Financial Statements of NPO

Question 1

Define Non-Profit Organizations.

Answer 1

It is set up to provide service to its members and the public in general.

Question 2

Explain Entity as a feature of NPO

Answer 2

It has a separate legal entity than its owners and members.

Question 3

Explain Purpose as a feature of NPO

Answer 3

Its purpose is to further cultural, professional, educational and religious objectives and give services to masses.

Question 4

Explain Ownership as a feature of NPO

Answer 4

it is set up by individuals or companies as charitable trust but belongs to the society.

Question 5

Explain Non-profit as a feature of NPO

Answer 5

It earns surplus, used to maintain assets and operations and for the objective it was set up for but not distribution amongst members.

Question 6

Explain Management as a feature of NPO

Answer 6

Managed by a group of individuals called managing committee or trustees.

Question 7

Explain Funds as a feature of NPO

Answer 7

Funds are given by the members or the donors in form of fees and donations and is credited to capital funds or general funds.

Question 8

Explain Financial Statements as a feature of NPO

Answer 8

Prepares receipts and payments A/c, Income and expenditure A/c and balance sheet and gives it to statutory authority known as registrar of societies.

Question 9

Define Receipts and payments A/c.

Answer 9

It is the summary of cash and bank receipts and payments during an accounting period.

Question 10

Explain Nature as a feature of R and P A/c

Answer 10

It is asset A/c as it is a summary of cash and bank receipts and payments.

Question 11

Explain Basis as a feature of R and P A/c

Answer 11

Prepared on cash basis of accounting i.e. transactions which are paid or received in cash are recorded.

Question 12

Explain Capital and revenue as a feature of R and P A/c

Answer 12

It shows all capital and revenue receipts and payments

Question 13

Explain period as a feature of R and P A/c

Answer 13

Shows transactions from current, previous and next accounting periods.

Question 14

Explain balances as a feature of R and P A/c

Answer 14

opening and closing shows cash in hand and/or bank at beginning and end resp.

Question 15

Explain Adjustments as a feature of R and P A/c

Answer 15

Adjustments are not made at it is cash basis accounting.

Question 16

Explain purpose as a feature of R and P A/c

Answer 16

Shows amount paid and received during accounting year.