Tag: features of not-for-profit organisation

Questions Related to features of not-for-profit organisation

The net result of the activities of Non-for-profit is termed as ________.

  1. Surplus or Deficit

  2. Cash at the end

  3. Net profit/loss

  4. Capital fund


Correct Option: A
Explanation:

All the revenue incomes during the accounting period are shown on the income side and all of the revenue expenses during the period are shown on the debit side of income expenditure account.

Funds raised by Not-for-Profit Organisations through various sources is __________account.

  1. credited to capital fund

  2. debited to capital fund

  3. credited to assets

  4. debited to assets


Correct Option: A
Explanation:

Funds raised by Non-for-Profit organisations through various sources is credited to capital fund. Capital fund is the excess of assets over liabilities.  So, the excess amount which is mostly the income of organisation is the funds raised by them. Any addition in funds will be added ro capital fund/general fund. 

Not-for-Profit Organisations earn their reputation on the basis of ________.

  1. customers satisfaction

  2. contributions to the welfare

  3. owners satisfaction

  4. all of the above


Correct Option: B
Explanation:

Non-for-profit organisations earn their reputation on the basis of contributions to the welfare. The are set up for the purpose of promoting science, commerce, social cause, education etc. Their main purpose is not to earn profit but to provide services. 

Not-for-Profit Organisations do not maintain_______account.

  1. capital

  2. cash

  3. bank

  4. income


Correct Option: A
Explanation:

Non-for-Profit organisations do not maintain Capital account. They prepare income and expenditure account as profit and loss account, receipts and payments account as cash account and balance sheet. They do not maintain a capital account because of all the balance regarding the capital introduced and withdrawn are recorded in the balance sheet.

Main sources of income of Not-for-Profit organisations is _________.

  1. legacies

  2. donations

  3. subscriptions

  4. all of the above


Correct Option: D
Explanation:

Main source of income of No-for-Profit organisation is legacies, donations and subscriptions. A non-for-Profit organisations is set up for promoting science, commerce, social cause etc. 

The main purpose is not to earn profits but to provide services. 
Legacy the income received  due to the death of a person who has mentioned the transfer of certain income in the will.
Donations are the major sources of such organisations. People usually donate a certain portion of their income for the welfare of the organisation.
Subscriptions are the side income of the not-for-profit organisation when a person subscribes for any activity in the various clubs inaugurated for societies's welfare. 

The main objective of not-for-profit organisations is _________.

  1. Gain profit

  2. Provide services

  3. Increase owners profit

  4. None of the above


Correct Option: B
Explanation:

The main objective of non-for-profit organisations is providing services. The services provided by the not-for-profit organisations are meant to satisfy the needs of the people like joining as member and receive medicines at very low cost.

 The organisations which are set up for providing service are called as _____.

  1. Profit organisations

  2. Not-for-profit organisations

  3. Sole trader

  4. Company


Correct Option: B
Explanation:

The organisations which are set up for providing services are called as not-for-profit organisations. They are set up for purpose other than profit for promoting science, religion, social cause etc. Hence, the organisation meant for a social cause are categorized as Not-for-profit organisation. 

If an organisation has followed the _______ entry system they must prepare a trial balance for checking the accuracy of the ledger accounts.

  1. single

  2. double

  3. manual

  4. computerised


Correct Option: B
Explanation:

In a double entry system, every transaction has two effects. One is debit and other is credit. In Trial Balance, balances of all the ledger accounts are recorded. If debit side of trial balance matches with credit side it shows the mathematical accuracy of all the accounts. 

So, if an organisation has followed the double entry system they must prepare a trial balance.

The funds raised by not-for-profit organisations are credited to _________.

  1. capital fund

  2. partners' capital

  3. cash

  4. owner's fund


Correct Option: A
Explanation:

The funds raised by not-for-profit-organisation are transferred to the capital fund. This is because like any other profit earning organisation they don't have a capital account to be shown in balance sheet. So, the excess of assets over liabilities is credited to capital fund. 

Not-for-Profit organisations refer to the organisations that are used for the welfare of the _________ and are st up as charitable institutions which function without any profit motive.

  1. company

  2. society

  3. manager

  4. director


Correct Option: B
Explanation:

The not-for-profit organisations are the ones which are responsible for the welfare of society and are a type of places which run without considering the profit. This type of organisation is funded mainly by the donations given by people and in return they are obliged to take care of the welfare of the society.