CHAPTER 1 :- NOT FOR PROFIT ORGANISATION

CASE/SOURCE BASED QUESTIONS:

Sl.No. Read the passage given below and answer the following questions……..
CASE-1. Dr. Rajani Mehta a qualified M.B.B.S. doctor got voluntary retirement at the age of 50
years from a renowned hospital. She was residing in a flat of a wide apartment which is
surrounded by a slum which is inhabited by economically weaker strata of the society. As
the people in that area were not aware about importance of health care, a widespread
ailment had been persistently prevailing.
Rajani met with some of the well-off people of apartment and decided to open a
dispensary named as `LOCAL Clinic’ to provide them cost free medical assistance and
make them aware about hygienic living, physical fitness, and economic balance diet. Many
of the apartment members agreed to it. She approached health department of the town
with her proposal which was accepted and an initial one time grant of ₹.2,00,000 was
sanctioned immediately for purchase of medical equipment and test kits for pathological
tests. 10 members of the apartment contributed ₹.20,000 each as lifetime subscription to
the clinic. Rajni decided to charge ₹10 as one time registration fee from patients.
Apart from above Rajni made following transactions for first year:
S. No. Particulars Amount in (₹)
1 Purchased Equipment 1,20,000
2 Purchased Medicines 95,000
3 Purchased Furniture 10,000
4 Rent paid 12,000
5 Fee received for medical tests 45,000
6 Honorarium paid to Yoga teacher 35,000
7 Honorarium paid to physiotherapist and sports teacher 38,000
Rajni informed that during the first year 10,500 patients were registered for treatment and
for other
services. Taking reference from the above, answer following questions.
Q.No.1 Not for profit organization prepares
(i) Income and Expenditure account
(ii) Trading and Profit loss account
(iii) Receipt and Payment account
(iv) None of the above
Options:
(a) Only (ii)
(b) Only (iii)

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 (c) Both (i) and (ii)
(d) Both (i) and (iii)
Q.No.2 Honorarium paid to Physiotherapist and sports teacher Will be posted to
(a) Debit side of Income and Expenditure Account.
(b) Debit side of Receipt and Payment Account.
(c) Debit side of Profit and Loss Account.
(d) Credit side of Income And Expenditure account
Q.No.3 State whether the following statements are true or false:
“Donations received by MsRajani Mehta from health department should be capitalized.”
Q.No.4 Lifetime subscription paid by 10 members will be posted in
(a) Expenditure side of Income and Expenditure Account
(b) Liability side of closing Balance Sheet
(c) Income side of Income and Expenditure Account
(d) Assets side of closing Balance Sheet

CASE 2. VIJAYA SHANKAR, an Ex-Indian cricketer decided to start a cricket academy to train
the young enthusiastic players of down south. With the support and guidance of his
family he started the Star cricket academy at Tirunelveli township area on 1st April 2020.
Land was donated by his grandfather worth Rs. 10,00,000 as per his will. His father
Shankar donated Rs.5,00,000 for the construction and running the academy. He spent
Rs.3,00,000 for construction of the pavilion. 200 players of Tirunelveli joined the
academy and they paid yearly subscription of Rs.1200 each. 10 players paid in advance
for the next year 2021 -22. Vijaya shankar appointed well experienced coach for them,
the coach fee amounted to Rs. 1,20,000 p.a.
The maintenance expenses amounted to Rs.75,000. Bats and balls purchased during the
year amounted to Rs.15,000. Closing stock of bats and ball amount to Rs.1000.
Based on the above information you are required to answer the following question.
Q. No.1 The liability towards advance subscription amounted to:
(a) Rs. 12,000
(b) Rs.24,000
(c) Rs.1,200
(d) Rs.1,20,000
Q. No.2 The amount of subscription received as per Receipts and payments Account of Star
cricket club is:
(a) Rs.2,52,000
(b) Rs.2,40,000

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 (c) Rs.2,50,000
(d) None of the above
Q. No.3 What amount should be charged to the Income and Expenditure account for bats and
balls consumed during the year?
(a) Rs.15,000
(b) Rs.16,000
(c) Rs.14,000
(d) Rs.13,500
Q. No.4 The amount of subscription to be credited to income and expenditure account-------------
(a) 2,00,000
(b) 2,40,000
(c) 1,80,000
(d) 2,50,000

