:
(a) Liability
(b) Assets
(c) Owner’s equity
(d) None of the above

Question. Income and Expenditure Account generally indicates:
(a) Surplus/Deficit
(b) Cash Balance
(c) Capital Fund
(d) Net Profit/Loss

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

Question. The opening balance of the Prize fund of a sports club was Rs.6,400. Further donations towards this fund received during the accounting year amounted to Rs.4,300. During the year, Rs. 3,500 was spent on prizes and Rs. 400 was received as interest on investment of the Prize Fund. The closing balance of the Prize fund is
(a) Rs. 1,900
(b) Rs.10,200
(c) Rs.10,600
(d) Rs.7,600

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
(a) Real Account.
(b) Nominal Account.
(c) Personal Account.
(d) Revenue Account

Question. Fixed assets fund is
(a)  Endowment Fund
(b) Current restricted Fund
(c) Current unrestricted fund
(d) Meant for accounting of asses and depreciation

Question. Subscription received during the year 50,000 Rs. Subscriptions outstanding at the end of the year 8,000 Rs. Subscription outstanding at the beginning of the year 6,000 Rs. Net Income from subscription will be :
(a) 48,000 Rs.
(b) 64,000 Rs.
(c) 52,000 Rs.
(d) 36,000 Rs.

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. 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. Subscription received by an organisation is:
(a) Capital Receipt
(b) Revenue Receipt
(c) Both (a) and (b)
(d) None of the above

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

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

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

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. Life Membership Fees received by a club is shown in :
(a) Income and Expenditure A/c
(b) Balance Sheet
(c) Receipts and Payments A/c
(d) None of these

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. The excess of assets over liabilities in non-trading concerns is termed as:
(a) Capital Fund
(b) Capital
(c) Profit
(d) Net Profit

Question. Life membership fee received by a club is:
(a) Revenue Receipt
(b) Capital Receipt
(c) (a) and (b) both
(d) None of these

Question. An Income and Expenditure Account reveals:
(a) Cash position.
(b) Surplus or Deficit.
(c) Capital Fund.
(d) None of the above.

Question. Most transaction in non-trading concerns are:
(a) Cash
(b) Credit
(c) Both (a) and (b)
(d) None of these

Question. Which of the following is directly added to the capital fund on the liabilities side of the Balance Sheet?
(a) Life membership fees
(b) Legacies
(c) Entrance Fees
(d) All of these

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. 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. Credit side balance in Income & Expenditure Account reveals :
(a) Excess of cash receipts overpayments
(b) Excess of cash payments over receipts
(c) Excess of expenditure over income
(d) Excess of income over expenditure

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

Question. The opening balance of Prize Fund was Rs.32,800. During the year, donations reoeived towards this fund amounted to Rs.15,400; amount spent on prizes was 712,300 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. 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. If a General Donation of huge amount is received by a school, that donation is treated as :
(a ) Revenue Receipt (Income)
(b) Capital Receipt (Liability)
(c) Assets
(d) Earned Income

1. The method in which goodwill is calculated on the basis of surplus profit in comparison to average profit	a) Super profit
	b) Average profit

1. Experienced management increased	2. Increased number of customers over a period of time
2. Increased number of customers over a period of time	b)Longevity of business
	c)Efficiency of management
	d) Risk involved

1) Interest on capital allowed to partners	a) Profit and Loss A/c is Credited
2) Interest on drawing charged by firm	b) Credited to partners’ capital A/c
	c) Debited to partners’ capital A/c
	d) Profit and Loss A/c is debited

1. Interest on capital	a) Cr. Side of Profit and Loss Appropriation A/c
2. Interest on drawing	b) Dr. side of Profit and Loss Appropriation A/c
	c) Dr. of Partner Loan

1. Fixed capital	a) Additional Capital Introduced
2. Fluctuating capital	b) Interest on Drawing
	c) Interest on Partner Loan
	d) Rent to Partner

Fill in the blanks for Class 12 Accountancy Not for Profit Organizations:

Question. Capital Fund = Total Assets − _

Question.General Fund can be transferred to ————————— Fund

Question. Surplus or Deficit Balance of Income and Expenditure Account is transferred to __

Question. When Expenditure is paid out of current/ restricted fund, cash/bank account is credited and —————————-is debited.

Question.Fund based accounting is used by —————————————organisations.

Question. The nature of Income and Expenditure Account is__________ 

Question. Endowment Fund is —————————Fund.

Question. —————————– represents the excess of assets over liabilities.

Question. _ means amount received or set aside by a Not-for-Profit Organization for a specific purpose.

Question. restricted fund can be used for ————————-purpose

One Word / Sentence Answers :

Question. The main purpose or objective of not-for-profit organization.

Question. The Account that shows the summary of cash receipts and cash payments of a not-for-profit organization______

Question. The fund usually of a non-profit institution, arising from gift, the income of which is devoted to a specified purpose______

Question. Mayank Club received life membership fees from its members. Which type of receipts it is_______ ?

Question. State the nature of Receipts and Payments A/c.

Question. State the basis of accounting on which ‘Receipt and Payment Account’ is prepared in case of Notfor Profit Organization.

Question. What is the nature of Income and Expenditure Account ?

Question. Name the term used for showing excess of income over expenditure in not-for-profit organizations.

Question. When the Receipts and Payments Account is converted into an Income and Expenditure Account and accounting concept is to be followed for provisions of the accruals and outstanding, what is the concept that is followed ?

Question. Where will you credit the general donations in the accounts of not-for-profit organization?

Question. Where is specific donation received shown in the final accounts of a not-for-profit organization?

Question. Classify subscriptions into revenue receipts or capital receipts.

Question. What will be the treatment of ‘Subscription received in advance’ during the current year in the Balance Sheet of a Not-For-Profit Organization?

Question. One horse of a horse club died. Insurance company has offered to settle the claim at 60%. Will it be recorded in the income and expenditure account and how ? 

Short Answer Type Questions

Q. 1. Explain any two of the following :
(i) Capital Fund (ii) Legacy (iii) Specific Fund

Q. 2. Explain the accounting treatment of these items in not for-profit organizations :
(i) Legacy (ii) Entrance fees

Long Answer Type Questions-I

Question. Briefly explain the following terms with accounting treatment in not-for-profit organization :
(i) Legacy
(ii) Specific Donation
(iii) Honorarium
(iv) Entrance fees. 

We hope the above multiple choice questions for Class 12 Accountancy for Chapter 1 Not for Profit Organizations provided above with answers based on the latest syllabus and examination guidelines issued by CBSE, NCERT and KVS are really useful for you. Not for Profit Organizations is an important chapter in Class 12 as it provides very strong understanding about this topic. Students should go through the answers provided for the MCQs after they have themselves solved the questions. All MCQs have been provided with four options for the students to solve. These questions are really useful for benefit of class 12 commerce students. Please go though these and let us know if you have any feedback in the comments section.