Accountancy Part AAccounts for Non Profit Organsiation

Identify which of the following is prepared on accrual basis :

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Income and Expenditure Account

The Income and Expenditure Account of a not-for-profit organisation is like a Profit and Loss Account: it takes all incomes and expenses of the year, received or not, so it is prepared on accrual basis.

Option (1) Cash Book — Incorrect. It records only actual cash receipts and payments.

Option (2) Receipt and Expenditure Account — Incorrect. No account of this name is prepared.

Option (3) Receipt and Payment Account — Incorrect. It is a summary of cash and bank transactions, that is, on cash 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.”