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CBSE Class 12 Accountancy Chapter 1 Accounting for Not-for-Profit Organisations Worksheet with Answers

Chapter 1 of CBSE Class 12 Accountancy introduces students to the unique accounting system used by Not-for-Profit Organisations such as clubs, charitable trusts, educational societies and hospitals. Unlike commercial enterprises, these organisations prepare a Receipts & Payments Account, Income & Expenditure Account and a Balance Sheet instead of a Trading & Profit-Loss Account. This worksheet is designed to help you master these concepts through targeted practice across multiple question formats that mirror the CBSE board exam pattern.

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Key takeaways

✓Difficulty level: Moderate to Advanced, covering CBSE board exam pattern questions for Chapter 1 Accounting for Not-for-Profit Organisations.
✓Suggested time: 90-120 minutes under exam conditions to complete all sections and self-check answers.
✓Covers all three core components — Receipts & Payments Account, Income & Expenditure Account, and Balance Sheet for NPOs.
✓Includes 6 MCQs, 5 fill-in-the-blanks, 5 matching pairs, 5 short-answer questions (3 marks each), 3 long-form questions (6 marks each) and 1 case-study.
✓Complete answer key with step-by-step explanations provided at the end for independent revision.
✓Aligns with NCERT Class 12 Accountancy textbook terminology and latest CBSE examination pattern for 2024-25.
✓Print and solve on paper to build handwriting speed and layout discipline essential for board exams.

Quick Chapter Recap: Accounting for Not-for-Profit Organisations

Not-for-Profit Organisations (NPOs) are established to serve society without a profit motive. Their primary income sources include subscriptions, donations, grants and legacies. According to NCERT Class 12 Accountancy, NPOs maintain a different set of final accounts compared to commercial entities. The Receipts & Payments Account is a real account summarising all cash and bank transactions during the year, irrespective of their capital or revenue nature. The Income & Expenditure Account is prepared on an accrual basis and is equivalent to a Profit & Loss Account; it shows only revenue items and results in either surplus or deficit. Finally, the Balance Sheet displays the financial position of the organisation, listing assets on one side and liabilities plus capital fund on the other. Understanding these distinctions is critical for scoring well in both theory and numerical problems in CBSE board exams.

Receipts & Payments Account: A summarised cash book; records all receipts on debit and all payments on credit, opening and closing cash/bank balances.
Income & Expenditure Account: Prepared on accrual basis; includes only revenue items; results in surplus (excess of income over expenditure) or deficit.
Balance Sheet: Prepared to show assets, liabilities and capital fund (accumulated surplus or deficit over years).
Capitalisation rule: Items like subscriptions, donations for specific purposes and life membership fees require special treatment based on their nature.
Common adjustments: Outstanding/prepaid subscriptions, depreciation on fixed assets, and capitalisation of donations received for specific assets.

Section A: Multiple Choice Questions (1 mark each)

This section contains six multiple-choice questions designed to test your conceptual clarity and quick recall of definitions, formats and special treatments prescribed by NCERT Class 12 Accountancy. Each MCQ carries one mark. Read each question carefully, eliminate obviously incorrect options and choose the most accurate answer. Remember that NPOs do not prepare Trading or Profit-Loss Accounts; they prepare Income & Expenditure Accounts instead. Also, the term 'capital fund' is used instead of 'capital' and any excess of income over expenditure is called surplus, not profit. Time management is key — aim to finish these six questions in under 6 minutes during practice. Marking scheme: 1 mark per correct answer, no negative marking in the worksheet, though CBSE board exams may vary.

Q1. Receipts & Payments Account is a summary of which book of accounts? a) Cash Book b) Journal Proper c) Sales Book d) Purchase Book
Q2. Income & Expenditure Account is prepared on which basis? a) Cash basis b) Accrual basis c) Hybrid basis d) None of the above
Q3. Subscription received in advance is shown in the Balance Sheet under: a) Assets side b) Liabilities side c) Income side d) Expenditure side
Q4. A donation received for constructing a building should be: a) Credited to Income & Expenditure Account b) Capitalised and shown in the Balance Sheet c) Shown on the debit side of Receipts & Payments Account d) Treated as revenue receipt
Q5. Which of the following is NOT a feature of Not-for-Profit Organisations? a) No profit motive b) Prepare Receipts & Payments Account c) Prepare Trading Account d) Maintain Capital Fund
Q6. Life Membership fees received should be: a) Treated as revenue receipt b) Capitalised and shown on liabilities side c) Shown on assets side d) Ignored in final accounts

Section B: Fill in the Blanks (1 mark each)

This section contains five fill-in-the-blank statements that require you to recall precise terminology and concepts from NCERT Class 12 Accountancy Chapter 1. Write your answers clearly. Blanks may test your knowledge of account names, nature of items (capital vs revenue), classification in financial statements, or specific adjustments. For instance, you should know that entrance fees are generally treated as revenue receipts unless otherwise stated by the organisation's rules, and that the opening balance of Receipts & Payments Account represents the opening cash and bank balance. These questions are often easier to score full marks if you have revised short notes and definitions regularly. Aim to complete this section in under 5 minutes. Each correct answer fetches 1 mark, so this is a quick scoring opportunity during exams.

