Match List – I with List – II.

Choose the correct answer from the options given below :

(A)-(III), (B)-(I), (C)-(IV), (D)-(II)

The correct answer is Option (3) - (A)-(III), (B)-(I), (C)-(IV), (D)-(II).

* Receipt and Payment account- Cash Basis. Receipt and Payment Account is prepared at the end of the accounting year on the basis of cash receipts and cash payments recorded in the cash book. It is a summary of cash and bank transactions under various heads. For example, subscriptions received from the members on different dates which appear on the debit side of the cash book, shall be shown on the receipts side of the Receipt and Payment Account as one item with its total amount. Similarly, salary, rent, electricity charges paid from time to time as recorded on the credit side of the cash book but the total salary paid, total rent paid, total electricity charges paid during the year appear on the payment side of the Receipt and Payment Account.

* Income and Expenditure account- Accrual Basis. Income and expenditure account 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. The Income and Expenditure Account serves the same purpose as the profit and loss account of a business organisation does. All the revenue items relating to the current period are shown in this account, the expenses and losses on the expenditure side and incomes and gains on the income side of the account. It shows the net operating result in the form of surplus (i.e. excess of income over expenditure) or deficit (i.e. excess of expenditure over income), which is transferred to the capital fund shown in the balance sheet.

* Subscription- Revenue Item. Not for Profit Organizations often receive subscriptions from their members. Subscription is a membership fee paid by the member on annual basis. This is the main source of income of such organisations. Subscription paid by the members is shown as receipt in the Receipt and Payment Account and as income in the Income and Expenditure Account.

* Machinery- Capital Item. Machinery is a capital expense of the not-for profit organisations as organisation invested in machinery. It is shown in the balance sheet of the organisation.