Accountancy Part AAccounts for Non Profit Organsiation

Identify the basis on which Income and Expenditure Account is prepare…

Identify the basis on which Income and Expenditure Account is prepared by a Not-for-profit organisation.

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Accrual Basis

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):
Income and Expenditure Account – “… The Income and Expenditure Account is prepared on accrual basis with the help of Receipts and Payments Account along with additional information regarding outstanding and prepaid expenses and depreciation etc.”