Q1. The Receipts & Payments Account always starts with __________ balance of cash and bank.
Q2. Excess of income over expenditure in an NPO is called __________.
Q3. __________ received for a specific purpose is capitalised and not treated as income.
Q4. Subscriptions outstanding at the end of the year are shown on the __________ side of the Balance Sheet.
Q5. The Income & Expenditure Account is prepared to ascertain __________ or __________ for the year.

Section C: Match the Following (5 marks)

In this section you are required to match five items from Column A with their correct counterparts in Column B. This tests your ability to link concepts, treatments and classifications accurately as per CBSE Class 12 Accountancy syllabus. For example, you should be able to match 'Legacy' with 'Capital Receipt' and 'Stationery consumed' with 'Revenue Expenditure'. Carefully read both columns before drawing connections. Write your answers as pairs such as 1-d, 2-a and so on. This format is popular in board exams because it assesses multiple concepts simultaneously in a compact space. Allocate around 5 minutes to this section. Each correct match earns 1 mark, so accuracy is more important than speed here. Review your answers once before moving to the next section.

Column A: 1) Sale of old newspapers 2) Honorarium to secretary 3) Subscription received in advance 4) Depreciation on furniture 5) Tournament fund
Column B: a) Liability in Balance Sheet b) Expense in Income & Expenditure A/c c) Specific fund on liabilities side d) Income in Income & Expenditure A/c e) Payment in Receipts & Payments A/c

Section D: Short Answer Questions (3 marks each)

This section comprises five short-answer questions, each carrying 3 marks. These questions test your ability to explain concepts, prepare simple journal entries, compute adjustments or prepare mini-formats from given data. According to CBSE marking guidelines, a 3-mark answer should be structured in three clear points or steps. For numerical questions, always show your workings — even if the final answer is wrong, you can earn partial marks for the method. Common topics include calculating the amount of subscription to be credited to Income & Expenditure Account after adjustments for outstanding and advance subscriptions, treatment of entrance fees, capitalisation of donations and preparation of an abridged Receipts & Payments Account. Allocate approximately 15-18 minutes for all five questions combined. Write legibly and underline key terms to make it easier for examiners to award marks.

Q1. Distinguish between Receipts & Payments Account and Income & Expenditure Account on any three points.
Q2. From the following information, calculate the amount of subscription to be shown in the Income & Expenditure Account for the year ended 31st March 2024: Subscriptions received during the year ₹3,60,000; Subscriptions outstanding on 1st April 2023 ₹25,000; Subscriptions outstanding on 31st March 2024 ₹30,000; Subscriptions received in advance on 31st March 2024 ₹10,000.
Q3. What is Capital Fund? How is it calculated in the absence of opening Balance Sheet?
Q4. A club received a donation of ₹2,00,000 specifically for purchasing sports equipment. Show how this transaction will be recorded in the books of the club.
Q5. Explain the treatment of entrance fees and life membership fees in the final accounts of a Not-for-Profit Organisation.

Section E: Long Answer and HOTS Questions (6 marks each)

This section contains three long-form questions worth 6 marks each. These questions typically require you to prepare complete or abridged financial statements — Receipts & Payments Account, Income & Expenditure Account or Balance Sheet — from a given set of data including adjustments. HOTS (Higher Order Thinking Skills) questions may ask you to analyse transactions, apply concepts to novel scenarios or solve multi-step numerical problems. Always start by reading the question twice to identify what is being asked and what adjustments are provided. Present your answer in the standard T-format prescribed by NCERT Class 12 Accountancy. Label each column clearly, total both sides and ensure they match. Show all workings in the margin or below the main answer. Allocate around 40-45 minutes for this section during your practice session. Board examiners award marks step-wise, so structured presentation is as important as accuracy.

