Accountancy Part AAccounts for Non Profit Organsiation

Identify the account statement that a Not-for-Profit organisation is…

Identify the account statement that a Not-for-Profit organisation is not required to prepare.

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Trading and Profit & Loss Account

A Not-for-Profit Organisation does not trade, so it does not prepare a Trading and Profit and Loss Account. Its financial statements are the Receipt and Payment Account, Income and Expenditure Account and Balance Sheet.

Option (2) Receipt and Payment Account — Prepared. It summarises the cash and bank transactions.

Option (3) Income and Expenditure Account — Prepared. It shows the surplus or deficit of the year.

Option (4) Balance Sheet — Prepared. It shows the financial position.

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):
Accounting Records of Not-for-Profit Organisations – “… The Not-for-Profit Organisations are also required to prepare financial statements at the end of the each accounting period. Although these organisations are non-profit making entities and they are not required to make Trading and Profit & Loss Account but it is necessary to know whether the income during the year was sufficient to meet the expenses or not.”