ACCOUNTS OF NOT FOR PROFIT CONCERN
PROF. RIYAZAHMED 9820386897/7021081809
There are some organisations whose main is to provide social
services to the general public but not earn profit such organisations
are called as NON PROFIT ORGANISATIONS such as Religious
Trust, Cultural Association,Sports Association, Government
Hospitals,Schools, Colleges etc.Such organisations does not deal in
trading activities,they buy Assets and other goods for their own use
but not to sale at higher prices to make profit.Such organisations
collect income through subscription,donations, Government grants,
subsidies, concessions, entrance fees, admission fees and life
membership fees etc.Such organisations doesn't prepare Trading and
Profit and loss account but they prepare Receipts and Payment
Account,Income and Expenditure Account and the Balance sheet as
their Final Account at the end of the financial year.
1.RECEIPTS AND PAYMENT ACCOUNT.
It a Real Account.It is prepared to record the receipt of cash and
Payment of cash.It is prepared like a Cash Book.It shows the opening
cash and bank balance, closing cash and bank balance and other
Revenue Receipt, Capital Receipt, Revenue Expenses and Capital
Expenses.It is like a Trail Balance.It is given in the problem on the
basis of which easily we can prepare the
PROF. RIYAZAHMED 9820386897/7021081809
RIZVI COLLEGE OF ARTS, SCIENCE AND COMMERCE
BANDRA WEST MUMBAI
1
Income and Expenditure Account and the Balance sheet of the Non
Profit Organisations.It a summary of cash and bank transactions for a
particular period may be a month or a quarter or a year.All the
Receipts are recorded on the debit side and Payment on the credit
side.The bad debts,RDD,and the depreciation are not recorded in this
account.
INCOME AND EXPENDITURE ACCOUNT
It is a Nominal Account.In this account all Revenue Receipts and
Revenue Expenses are recorded on credit side and debit side
respectively.It shows the surplus or deficit.If surplus it is added in the
capital fund and if deficit it is deducted from the capital fund.It is
prepared just like a Profit and Loss Account.
IMPORTANT POINTS
1.Capital Fund…..It is the capital of the NPO which may be given in
the problem and somtimes not given which we have to find out by
preparing
the Opening Balance Sheet.
2.PRINTING AND STATIONARY.
As per R/P Account ×××
ADD O/S of the current year ×××
(Closing BS liabilities side)
×××
LESS O/S of the last year ×××
(Opening BS liabilities side)
LESS Prepaid of current year ×××
(Closing BS Assets side)
ADD Prepaid of last year ***
(Opening BS Assets side)
2
ADD Opening Stock ×××
(Opening BS Assets side)
LESS Closing stock ×××
(Closing BS Assets side) Total ₹ ×××
3.SALARIES ACCOUNT
As per Receipt and Payment Account ×××
ADD O/S OF CURRENT YEAR ×××
(Closing BS liabilities side)
LESS O/S OF LAST YEAR ×××
(Opening BS liabilities side) Total ₹
4.INSURANCE ACCOUNT
As per Receipt and Payment Account ×××
LESS PREPAID OF THE CURRENT YEAR ×××
Closing balance sheet Assets side
ADD PREPAID OF THE LAST YEAR ×××
Opening Balance Sheet Assets side Total ₹
5.SUBSCRIPTION. It is the regular income of the NPO which is
collected from its members on the monthly basis.It may be receivable
for the
current year or for the last year or in arrears or received in advance of
the current year or received in advance of the last year.
Subscription as per Receipt and Payment Account ×××
ADD SUBSCRIPTION RECEIVABLE OF CURRENT YEAR ×××
(Closing Balance Sheet on Assets side)
LESS SUBSCRIPTION RECEIVABLE OF LAST YEAR ×××
(Opening Balance Sheet on Assets side)
LESS SUBSCRIPTION RECEIVED IN ADVANCE OF C.Y ×××
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(Closing Balance Sheet liabilities side)
ADD SUBSCRIPTION RECEIVED IN ADVANCE OF L.Y ×××
(Opening Balance Sheet liabilities side)
Total ₹ ×××
6.DONATION
(a)General Donations show on credit side of the Income and
Expenditure Account.
(b) Special Donations or Donations capitalised are Added to Capital
Fund or show on the liabilities side of the Closing Balance Sheet.
7.Entrance Fees: It is collected from the members at the time of
admission and it is collected only once.If given in the problem to
capitalised then added to the capital fund and if there no information
then show on the credit side of the Income and Expenditure Account.
8.Life membership fees;It is collected from the members only once at
time of admission. Always added to the capital fund and if any
information is given in the problem then adjust accordingly
9.Government Grants: if for specific purpose then show on the
liabilities side of closing Balance Sheet and if the purpose is not given
or if it is Revenue then show on the credit side of the Income and
Expenditure Account.
10.Sale of Assets:
When the assets are sold for example sale of furniture then compare
the book value and sale value of the furniture and if there is profit on
sale then credit it to the Income and Expenditure Account and if there
is loss on sale of furniture then debit it to the Income and Expenditure
Account.The book value or cost of the furniture sold deduct from the
value of furniture before providing depreciation in the closing balance
sheet on Assets side.
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11.Legacies: It means the donations donated to the organisations as
per the will of a deceased member.If it is donated for a specific
purpose then show on the liabilities side of the closing balance sheet
and if the purpose is not given then treat like income and show on the
credit side of Income and Expenditure Account.
ACCOUNTS
WE HAVE TO PREPARE THE FOLLOWING ACCOUNTS.
1.INCOME AND EXPENDITURE ACCOUNT TO FIND OUT THE
SURPLUS OR DEFICIT.
2.CLOSING BALANCE SHEET
3.OPENING BALANCE SHEET TO FIND OUT THE OPENING
CAPITAL.
PROF. RIYAZAHMED 9820386897/7021081809
RIZVI COLLEGE OF ARTS, SCIENCE AND COMMERCE
BANDRA WEST MUMBAI.
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