Solution:

Step 1: Understanding the Accounting Process for NPOs

Not-for-Profit Organizations (NPOs) follow a structured process to prepare their final accounts. The correct order is:

1. Prepare the Cash Book (E) – This records all cash receipts and payments.
2. Prepare Receipts and Payment Account (C) – A summary of all cash transactions.
3. Prepare Income and Expenditure Account (B) – This is prepared from the Receipts and Payment Account to determine the surplus or deficit.
4. Adjust outstanding/prepaid expenditure and income (D) – Adjustments for accruals and prepayments are made to get an accurate financial position.
5. Prepare the Balance Sheet (A) – The final step to show the financial position of the NPO.

Step 2: Evaluating the Given Answer Choices

• Option A (E, C, B, D, A)  – Correct order as per the process above.
• Option B (D, E, A, B, D)  – Incorrect, as adjustments (D) should come later in the process.
• Option C (A, B, C, D, E)  – Incorrect, as the Balance Sheet (A) should be the last step.
• Option D (E, C, A, B, D)  – Incorrect, as Balance Sheet (A) should come last, not before Income & Expenditure Account (B).

Final Answer:

 Option A (E, C, B, D, A) is correct.

This follows the proper sequence:

1. Prepare Cash Book
2. Prepare Receipts and Payment Account
3. Prepare Income and Expenditure Account
4. Make Adjustments for accruals and prepayments
5. Prepare the Balance Sheet

This is the correct process for preparing the final accounts of an NPO (Not-for-Profit Organization).