Accounting by Non-Profit Organizations (NPOs) usually revolves around which system? MCQ with Answer and Explanation

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Accounting by Non-Profit Organizations (NPOs) usually revolves around which system?

A. Standard Costing

B. Social Accounting

C. Fund Based Accounting

D. Responsibility Accounting

Answer: Option C

Solution (By JKSSB Mock Tests)

NPOs use fund-based accounting where resources are categorized into specific funds based on restrictions placed by donors.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

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A: The Current Ratio is a liquidity ratio. R: It measures the ability to pay off long-term debts. Choose the correct option.

A. A is true but R is false

B. Both A and R are true but R is NOT the correct explanation of A

C. A is false but R is true

D. Both A and R are true and R is the correct explanation of A

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Correct Answer: Option A

Explanation:
The Current Ratio is indeed a liquidity ratio. However, it measures short-term liquidity (ability to pay current liabilities), not long-term debts (which is measured by solvency ratios like Debt-Equity). A is true, R is false.

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Question #2

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The 'Roll-forward Procedures' in audit are performed to:

A. Replace interim testing

B. Postpone audit

C. Start audit early

D. Update audit findings from an interim date to the period end

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Correct Answer: Option D

Explanation:
Roll-forward extends the conclusions from interim date to year-end.

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Question #3

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The 'GST Annual Return' GSTR-9 is required for:

A. All registered persons

B. Input service distributors

C. Regular taxpayers (not composition dealers, not ISD, etc.)

D. Composition dealers

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Correct Answer: Option C

Explanation:
GSTR-9 is filed by normal taxpayers; composition taxpayers file GSTR-4 annually.

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