CASE Read the passage given below and answer the following questions……..
3. Subscriptions received during the year ₹ 50,000
Subscriptions outstanding on 31st March, 2020 ₹ 20,000
Subscriptions outstanding for the year 2020-21 ₹ 6,000
Subscriptions received in Advance on 31-3-2020 ₹ 8,000
Subscriptions received in Advance on 31-3-2021 ₹ 9,000
Subscriptions of ₹ 9,000 is still in arrears for the year 2019-20
1. What is the amount of Subscription outstanding at 31st March 2021
(A) ₹ 9,000
(B) ₹ 6,000
(C) ₹ 15,000……
(D) ₹ 3,000
2. What amont is shown in credit side of Income and Expenditure account
(A) ₹30,000
(B) ₹ 44,000…..
(C) ₹ 45,000
(D) None of above
3. What amount is shown in the Asset side of Balance sheet at 31st March 2020?
(A) ₹ 20,000
(B) ₹ 6,000
(C) ₹ 9,000
(D) ₹ 15,000

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4. What amount is shown in the Liability side of Balance sheet at 31st March 2021?
(A) ₹ 19,000
(B) ₹ 6,000
(C) ₹ 9,000
(D) ₹ 8,000

CASE Following information given below is of Good Health Sports Club for the year ended 31st
4.. March, 2021.
Particulars 01.04.2020 (Amount ₹) 31.03.2021(Amount ₹ )
Stock of Stationery 8,000 6,000

Creditors for Stationery 9,000 11,000

Stationery purchased during the year ended 31st March, 2021 was ₹ 47,000.
On the basis of above information answer the following -
1. What is the amount of stationery shown in Income and Expenditure Account for the year
ended 31st March, 2021 ?
(A) ₹ 48,000
(B) ₹40,000
(C) ₹ 49,000
(D) ₹ 51,000
2. What amount will be shown in Asset side of Balance sheet at 31st March 2021
(A) ₹ 8,000
(B) ₹ 6,000
(C) ₹ 11,000
(D) ₹ 9,000
3. What amount will be shown in Liability side of Balance sheet at 31 st March 2021
(A) ₹ 8,000
(B) ₹ 6,000
(C) ₹ 11,000
(D) ₹ 9,000
4. What amount is paid for stationery during the year 2020-21 ?
(A) ₹ 47,000
(B) ₹ 49,000
(C) ₹ 45,000
(D) ₹ 48,000

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Sl.No. Read the passage given below and answer the following questions.
CASE 5. Case:
Dr. Rajani Mehta a qualified M.B.B.S. doctor got voluntary retirement at the age of 50 years
from a renowned hospital. She was residing in a flat of a wide apartment which is surrounded
by a slum which is inhabited by economically weaker strata of the society. As the people in
that area were not aware about importance of health care, a widespread ailment had been
persistently prevailing. Rajani met with some of the well-off people of apartment and decided
to open a dispensary named as `LOCAL Clinic’ to provide them cost free medical assistance
and make them aware about hygienic living, physical fitness, and economic balance diet.
Many of the apartment members agreed to it. She approached health department of the town
with her proposal which was accepted and an initial one time grant of ₹.2,00,000 was
sanctioned immediately for purchase of medical equipment and test kits for pathological tests.
10 members of the apartment contributed ₹.20,000 each as lifetime subscription to the
clinic. Rajni decided to charge ₹10 as one time registration fee from patients. Apart from
above Rajni made following transactions for first year: S. No. Particulars Amount in (₹) 1
Purchased Equipment 1,20,000 2 Purchased Medicines 95,000 3 Purchased Furniture 10,000 4
Rent paid 12,000 5 Fee received for medical tests 45,000 6 Honorarium paid to Yoga teacher
35,000 7 Honorarium paid to physiotherapist and sports teacher 38,000 Rajni informed that
during the first year 10,500 patients were registered for treatment and for other services.
Taking reference from the above, answer following questions.
Q1) Not for profit organization prepares (i) Income and Expenditure account (ii) Trading and
Profit loss account (iii) Receipt and Payment account (iv) None of the above Options:
(a) Only (ii)
(b) Only (iii)
(c) Both (i) and (ii)
(d) Both (i) and (iii)

Q2) Honorarium paid to Physiotherapist and sports teacher Will be posted to (a) Debit side of
Income and Expenditure Account.
(b) Debit side of Receipt and Payment Account.
(c) Debit side of Profit and Loss Account.
(d) Credit side of Income And Expenditure account

Q3) State whether the following statements are true or false: “Donations received by Ms
Rajani Mehta from health department should be capitalized.”
Q4) Lifetime subscription paid by 10 members will be posted in

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 (a) Expenditure side of Income and Expenditure Account
(b) Liability side of closing Balance Sheet
(c) Income side of Income and Expenditure Account
(d) Assets side of closing Balance Sheet

CASE 6 Read the following hypothetical text and answer the given questions
Ajit started “Sevarth Library” at Kolkata as a platform for the students who are not capable
enough to purchase books and they need support from the society. Ajit met a few renowned
persons and collected a good amount of donation. He purchased books, bookshelf and other
items required to start a library. His aim was to help students and not to earn any profit from
the library. 100 students joined the library from which a minimum amount of Rs. 50 p.m. was
charged as subscriptions. 5 more people joined who paid life membership fee of Rs. 5000
each. Mr. Mahendra, a businessman, once visited the library and donated Rs. 200000 for
purchasing of furniture. On the entry of every new member in the library a nominal amount
of Rs. 5/- was charged as entry fee. The Accountant prepared Receipts and Payments a/c,
Income & Expenditure a/c and balance sheet every year for the library.

