Accountancy Part AAccounts for Non Profit Organsiation

Identify from the following which excludes capital nature items?

Answer & explanation

Correct answer: option 2

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

The Income and Expenditure Account of a not-for-profit organisation is prepared on the accrual basis and includes only revenue items of the current year; capital receipts and capital expenditure are kept out of it and go to the Balance Sheet.

Option (1) Receipt and Payment Account — Incorrect. It records all cash receipts and payments, whether of capital or of revenue nature.

Option (3) Balance Sheet — Incorrect. The Balance Sheet is where capital items such as assets, funds and capital fund are shown.

Option (4) Fund Flow Statement — Incorrect. A fund flow statement deals with long-term sources and uses of funds, which are capital items.

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 – “It is the summary of income and expenditure for the accounting year. It is just like a profit and loss account prepared on accrual basis in case of the business organisations. It includes only revenue items and the balance at the end represents surplus or deficit.”

NCERT (Pre-rationalised edition):
Salient Features – “… 3. It includes all receipts and payments whether they are of capital nature or of revenue nature.”