Accounting For NGO

Question 1

Real account

Answer 1

The account balances are not closed at the end of the accounting period, they are carried forward to the next accounting period. Often referred to as Permanent Accounts.
Eg. Balance sheets accounts.

Question 2

Nominal account

Answer 2

The balances are closed at the end of the accounting period thus, each accounting period begins with a zero balance. Also referred to as Temporary Accounts.
Eg. Income statement accounts.

Question 3

Receipts and payments

Answer 3

1. Captures capital and revenue expenditure
2. It is a real (permanent) account
3. Cashbook of the organization.
4. Records all cash receipts and payments irrespective of the period to which they relate.
5. Difference is the cash/bank balance at the end
6. Receipts are debited and payments are credited

Question 4

Income and expenditure account

Answer 4

1. Records only revenue expenditure
2. It is a nominal account
3. This is the income statement of the organization
4. Records only incomes and expenses relating to the period under consideration.
5. Difference is surplus / deficit.
6. Revenue expenditures are debited whilst revenue incomes are credited

Question 5

Sources of finance for NPOs

Answer 5

1. Membership dues
2. Annual subscription
3. Fund raising activities
4. Donations
5. Trading activities