Tag: elements of accounts

Questions Related to elements of accounts

Deficit as per Income and Expenditure Account is given effect as______________.

elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

  1. Added to capital fund

  2. Deducted from capital fund

  3. Added to liabilities

  4. Deducted from liabilties

Show answer
Correct Option: B
Explanation:

The deficit as per Income and Expenditure Account is deducted from capital fund. Capital fund is the excess over assets over liabilities. Any addition or reduction in the fund is adjusted through the capital fund account. 

Non-production overheads are usually omitted from stock valuation for the following reason :

elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

  1. They are outside the control of production management.

  2. They are incurred after the stock has been brought to its present location and condition.

  3. They cannot be identified with individual products.

  4. They are fixed period costs.

Show answer
Correct Option: B
Explanation:

SSAP 9 defines that the valuation of stock is to be done on cost or realizable  value whichever is less. Cost is further defines as the cost of raw material, labour, expenses and overheads which are incurred for bring the stock at its location and condition.

Non- production overhead are expenses which are incurred after the stock has been brought to its present location and condition.

In Not-for-Profit organisations effect of surplus is_____________.

elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

  1. Deducted from capital fund

  2. Added to capital fund

  3. Deducted from asset

  4. Added to asset

Show answer
Correct Option: B
Explanation:

Not-for-profit organisation prepare balance sheet for ascertaining the financial position of the organisation. There will be capital fund or general fund in place of the capital, and surplus or deficit ascertained from income and expenditure account is added to/ deducted to the capital fund account.

 It is also a common practice to add some of the capitalised  items like legacies, entrance fees, and life membership fees directly in the capital fund.

If a small amount is received as specific donation the __________.

elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

  1. it is shown on the liabilities side of the balance sheet

  2. it is shown by way of deduction in capital fund in liability side of the balance sheet

  3. it is treated as income and credited to income and expenditure account

  4. None of the above

Show answer
Correct Option: A
Explanation:

b"Donation received for specific purpose is capital receipt. Specific donation can't be used for any other purpose than the purpose for which it is given. It creates a liability for Not for Profit Organisation. That's why It is shown on the liabilities side of the balance sheet. "

Outstanding subscription for a non-profit organization is considered as a/an ____________.

elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

  1. Expenses

  2. Liability

  3. Equity

  4. Asset

Show answer
Correct Option: D
Explanation:

Subscription is a annual charge paid by the members of the organisation to receive or avail service or information. It is an income for the organisation and if income is outstanding or say yet to be received it will be an asset for the company hence, will be shown under the head current assets.

Donations for specific purposes are always capitalized.

elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

True. Specific donations is a donation received for a specific purpose say for constructing a building. Specific donations are not charged to income and expenditure account rather capitalised and shown on the liabilities side and any expenses of the same are deducted from the fund. 

Rent outstanding for the month of February will appear_________.

elements of accounts subsidiary books - 2 understand the method of recording cash transactions simple cash boook recording and posting of cash transactions

  1. on the debit side of the cash book

  2. on the credit side of the cash book

  3. as a contra entry in the cash book

  4. no entry in the cash book

Show answer
Correct Option: D

Withdrawl column of the Pass Book showed a wrong entry of Rs. 112. When the balance as per Cash Book is the starting point __________.

elements of accounts subsidiary books - 2 understand the method of recording cash transactions simple cash boook recording and posting of cash transactions

  1. Rs. 112 to be added

  2. Rs. 112 to be subtracted

  3. No adjustment in required

  4. None of these

Show answer
Correct Option: B

A debit balance of Rs. 1,000 has been brought forward as a credit balance of Rs. 100 on the next page in the Pass Book. To ascertain the balance as per Cash Book _______________________.

elements of accounts subsidiary books - 2 understand the method of recording cash transactions simple cash boook recording and posting of cash transactions

  1. Rs. 900 should be added to the balance as per Cash Book.

  2. Rs. 900 should be subtracted from the balance as per Pass Book

  3. Rs. 1,100 should be added to the balance as per Pass Book

  4. None of the above.

Show answer
Correct Option: D

One outgoing cheque of Rs. 112 recorded as Rs. 121 in the Cash Book. (Note: This cheque was presented in the Bank). When the balance as per Cash Book is the starting point.

elements of accounts subsidiary books - 2 understand the method of recording cash transactions simple cash boook recording and posting of cash transactions

  1. Rs. 112 to be subtracted

  2. Rs. 121 to be subtracted

  3. Rs. 9 to be added

  4. Rs. 112 to be added

Show answer
Correct Option: C