PART – A
Unit - 1
ACCOUNTING FOR – NOT FOR PROFIT ORGANISATIONS
1 Mark Questions
Q.1 During the year 2007 a club received Rs. 1, 00,000 as entrance fees. According
to accounting policy for the club 40% of the entrance fees is to be capitalised.
How will you deal with entrance fees received by NPO?
Q.2 hat is meant by Fund Based Accounting ?
Q.3 How would you calculate the amount of consumable materials ?
Q.4 Difference between receipt and payment account and trial balance ?
ANSWERS
Ans.1 Entrance fees Rs. 60,000 (i.e. 60% of Rs. 1,00,000) will be credited to 'Income
and Expenditure Account' and Rs. 40,000 (i.e. 40% of Rs. 1,00,000) will be added
to capital fund in the balance sheet.
Ans.2 In fund based accounting separate accounts are maintained for specific activities
of the organisation such as sports fund, price fund etc. All items related the
specific funds are recorded fund wise and consolidation of these statements or
accounts are presented in the financial results.
Ans.3 Opening stock of Material + purchase during the year - closing stock of material =
consumable material.
Ans.4
Basis Receipts and payment account Trial balance
Preparation It is prepared after summarizing It is prepared after
of accounts cash receipts and cash payment. balancing all ledger
accounts.
Opening It starts with opening balance of It has no opening balance
Balance cash and bank
Q.5 Following are the brief particulars of cash transactions of Geeta Pustakalaya
Allahabad for the year ended 31st December 2002.
Receipts Rs Payments Rs.
To balance b/f 1319 By rent and rates 168
To entrance fees 255 By wages 245
To subscriptions 1600 By lighting 72
To donation 165 By lecturers fee 435
To life membership fee 250 By books 213
To interest 14 By office expenses 450
To profit on entertainment 42 By 3% fixed deposits 800
(1.7.2002)
By bank balance 242
By cash in hand 1020
3,645 3,645
Library has books worth Rs 2,000 and furniture worth Rs 850 in the beginning of year.
Outstanding subscription was Rs 35 in the beginning of year and Rs 45 at the end of year.
Outstanding rent was Rs 60 in the beginning as well as at the end of year. Charge
depreciation Rs 50 on Furniture and Rs 113 on Books.
Required: from the above particulars prepare Income and Expenditure Account and
Balance Sheet of Pustakalaya as on 31st December 2002.
Solution 5
Income and expenditure account
For the year ending 31st Dec. 2002
Particulars Rs Particulars Rs.
To rent 168 By subscription 1600
Add outstanding 60 Add: outstanding 45
Less: of previous year 60 168 Less: of previous year 35 1610
To wages 245 By interest 14
To lighting 72 Add: Accrued int. 12 26
To lecture fee 435 By profit on entertainment 42
To office expenses 450 By entrance fees 255
Book 113 By donations 165
Furniture 50 163
To excess of income over 565
expenditure
2,098 2,098
Balance sheet as at 31st Dec. 2002
Liabilities Rs Assetss Rs
Capital Fund 4144 Cash in hand 1020
Add: Surplus of this year 565 4709 Cash at bank 242
Life membership fees 250 Fixed deposit 800
Outstanding rent 60 Outstanding subscriptions 45
Books 2100
Furniture 800
Accrued interest 12
5,019 5,019
Working note calculation of opening capital fund
Balance sheet as at 31st Dec. 2001
Liabilities Rs Assetss Rs
Outstanding rent 60 Cash in hand 1319
Capital fund (balancing figure) 4144 Outstanding subscription 35
Book 2000
Furniture 850
4,204 4,204
Q.6 Following is the receipts and payment account of recreation club for the year ended
31st march 2007.
RECEIPTS AND PAYMENTS ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 07
Receipts Amount Payments Amount
(Rs.) (Rs.)
To cash in hand 8320 By rent of hall 3640
To subscription 26000 By salaries 5200
To entrance fees 3900 By purchase of sports 16640
equipments
To sale of refreshments 9880 By dance expenses 4940
To sale of dance tickets 5850 By supply of refreshment 6760
To interest on investments 4550 By honorarium 1040
@ 7%
By sundry expenses 3250
By electricity changes 1820
By cash at bank 15210
58,500 58,500
Following additional information's are also provided to you :
(i) Following were the assets and liabilities on 31st March, 2006 :
Sports equipment Rs. 6,760, subscription in arrears Rs. 1,950, Furniture Rs. 12,480
Liabilities-Accrued rent Rs. 780 and subscription received in advance Rs. 520.
(ii) 'Following were the assets and liabilities on 31st March 2007 :
Sports equipments Rs. 19,760, Subscription in arrear Rs. 1,690, Furniture Rs.
11,180, Liabilities-accrued rent Rs. 390, subscription received in advance Rs. 2,340.
(iii) Entrance Fees is to be capitalised.
You are required to prepare income and expenditure account for the year ended
31st March, 2007 and balance-sheet as on that date.
Solution: 6
INCOME AND EXPENDITURE ACCOUNT OF RECREATION CLUB FOR THE YEAR
ENDED 31ST MARCH 07
Expenditure Rs. Income Rs.
To rent of hall 3640 By subscription 26000
Add: accrued rent 390 Add: subscription 520 26520
(credit year) in advance in
previous year
Less: accrued rent 780 3250
(previous year)
To Salaries 5,200 Add : Subscription in
To Honorarium 1,040 Arrear for
To Sundry Expenses 3,250 Current Year
To Electricity Charges 1,820 28,210
To Supply of Refreshment 6,760 Less : Last year's arrear -
To Dance expenses 4,940 26,260
To Depreciation Less: Subscriptions-received
Furniture Advance for next Dr.
Sports Equipment 4,940 year - 23,920
To Excess of Income By Sale of Refreshment 9,880
Over Expenditure
Transferred to Capital 13,000 By Sale of Dance Tickets 5,850
By Interest on Investments 4,550
44,200 44,200
BALANCE-SHEET AS AT 31ST MARCH, 2007
Liabilities Amount Assets Amoun
(Rs.) t
(Rs.)
Capital Fund* 93,21 1,10,11 Furniture 12,480 11,180
as at 1 April 2006 0 0 1,300
3,900 2,340 Less : ' 6,760 19,760
Add: Entrance 390 65,000
97,11 Depreciation 16,640
Fees 0 Sports Equipment 23,400 1,690
Add: Surplus 13,00 Add: Purchases - 3,640 15,210
Advance 0 Less:
Subscription Depreciation 1
Accrued Rent
Investments
Subscription
1,12,84 Arrear 1,12,84
0 Cash at Bank 0
