CAF-1 · Chapter 13 · Question 6 of 15
An NPO runs a small coffee bar to generate extra funds. How should the financial results of this trading activity be presented?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The net profit or loss from the trading activity is transferred to the statement of income and expenditure.
Explanation
Trading activities (like a coffee bar) are accounted for separately, and the resulting net profit or loss is then included in the NPO's main statement of income and expenditure.
More Accounting for NPOs MCQs
- Q8Which of the following statements replaces the 'Statement of Profit or Loss' for a Non-Profit Organization?
- Q9If an NPO decides to write off unpaid subscriptions from members who have left the club, how is this transaction recorded?
- Q10At year-end, the statement of income and expenditure shows a 'Surplus'. Where is this surplus transferred?
- Q11When an NPO uses fund accounting, how is depreciation expense treated?
- Q12An NPO sets up a specific fund strictly to contribute to the school fees of local children using a grant of Rs. 24 million. How are these…