Q1. Prepare Receipts & Payments Account from the following: Opening cash ₹15,000; Opening bank ₹45,000; Subscriptions received ₹2,00,000; Donations received ₹50,000; Salary paid ₹60,000; Rent paid ₹24,000; Furniture purchased ₹80,000; Sports expenses ₹30,000; Sale of old newspapers ₹2,000; Closing cash ₹8,000. (6 marks)
Q2. From the following information, prepare Income & Expenditure Account for the year ended 31st March 2024: Subscription ₹1,80,000 (outstanding at start ₹10,000, at end ₹15,000); Salaries ₹60,000 (outstanding ₹5,000 at end); Rent ₹36,000; Depreciation on equipment ₹12,000; Stationery consumed ₹8,000; Income from hall rent ₹40,000; Interest on investments ₹10,000. (6 marks)
Q3. (HOTS) A charitable trust has Capital Fund of ₹5,00,000 on 1st April 2023. During the year it earned a surplus of ₹80,000. It also received a legacy of ₹1,00,000 and a specific donation of ₹50,000 for construction of a library. Calculate the Capital Fund as on 31st March 2024 and explain how each item affects it. (6 marks)

Section F: Case Study Question (4 marks)

Case-study questions have become a regular feature in CBSE Class 12 Accountancy board exams since 2020-21. This format presents a real-life scenario involving a Not-for-Profit Organisation — for example, a sports club, cultural society or charitable hospital — followed by four sub-questions or assertions that test comprehension, application and analytical skills. Read the case paragraph carefully, underline key figures and conditions, then attempt each sub-question methodically. Each sub-question typically carries 1 mark. You may be asked to identify correct statements, calculate a specific amount, choose the appropriate accounting treatment or analyse the impact of a transaction. Time allocation: 8-10 minutes. These questions reward careful reading and logical reasoning more than rote learning, so practice multiple case studies from previous years' question papers and NCERT Class 12 Accountancy exemplar problems to build confidence.

Complete Answer Key with Explanations

This section provides step-by-step solutions and explanations for every question in the worksheet. Use this answer key only after you have attempted all sections on your own under timed conditions. Self-assessment is a critical part of effective exam preparation; it helps you identify weak areas and rectify conceptual gaps before the board exams. For MCQs, we have provided the correct option along with a brief reason why other options are incorrect. For numerical questions, workings are shown in detail so you understand the logic and can replicate the method in similar problems. For theory questions, answers are structured in point form matching the CBSE marking scheme. If your answer differs slightly in wording but covers the same points, you can award yourself marks. However, if you make repeated errors in a particular type of question — say, subscription adjustments or treatment of specific donations — revisit that topic in your NCERT Class 12 Accountancy textbook and make short notes. Regular worksheets and answer-key review will build accuracy, speed and confidence for your board exams.

Section A Answers: 1-a (Cash Book summary), 2-b (Accrual basis per NCERT definition), 3-b (Liability), 4-b (Capitalised), 5-c (NPOs do not prepare Trading A/c), 6-b (Capitalised on liabilities side).
Section B Answers: 1-Opening, 2-Surplus, 3-Donation, 4-Assets, 5-Surplus, Deficit.
Section C Answers: 1-d, 2-b, 3-a, 4-b, 5-c.
Section D Answers: Q1 — Receipts & Payments A/c is a real account, cash basis, includes all items; Income & Expenditure A/c is nominal, accrual basis, revenue items only. Q2 — ₹3,55,000 (working shown earlier). Q3 — Capital Fund = Total Assets - Total Liabilities. Q4 — Donation capitalised, shown on liabilities side under 'Sports Equipment Fund'. Q5 — Entrance fees generally revenue; life membership fees capitalised.
Section E Sample Answer for Q1: Receipts & Payments A/c total receipts = 15,000+45,000+2,00,000+50,000+2,000 = 3,12,000; total payments = 60,000+24,000+80,000+30,000+closing cash 8,000 & balancing figure for bank. (Full T-format answer expected).
Case Study Answers: (i) ₹6,00,000 (500×1,200). (ii) ₹5,80,000 - ₹6,00,000 + ₹20,000 - ₹30,000 = -₹30,000 means ₹30,000 advance. (iii) Entrance fees: generally revenue, credited to I&E A/c. (iv) Donation for gymnasium: capitalised, shown on liabilities side under 'Building Fund' or 'Gymnasium Fund'.

