In a not-for-profit organization, 'Life Membership Fees' is usually treated as: MCQ with Answer and Explanation

In a not-for-profit organization, 'Life Membership Fees' is usually treated as:

A. Capital receipt

B. Expense

C. Liability

D. Revenue

Answer: Option A

Life membership fees are generally treated as capital receipt and transferred to a fund, not income.

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

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Question #1 Report Error

An amount of Rs 5,000 received from Mohan was incorrectly credited to Sohan's account. This is an example of:

A. Compensating Error

B. Error of Principle

C. Error of Commission

D. Error of Omission

Correct Answer: Option C

Explanation:
Posting to the correct side but the wrong personal account is a clerical mistake classified as an error of commission.

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

Question #2 Report Error

The 'True and Fair View' is an overriding requirement of:

A. Financial statements

B. GST returns

C. Management accounts

D. Tax returns

Correct Answer: Option A

Explanation:
Financial statements must present a true and fair view of the entity's financial position and performance.

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

Question #3 Report Error

Which of the following is a 'period cost'?

A. Direct labour

B. Royalty on production

C. Direct material

D. Rent of office building

Correct Answer: Option D

Explanation:
Period costs are not tied to production volume and are expensed in the period incurred. Office rent is a period cost.

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