Preparing Income and Expenditure Account and Balance Sheet for a Non-Profit Organization (NPO)

What is the primary task required for the Christ Social and Cultural Club's financials?

• Prepare a cash flow statement

• Prepare a trial balance

• Prepare an income and expenditure account and balance sheet

• Prepare a profit and loss account

Why is it necessary to prepare an opening balance sheet in this problem?

• To assess the liabilities for the year

• To determine the closing cash balance

• To find the opening capital fund figure

• To calculate the profit for the year

How should the sale of investments be treated in the financial statements?

• As a liability

• As an expense

• By deducting the book value from the asset and recording the profit as income

• As a direct income

What is the effect of outstanding electricity on the financial statements?

• It is ignored

• It is added to the expenses and shown as a liability

• It is deducted from the liabilities

• It is added to the income

How is prepaid insurance treated in the financial statements?

• As an expense

• As an asset

• As income

• As a liability

What is the correct treatment for subscription income received in advance?

• Add to next year's income

• Ignore it

• Deduct from current year's income and show as a liability

• Add to current year's income

How is depreciation on furniture calculated when the purchase date is given?

• From the date of purchase till the year-end

• Only for the first six months

• It is not calculated

• For the entire year

What should be done if there is a deficit in the income and expenditure account?

• Show it as an asset

• Deduct it from the capital fund

• Add it to the capital fund

• Ignore it

What is the final step in ensuring the balance sheet is accurate?

• Recalculate all expenses

• Ensure all adjustments are posted correctly

• Verify the opening balance

• Check the cash flow statement

Why is it important to mark items in the question before solving?

• To avoid mistakes in calculations

• To make the question look neat

• To ensure all items are accounted for

• To save time