Identify the accounts related to a Not for Profit Organisation. (A) P…

Identify the accounts related to a Not for Profit Organisation.

(A) Profit and Loss Appropriation Account
(B) Receipt and Payment Account
(C) Subscription Account
(D) Income and Expenditure Account
(E) Trading and Profit and Loss Account

Choose the correct answer from the options given below.

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (B), (C) and (D) only

A not-for-profit organisation prepares a Receipts and Payments Account, an Income and Expenditure Account and a Balance Sheet; it uses a Subscription Account to work out the subscription income of the year.

(A) Profit and Loss Appropriation Account — False. It distributes profit among partners of a firm.

(B) Receipt and Payment Account — True. It is the summary of the cash book of the organisation.

(C) Subscription Account — True. Subscriptions are the main income, and this account finds the amount for the year.

(D) Income and Expenditure Account — True. It shows the surplus or deficit of the year.

(E) Trading and Profit and Loss Account — False. These organisations are not required to prepare it.

Note: This question is from the pre-rationalised NCERT book for items (B), (C), (D) and (E). 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 – “… 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. Not only that they have to provide the necessary financial information to members, donors, and contributors and also to the Registrar of Societies. For this purpose, they have to prepare their final accounts at the end of the accounting period and the general principles of accounting are fully applicable in their preparation as stated earlier, the final accounts of a ‘not-for-profit organisation’ consist of the following: (i) Receipt and Payment Account (ii) Income and Expenditure Account, and (iii) Balance Sheet.”

NCERT (Pre-rationalised edition):
Subscriptions – “… Subscription is a membership fee paid by the member on annual basis. This is the main source of income of such orgnisations.”

NCERT (2026-27 edition):
Profit and Loss Appropriation Account – “Profit and Loss Appropriation Account is merely an extension of the Profit and Loss Account of the firm. It shows how the profits are appropriated or distributed among the partners.”