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Not For Profit Organizations, Meaning of Not for Profit Organizations, 1. Not-for-profit organizations are types of organizations that do not earn profits for its, owners. All of the money earned or donated to a not-for-profit organization is used in, pursuing the organization's objective and keeping it running., 2. Not for profit Organization is a legal and Accounting entity i.e. Operated for benefits of, the society as a Whole rather than for, , the benefits of a sole proprietor or group of, , partners or group of shareholders., Examples :- Govt. Hospitals, Bar, Clubs and etc., , Financial Statements of Not for Profit Organizations., Receipts and Payments Accounts., Receipts and Payments Account is a report of cash and bank transactions, during a period., It is a summary of cash book, prepared for the required, period. It is updated with every cash or bank transaction or voucher entry. It, Starts with Opening Cash and Bank Balance and also ends with their Closing, balances., (Note :- Items in this Accounts related to any years.), , Receipts and Payments Accounts, Particulars, , To Balance B/d., Cash, Bank, To Receipts (any year), (Capital / Revenue), To Balance c/d (Bank), , ADITYA SAXENA. 8178650210., , Amounts, , xxx__, xxx__, , xxx, xxx, , xxx, ___________, , Particulars, , Amounts, , By Balance B/d. (Bank), , xxx, , By Payments (any years), (Capital / Revenue ), , xxx, , By Balance c/d, , xxx, _______

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A + ACCOUNTANCY, Income and Expenditure Account., An Income and Expenditure is the detailed summary of income and expenses, incurred by an organization in a current year. Prepared on an accrual basis, this, account records every income and expense in a particular year, It may include, Non cash Items like Depreciation. Only items of revenue nature., , Income and Expenditure Accounts, Particulars, , Amounts, , Amounts, , Particulars, Xxx, , To Expenses., • Revenue Nature, • Accrual Basis, • Current Years, , xxx, , By Incomes., •, Revenue Nature, •, Accrual Basis, •, Current Year, , To Surplus (B/fig), , xxx, , By Deficit (B/fig), , XXX, , xxx, , xxx, , XXX, , Note, 1. NPO registered Section 8 of Companies Act, 2013 are required to, prepare this Income and Expenditure and Balance sheet as per, Schedule III of Companies Act 2013, 2. Until and Unless question specifies, we will always assume that NPO, referred in the question is not registered under Section 8 of Companies, Act, 2013, , and Therefore Financial Statement are prepared in the, , normal manner (T- Shape), , Topic - Not for Profit Organization, , 12th, , Aditya Saxena - 8178650210

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A + ACCOUNTANCY, • General Expenses, Particulars, , Journal Entries, , (I), , Payment During the Year, , Expenses A/c, To Cash & Bank A/c, , ….Dr., , (II), , Outstanding At the end of the year, , Expenses A/c, …Dr., To Outstanding Expenses A/c, , (III) Outstanding At the beginning of the, year, , Outstanding Expenses A/c, To Expenses A/c, , (IV) Prepaid at the end, , Prepaid Expenses A/c, To Expenses A/c, , (V), , Expenses A/c, ...Dr, To Prepaid Expenses A/c, , Prepaid at the Beginning, , (VI) Transferred to Income and, Expenditure A/c, , Income and Expenditure A/c, To Expenses A/c., , …Dr., ...Dr, , ...Dr, , Computation of Amount to be transferred to Income and Expenditure A/c., Payment made during the year, Add :- Outstanding Expenses at the end of the year, Less :- Outstanding Expenses at the Beginning of the year, Add :- Prepaid Expenses at the Beginning of the year, Less :- Prepaid Expenses at the end of the year, Amount Transferred to Income and Expenditure A/c, , xxx, xxx, (xxx), xxx, (xxx), xxx, , Q1- Mr. Kapil Sinha wants to compute the salaries for the year 2021-2022 from, the following Information., 1. Opening Outstanding Salaries `7,500,, 2. Opening Prepaid Salaries `2,000,, 3. Closing Prepaid Salaries `6,500, 4. Closing Outstanding Salaries `10,000, Salaries paid during the year @ `1,50,000., , Topic - Not for Profit Organization, , 12th, , Aditya Saxena - 8178650210