1 Where should the amount of subscriptions be shown by the Accountant

(A) Receipts side of Receipts and Payments a/c
(B) Income side of the Income & expenditure a/c
(C) Liabilities side of Balance Sheet
(D) Both (A) and (C)

2 Donation received from Mr. Mahendra should be treated as a__

(A) General receipt and to be shown in the Income & Expenditure a/c
(B) Capital receipt and to be shown in the Income & Expenditure a/c
(C) Capital receipt and to be shown in the Balance Sheet
(D) General receipt and to be shown in the Balance Sheet

3 Life membership fee is

(A) Liability
(B) Income
(C) Expense
(D) Asset

4 Surplus/Deficit will be calculated with the help of

(A) Receipts and Payments a/c
(B) Income and Expenditure a/c
(C) Balance Sheet
(D) Both (A) and (B)

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 SL.No Questions

CASE Following is the Receipts and Payments Account of Appollo Hospital for the year ended
7 31st March,2021:
RECEIPTS AND PAYMENTS ACCOUNT
Receipts Rs. Payments Rs.

To balance b/d 8,500 By payment for 33,000

To Subscriptions 48,000 medicine
To Donations 15,000 By fees to Doctors 24,000
To interest on - By Salaries 27,000
investments @9% 9,000 By Equipment 15,000
To proceeds from 12,000 purchased
charity show By Charity show 4,000
To Grant in aid 20,000 expenses
By Sundry Expenses 1,200
By balance c/d 8,300

1,12,500 1,12,500

Other Information:
Particulars 1.4.2020 31.3.2020

Subscription due 500 1,000

Subscription received in advance 1,000 500
Stock of Medicines 10,000 15,000
Amount due to medicine suppliers 8,000 12,000
Value of Equipments 25,000 33,000
Value of Buildings 70,000 65,000

You are required to furnish the following information:

(A) What will be the amount of Capital Fund:
(i) Rs.2,00,000
(ii) Rs.2,10,000
(iii) Rs.3,00,000
(iv) Rs.3,15,000
(B) What will be the value of investment at the beginning of the year:
(i) Rs.10,00,000
(ii) Rs. 1,00,000
(iii) Rs. 1,10,000
(iv) Rs. 1,45,000
(C) How much amount of medicine is consumed during the year:
(i) Rs.3,00,00
(ii) Rs. 36,000
(iii) Rs.32,000
(iv) Rs.27,000
(D) How much amount of subscription will be shown on the income side of the
income and expenditure account:
(i) Rs.51,000
(ii) Rs.49,000
(iii) Rs.43,000
(iv) Rs.46,000

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 CASE Following is the Receipts and Payments Account of Excel Club for the year ended 31 st
March,2021:
8
RECEIPTS AND PAYMENTS ACCOUNT
Receipts Rs. Payments Rs.

To balance b/d 1,90,000 By Salaries 3,30,000

To subscriptions By Sports Materials 4,00,000
6,60,000
To interest on- By balance c/d 1,60,000
investments@8% for - 40,000
full year

8,90,000 8,90,000

Additional Information:
(i) The club had received Rs,20,000 for subscription in 2019-20 for 2020-21
(ii) Salaries had been paid only for 11 months.
(iii) Stock of Sports Material on 31st March,2020 was Rs.3,00,000 and on 31st
March ,2021 Rs.6,50,000.
You are required to calculate the following:

(A) How much amount of Salaries will be shown on the expenditure side of Income
and Expenditure Account.
(i) Rs,9,00,000
(ii) Rs.8,00,000
(iii) Rs.3,60,000
(iv) Rs.10,00,000
(B) What will be the value of investment at the beginning of the year.
(i) Rs.1,00,000
(ii) Rs.2,00,000
(iii) Rs.4,00,000
(iv) Rs.5,00,000
(C) How much will be the amount of Surplus(excess of Income over Expenditure):
(i) Rs.3,05,000
(ii) Rs.3,10,000
(iii) Rs.3,50,000
(iv) Rs.3,60,000

