Which of the following statements is incorrect in case of 'Not for Profit Organisation'?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Income and Expenditure Account does not include Depreciation
The Income and Expenditure Account is prepared on accrual basis, so non-cash expenses such as depreciation are included in it. It is the Receipts and Payments Account that leaves depreciation out.
Option (1) Debit side of Income and Expenditure Account records expenses and losses — A true statement. Expenses and losses go on the debit (expenditure) side.
Option (2) Balance at the end of Receipt and Payment Account represents cash in hand at the end and Bank Balance — A true statement. It is a summary of the cash book, so it closes with cash and bank balances.
Option (3) Income and Expenditure Account does not include Depreciation — Correct. This is the incorrect statement: depreciation is included.
Option (4) Income and Expenditure Account is like as Profit and Loss Account — A true statement. It serves the same purpose for a not-for-profit organisation.
Note: This question is from the pre-rationalised NCERT book. The topic is not there in the latest NCERT book (2026-27), but it is still in the CUET 2026 syllabus, so do not skip it.
NCERT (Pre-rationalised edition):
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