Not for Profit Organisation Class 12 DK Goel Solutions

1. Not for Profit Organisation Class 12 DK Goel Solutions Not for Profit Organisation Class 12 DK Goel Solutions , which is laid out by master Accountancy instructors from the most recent form of DK Goel Class 12 Accountancy books. We, at Dk Goel Solutions help students to fathom every one of the hypotheses, specifically. There are various ideas in Accountancy, however the ideas of Trial Balance, Depreciation and Bank Reconciliation Statement (BRS) are required. DK Goel Solutions Class 12 – Chapter 1 Short Answer Questions Question 1. Give three essential features of Receipts and Payments Account. Solution 1 Receipts and Payments Account Features: 1.) Capital and revenue: all receipts and payments are registered, whether in terms of revenue or capital. 2.) Period: Cash and bank deposits are reported without discriminating between present, recent or consecutive (next) accounting cycles. 3.) Opening and closing balance: At the beginning of the accounting period, the opening balance of this account shows cash in hand and/or at the bank and the closing balance shows cash in hand and/or at the bank at the end of the accounting period. Question 2. Give three essential features of Income and Expenditure Account. Solution 2 Features of the Account for Revenue and Expenditure:—

2. 1.) Nature: It is an account of a nominal account. It is also debited with costs and liabilities and profits and gains are attributed it. 2.) Opening and closing balance: No opening balance is available. The balance is either a surplus or a loss at the p. It is moved from the balance sheet the Capital Budget. 3.) Adjustment: This account shall be prepared on an accrual accounting basis and all changes shall be rendered in respect of prepaid or outstanding costs and sales, depreciation clauses or questionable debts. Question 3. Distinguish between Income and Expenditure Account and Receipt and Payment Account on the basis of: (1) Nature, (ii) Nature of items, (iii) Period Solution 3 Basis Receipt and Payment Account Income and Expenditure Account Nature A list of cash transactions showing receipts and transfers is listed under separate headings for the time. It’s like an account of Profit and Loss. Nature of item This account’s debit side tracks refunds and logs transfers on the credit side. This account’s debit side reports costs and losses, and sales and profits are reported on the credit side.

3. Period If they refer the prior, present or successive year, it displays refunds and transfers over the year. It indicates the current year’s revenue and spending alone. Question 4. How would a not-for-profit organisation deal with the following items: (i) urnament Fund. Outstanding Subscriptions, (ii) Subscriptions Received in advance, (iii) Solution 4 (i) Outstanding Subscription:- Outstanding Subscription Revenue and Expense A/c of the year is reported on the debit side and is also displayed on the Assets Side of the Balance Sheet of the current year. (ii) Subscriptions received in advance:- Subscriptions received in advance for the coming year are displayed on the balance sheet side of the liabilities. (iii) urnament Fund:- The urnament Fund will be viewed in line with the changes on the debt side of the balance sheet. Question 5. List the items that you will exclude from the Income and expenditure Account and in each case state briefly in a sentence or two why you excluded that item? Solution 5 1. 2. The payment of capital spending for the acquisition of government securities has been removed. 3. The number of subscriptions earned was omitted for the years 2013-14 and 2014-15. 4. The life membership fee is an object of receipt of capital and is therefore exempt. 5. Construction donation is a receipt for a particular reason and is therefore exempt. Cash/bank reserves have been omitted for opening and closing.

4. Question 6. Explain the following terms: (i) Capital Fund; (ii) Legacy (iii) Specific Donations. Solution 6 (i) Capital Fund:- The Capital Fund has no limitations on its use. In other words, management can, as it deems necessary, use the sums in the fund serve the reason for which the company operates. (ii) Legacy:- Legacy is the sum earned a non-profit entity under the will of a dead citizen as a gift. Conditions for its use should or may not be specified the donor. If no condition is stated, the ‘Common Contribution’ is paid for. And it is counted as ‘Unique Donation’ if a provision is stated. (iii) Particular gift:- If the donor states the reason for which the gift will be used, it is a specific gift. For instance, Donation received Rs. 2,00,000 for a library. It means the donation received can be used only for library, i.e. it is a specific donation. Question 7. How will you deal with sale of old assets while preparing the financial statements of a not-for-profit organisation? Solution 7 The selling of an asset can result in a benefit if the value of the sale is greater than the value of the book; or a loss if the value of the sale is less than the value of the book; or neither a profit nor a loss if the value of the sale is equal the value of the book. Book The value of the asset as of the date of selling shall be assessed after depreciation has been paid up the date of sale. Selling value is attributed the Asset Account, while benefit, if any, is credited the Revenue and Expense Account or loss, if any. Question 8. How would a non-profit organisation record the following items while preparing Income & Expenditure Account and Balance Sheet (i) Entrance Fees (ii) Life Membership Fees

5. (iii) Legacy (iv) General Donation Solution 8 (i) Entry fees:- The payment charged an applicant at the time of becoming a member of a not-for-profit entity is the entrance fee or membership fee. A tax refund is an entry charge or entry fee which is thus paid for as an income and added the Income and Expense Account. (ii) Life Membership Fees:- Life Membership Fees are reported on the liability side of the Balance Sheet as a Capital Receipt and added the Capital Fund. It is not counted as wages since a life member pays a one-time contribution during his life and requires resources. (iii) Legacy:- Legacy is the sum earned a not-for-profit entity under the will of the deceased citizen as a gift. The donor may or may not specify conditions for its use. In case, no condition is specified, it is accounted as ‘General Donation’. And if a condition is specified, it is accounted as ‘Specific Donation’. (iv) General donation:- General donation is a donation in which no requirement for its use is specified the donor. The general contribution sum is paid for as revenue and added the account of income and spending. Question 9. How will you treat the following items while preparing Income and expenditure A/c and Balance sheet of non-profit Organisation? (i) Donation for Building (ii) Sale of Newspapers (iii) Investment purchased. Solution 9 (i) Donation for Construction:- Donation for Construction means that the donation received will only be used as a particular donation for construction. The same donation is capitalized and is displayed on the hand of the balance sheet’s liabilities. (ii) Selling of publications:- The money paid for newspapers, magazines, newspapers, etc. is credited the revenue and spending budget, which is the cost

6. of income. Thus, the Revenue and Expense Account is credited with the money realized from the selling of old newspapers, books, periodicals, etc. (iii) Investment Purchased:- Investment investments are viewed as capital spending and are shown on the asset side of the balance sheet. Download Free study materials for your Examinations at DK goel Solutions