Accountancy Part AAccounts for Non Profit Organsiation

Identify that out of the following which facilitates a Not-for-Profit…

Identify that out of the following which facilitates a Not-for-Profit organisation in preparation of its financial statements at the end of an accounting period.

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Trial Balance

A Not-for-Profit Organisation prepares a trial balance to check the accuracy of its ledger accounts, and this trial balance facilitates the preparation of its Receipt and Payment Account, Income and Expenditure Account and Balance Sheet.

Option (1) Receipt and Payment Account — Incorrect. It is one of the statements being prepared, not the aid to preparing them.

Option (2) Income and Expenditure Account — Incorrect. It is itself a financial statement.

Option (3) Balance Sheet — Incorrect. It is the last statement prepared.

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 – “… Income and Expenditure Account is akin to Profit and Loss Account. The Not-for-Profit Organisations usually prepare the Income and Expenditure Account and a Balance Sheet with the help of Receipt and Payment Account. However, this does not imply that they do not make a trial balance. In order to check the accuracy of the ledger accounts, they also prepare a trial balance which facilitates the preparation of accurate Receipt and Payment Account as well as the Income and Expenditure Account and the Balance Sheet.”