(D) What is the amount of Sports material consumed during the year:
(i) Rs.60,000
(ii) Rs.45,000

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 (iii) Rs.50,000
(iv) Rs.52,000

CASE 9 Read the information given below and answer the following questions: Following is the
Receipt and payment of Literacy Club for the year ended 31.3.2020
Receipt Rs Payment Rs
To balance b/d 19550 By salary 3000
To Subscriptions: By newspaper 2050
2018-19 1200 By electricity bill 1000
2019-20 26500 By Fixed deposits (as on
2020-21 500 28200 1.7.2019 @9%p.a.) 20000
To sale of old news paper 1250 By books
To Govt. grants 10000 By rent 10600
To sale of old furniture (book By furniture 6800
value Rs7000) 5700 By balance c/d 10500
To interest on F.D. 450 11200

65150 65150
Additional information:
(i) Subscription outstanding as on 31.3.2019 were Rs.2000 and on 31.3.2020 Rs.2500
(ii) On 31.3.2020 salary outstanding was Rs.600 and rent outstanding was Rs.1200
(iii) The club owned furniture Rs.15000 and books Rs.7000 on 1.4.2019
1 Opening capital fund of the club will be
(A) Rs.32000
(B) Rs.43550
(C) Rs.25000
(D) Rs.11200
2 What will be total interest on fixed deposits owned by the Club
(A) Rs.1350
(B) Rs.450
(C) Rs,1800
(D) None of the above
3 Which of the following will not be recorded in income and expenditure account of the club
(A) Electricity bill
(B) Rent
(C) Books
(D) Salary

4 Outstanding salary and outstanding rent is recorded in the receipt and payment account of
the club as
(A) It is related with the current year expenses
(B) no payment in the form of cash
(C) Liability is creating
(D) not recorded in the Receipt and Payment account

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CASE Read the information given below and answer the following questions:
10 Following is the extract of the balance sheet of Bharat Sports Club for the year ending
31.3.2019 and 31.3.2020
particulars 31.3.2019 31.3.2020
(Rs) (Rs)
Advance subscription 8000 9500
Outstanding subscription 7000 12500

During the year, the club received Rs,120000 as subscription which included Rs.5000 for the
year ending 31.3.2019.

1 How subscription in advance in the beginning will be treated

(A) Asset and shown in opening Balance Sheet
(B) Liability and shown in opening Balance Sheet
(C) Accrued Income and shown in opening Balance Sheet
(D) Prepaid expense and shown in opening Balance Sheet
2 Subscription received during the year will be treated as
(A) Revenue Receipts
(B) Capital Receipts
(C) Any of the above depending on the information
(D) None of the above
3 Amount to be credited in Income and Expenditure account during the year 31.3.2021
(A) Rs 120000
(B) Rs.15000
(C) Rs.137000
(D) Rs.9500

4 Subscription outstanding as on 31.3.2021, shown in the balance Sheet of the Club will be
(A) Rs.12500
(B) Rs.17500
(C) Rs.5000
(D) Rs.12000

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 ANSWER KEY

Case Study Questions (1)

Q.No.1 C
Q.No.2 B
Q.No.3 A
Q.No.4 C
Case Study Questions (2)
Q.No.1 C
Q.No.2 B
Q.No.3 C
Q.No.4 C
Case Study 3
Q.No.1 (d) Both (i) and (iii)
Q.No. 2 2 (a) Debit side of Income and Expenditure Account.

Q.No. 3 3 True

Q.No.4 (b) Liability side of closing Balance Sheet

Case Study 4
Q.No.-1 (a) Rs.12,000

Q.No. 2 (a) Rs.2,52,000

Q.No. 3 ( c) Rs.14,000
Q.No.4 (b) 2,40,000
Case Study 5
Q1 (d) Both (i) and (iii)
Q2 (a) Debit side of Income and Expenditure Account.
Q3 True
Q4 (b) Liability side of closing Balance Sheet.

Case Study 6

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 1 Subscription
2 Rs.2,40,000
3 Vijaya Shankar’s grandfather donated a land for cricket coaching which is to be treated as legacy
and is to be capitalized.
4 (a) Rs.12,000

Case Study 7
(A)-(ii)
(B)-(ii)
(C)-(iii)

(D)-(ii)

Case Study 8
(A)-(iii)
(B)-(iv)
(C)-(ii)

(D)-(iii)
CASE 9

S.NO. ANSWER
1 B
2 A
3 C
4 D
CASE 10

S.NO. ANSWER
1 B
2 A
3 C
4 B

PREPARED BY THE PGTs ( COMMERCE ) OF BHUBANESWAR, GUWAHATI, KOLKATA,

RANCHI, SILCHAR AND TINSUKIA REGIONS.

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