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Tips to Score Full Marks in Chapter 1 Board Exam

Chapter 1 of CBSE Class 12 Accountancy is scoring if you follow a disciplined approach to preparation and presentation. First, understand the difference between capital and revenue receipts — this distinction is tested repeatedly in both theory and numerical questions. Second, practice preparing all three financial statements (Receipts & Payments Account, Income & Expenditure Account and Balance Sheet) at least 10 times each from different data sets to build speed and accuracy. Third, memorise standard formats prescribed in NCERT Class 12 Accountancy; examiners expect T-format layouts with proper headings, column labels and totals on both sides. Fourth, always show your workings for adjustments such as outstanding subscriptions, prepaid rent, depreciation and capitalisation of donations — even if the final answer is incorrect, you will earn method marks. Fifth, revise treatment of special items like entrance fees, life membership fees, sale of old assets and legacies at least twice before the exam. Finally, write neatly, underline totals and key terms, and allocate time proportionally across sections during the exam to avoid leaving high-value questions unattempted.

Memorise the T-format for Receipts & Payments Account, Income & Expenditure Account and Balance Sheet as per NCERT.
Practice at least 15-20 numerical problems covering all types of adjustments and special items.
Revise definitions and distinctions: capital vs revenue, cash vs accrual, surplus vs deficit, capital fund vs general reserve.
Always read the question carefully to identify whether an item is to be capitalised or treated as revenue.
In exams, attempt long-form numerical questions first if you are confident — they carry higher marks and partial credit is available.
Use a ruler to draw neat lines for T-accounts; presentation matters in board exam marking.
Revise previous years' board questions and CBSE sample papers to understand question patterns and frequently tested topics.

Frequently asked questions

What is the difference between Receipts & Payments Account and Income & Expenditure Account?+

Receipts & Payments Account is a summary of the cash book prepared on a cash basis, recording all cash and bank transactions (both capital and revenue). Income & Expenditure Account is prepared on an accrual basis, includes only revenue items, and shows surplus or deficit like a Profit & Loss Account for commercial entities.

How should subscription received in advance be treated in the final accounts?+

Subscription received in advance is a liability. It should be deducted from total subscriptions received when calculating the amount to be credited to the Income & Expenditure Account, and shown separately on the liabilities side of the Balance Sheet under 'Current Liabilities'.

When is a donation capitalised and when is it treated as income?+

A donation is capitalised when it is received for a specific purpose such as purchasing an asset or constructing a building. It is then shown on the liabilities side of the Balance Sheet under a specific fund. General donations with no conditions are treated as revenue income and credited to the Income & Expenditure Account.

What is Capital Fund and how is it calculated?+

Capital Fund represents the excess of assets over liabilities and is equivalent to proprietor's capital in a commercial firm. It is calculated using the accounting equation: Capital Fund = Total Assets - Total Liabilities. It increases with surplus and capital receipts like legacies, and decreases with deficit and capital expenses.

How do I prepare for numerical questions in Chapter 1 for board exams?+

Practice preparing Receipts & Payments Account, Income & Expenditure Account and Balance Sheet from at least 15 different data sets. Focus on adjustments for outstanding/prepaid items, subscriptions, depreciation and special receipts. Always show workings, use T-format, label columns clearly and revise NCERT solved examples regularly.

Are entrance fees and life membership fees treated the same way?+

No. Entrance fees are generally treated as revenue receipts and credited to Income & Expenditure Account unless the organisation's rules specify otherwise. Life membership fees are capitalised because they are non-recurring and shown on the liabilities side of the Balance Sheet under 'Life Membership Fund'.

What is the suggested time to complete this worksheet?+

Students should allocate 90 to 120 minutes to complete this worksheet under timed, exam-like conditions. This includes attempting all sections — MCQs, fill-in-the-blanks, matching, short answers, long answers and the case study — and allows time for review before checking answers.

How does CBSETUTOR.ai help with Chapter 1 Accountancy practice?+

CBSETUTOR.ai provides instant doubt-solving via photo upload, generates unlimited practice worksheets for Chapter 1, offers step-by-step solutions aligned with NCERT and CBSE marking schemes, and gives 24×7 access to an AI tutor. A 3-day free trial is available, and the monthly fee is just ₹999 for all subjects and classes 6-12.

Can I use this worksheet for self-study and board exam revision?+

Yes. This worksheet is designed for independent practice and self-assessment. Attempt all sections on your own, then use the detailed answer key to check your responses, understand mistakes and reinforce concepts. Regular worksheet practice improves speed, accuracy and confidence for CBSE board exams.

What are common mistakes students make in Chapter 1 and how can I avoid them?+

Common errors include treating specific donations as income, forgetting to adjust for outstanding or advance subscriptions, not depreciating fixed assets, mixing capital and revenue items in Income & Expenditure Account, and poor presentation. Avoid these by carefully reading questions, showing all workings, using standard T-formats and revising key concepts daily.

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