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CMA Foundation · Fundamentals of Financial and Cost Accounting · Financial Statements of a Not-for-Profit Organisation

In the Balance Sheet of a not-for-profit organisation, the excess of assets over liabilities is shown as which of the following?

The excess of assets over liabilities of a not-for-profit organisation is shown as the Capital Fund, also called the Accumulated or General Fund. Such an entity has no proprietor, so its net worth is represented by this fund, which increases by surplus and decreases by deficit.

  1. ACapital Fund (Accumulated Fund)Correct
  2. BProfit and Loss Account balance
  3. CReserve for contingencies
  4. DOutstanding income

Explanation

A not-for-profit organisation has no owner's capital. Its net worth, the excess of assets over outside liabilities, is called the Capital Fund or General Fund. Surplus from the Income and Expenditure Account is added to it each year.

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