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CSEET · Fundamentals of Accounting · Accounting for Non-Profit Organizations

In a non-profit organization, what is the term for the excess of its total income over total expenditure for a year, as shown in the Income and Expenditure Account?

The excess of income over expenditure in a non-profit organization's Income and Expenditure Account is called a surplus. It is transferred to the Capital Fund. If expenditure exceeds income, the shortfall is called a deficit and reduces the Capital Fund.

  1. ADeficit
  2. BSurplusCorrect
  3. CDrawings
  4. DGross profit

Explanation

The Income and Expenditure Account is like a profit and loss account of a non-profit. When income exceeds expenditure the balancing figure is called surplus, and it is added to the Capital Fund. A deficit is the reverse. Drawings relate to proprietors, and gross profit arises from trading.

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