Accountancy Part AAccounts for Non Profit Organsiation

Identify the account in case of a Not for Profit Organisation that ex…

Identify the account in case of a Not for Profit Organisation that excludes the Capital receipts and Capital payments.

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Income and Expenditure Account

The Income and Expenditure Account is prepared on accrual basis and contains only revenue items of the current year. While converting the Receipts and Payments Account into it, capital receipts and capital payments are excluded and taken to the Balance Sheet.

Option (1) Receipt and Payment Account — Incorrect. It records every receipt and payment, of capital as well as revenue nature.

Option (3) Cash Account — Incorrect. The cash book also records all cash receipts and payments, capital ones included.

Option (4) Bank Account — Incorrect. Bank transactions of every kind, capital or revenue, pass through it.

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):
Steps in the Preparation of Income and Expenditure Account – “Following steps may be helpful in preparing an Income and Expenditure Account from a given Receipt and Payment Account: 1. Persue the Receipt and Payment Account thoroughly. 2. Exclude the opening and closing balances of cash and bank as they are not an income. 3. Exclude the capital receipts and capital payments as these are to be shown in the Balance Sheet.”