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A + ACCOUNTANCY, Subscription, Subscription in NPO means pays some amount to an Organization by its, member on a regular basis. It can be collected by the Organization on a, monthly, quarterly, or yearly basis. This is the revenue for the Organization so,, it will be credited to the Income and expenditure account, Particulars, (I) Received During the year, , Journal entries, Cash and Bank A/c, To Subscription A/c, , (ii)Subscription Accrued at the End, , Accrue Subscription A/c, To Subscription A/c, , (iii, , Subscription, Beginning, , Accrued, , .. Dr, , the, , Subscription A/c, …Dr, To Accrued Subscription, , (iv) Pre-Received Subscription at the, End, , Subscription A/c, …Dr, To Pre-Received Subscription A/c, , (v) Pre-Received Subscription at the, Beginning, , Pre-Received Subscription A/c …Dr, To Subscription A/c, , (vi) Transferred, Expenditure, , Subscription A/c, …Dr, To Income and Expenditure, , To, , at, , …Dr, , Income, , and, , Computation of Amount to be transferred to Income and Expenditure A/c., Payment made during the year, Add :- Outstanding Subscription at the end of the year, Less :- Outstanding Subscription at the Beginning of the year, Add :- Prepaid Subscription at the Beginning of the year, Less :- Prepaid Subscription at the end of the year, Amount Transferred to Income and Expenditure A/c, Topic - Not for Profit Organization, , 12th, , xxx, xxx, (xxx), xxx, (xxx), xxx, , Aditya Saxena - 8178650210

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A + ACCOUNTANCY, Q2- SImran running an NGO wants to compute the Subscription for the year, 2021-2022and Show the from the Balance Sheet Extract following, Information., 1. Opening Subscription `9,500,, 2. Closing Subscription ` 7,000, 3. Opening Pre-Received Subscription `2,800, 4. Closing Pre-Received Subscription `5,200, Subscription Received During the year 2021-2022 @ `1,48,900 ., Q3- A Club has 75 Members, Each paying annual Subscription, Subscription Received During 2021-2022, Subscription Received in Advance 31st March 2021, Subscription Received in Advance 31st March 2022, Subscription Outstanding as at 31st March 2021, Subscription of `.12,000 still in Arrears for the year ended 20202021, , `1,000, `80,000, `15,000, `10,000, `26,000, , Show the relevant extract in financial Statement for the year ending 31st March 2022., , Entrance Fees / Admission Fees, Entrance Fees or Admission Fees is the amount that a person pays at the time of, becoming a member of a Not-for-Profit Organization. It is a revenue receipt., Therefore,, we account it as an income and credit it to Income and Expenditure Account., Treatment., Question Specifies, , Capital Nature, Add to Capital in, Balance sheet, , Revenue Nature, , Question Silent, , Amount is Large, , T/f to Income and, Expenditure, , Topic - Not for Profit Organization, , Amount is Small, , Capital Receipt, , 12th, , ., Add to Capital, Fund in balance, sheet, , Revenue Receipt, T/f to Income, & Expenditure, , Aditya Saxena - 8178650210

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A + ACCOUNTANCY, , Donations, Donation are the amount which are given to the NPO as gift by the members of, the society. It is shown on the receipts side of receipts and payment account., There are two types of Donations (i) General Donation and (ii) Specific Donation., , General Donation., General Donation is the donation in which the donor does not specify any, condition for its use. The amount of general donation is an income and we credit, it to Income and Expenditure Account if amount is Small Because it is Treated as, Revenue Receipts. If amount of Donation is Large it is to be Capitalized and, added to Capital Fund in Balance Sheet., , (Note:- If Nothing is specified about any treatment of amount of, Donation is Large or Small, can be adopted by giving a Suitable Note.), Specific Donation., Specific Donation: In case the donor specifies the purpose for which the, donation should be used, it is a Specific Donation. specific donation received, will be shown under Liability side of the Balance sheet as they are Capital, Receipts., , Life Membership Fees., Life membership fees for a non-profit organisation is a capital receipt.It is a, "once in a life", lump sum payment made by the members to the organization, in lieu of their monthly, quarterly or yearly fee or subscription., Journal Entry- (i), , (ii), , Bank A/c, To Life Membership Fees A/c., ( Being- Life Membership Money Received ), , …Dr., , Life Member Fees A/c, , …Dr, , Topic - Not for Profit Organization, , 12th, , Aditya Saxena - 8178650210

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A + ACCOUNTANCY, To Capital Fund A/c, ( Being- Life Membership fees Transferred to Capital Fund ), Lagacies., Legacy is the amount received by an NPO against will of a person. If person, specified the purpose for which his legacy should be used. Then it is treated as, Specific legacy and recorded as capital receipts and the liabilities side of, Balance Sheet., Example - When a person dies, the mark the individual left on the world, represents that legacy., , Sale of old Newspapers., , Sale of old newspapers is a type of revenue income or receipt. This is because it, neither created any liability for firm nor reduces any asset of the firm. Thus,, such incomes are revenue receipts., , Sale of Fixed Assets., , When a fixed asset or plant asset is sold, there are several things that must take, place: The fixed asset's depreciation expense must be recorded up to the date, of the sale. Sale Proceed of Fixed Assets are treated as Capital Receipts and, The amount of Profit and Loss transferred to Income and Expenditure A/c., , Consumables., , Consumables (also known as consumable goods, non-durable goods, or soft, goods) are goods that are intended to be consumed. For Example. Stationery,, Sport Material, Medicines and etc., a separate Stock Account is prepared for, each Consumables items during the year., Sometimes, Trade Creditor Account is to be prepared for Ascertain the credit, purchase. Such Amount consumed is to be Debited in Income and Expenditure, A/c., Consumption = Opening + Purchases (cash/credit) – Closing., Dr., Particular, , Topic - Not for Profit Organization, , Creditors A/c, Amount, Particular, , 12th, , Cr., Amount, , Aditya Saxena - 8178650210

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A + ACCOUNTANCY, To Cash/Bank A/c., , xxx, , By Balance b/d., , xxx, , To Balance c/d, , xxx, , By Purchases (b/fig.), , xxx, , xxx, , xxx, , Q4-You are a Chartered Account, How will you deal with the following items, while preparing the Income and Expenditure A/c for the year ended 31 st March, 2022 and a balance sheet as on that date ?, Particulars, 1/4/2021 31/3/2022, Creditor for Sport Material 3,000, 3,200, Stock of Sport Material, 4,100, 1,000, During the 2021-2022, the payment made to those creditors was Rs.10,000., Cash Purchase 10% of Credit Purchases. Out of the sport material used during, the year 60% was consumed by the club and the remaining was sold at a profit, of 25% of cost., Trading Activity., Sometimes, Not For Profit Organizations carry on Trading Activity. Like Bar Run, by a Club, Stationery Store by a School. In such case Separate trading account, is prepared For calculation of Profit and Loss by this activity. Such profit and, loss Is transferred to Income and Expenditure A/c., , Questions For Practice, Q1- Following is the extract from the Receipt and Payment A/c of a Gandhi Sport Club., You are required to show Different items in the Income and Expenditure A/c and, Balance sheet of the Club for the year ended 31st March 2022 after Considering the, additional information Given below:, , Dr., Receipt, , Topic - Not for Profit Organization, , Receipt and Payment A/c, Amount, Payments, , 12th, , Cr., Amount, , Aditya Saxena - 8178650210

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A + ACCOUNTANCY, To Donation For Pavilion, , 10,00,000, , To Contribution For Governor’s, Party, , 2,00,000, , To Donations, , 5,000, , By Governor Party, Expenses, , 2,40,000, , Additional Information :(I) Amount Spend on Pavilion Rs.20,00,000. The construction work is in progress and, has not yet completed., (ii) Outstanding Subscription For Governor’s Party Rs.30,000., (iii) Capital Fund as at 31st March 2021 Rs. 10,00,000., (iv) Pavilion Fund as at 31st March 2021 Rs. 40,00,000., , Q2- Subscription Received during the year ended 31st March 2021 are:, For the year ended 31st March 2020, For the year ended 31st March 2021, For the year ended 31st March 2022, , 4,000, 2,11,000, 8,000, , 2,23,000, , These are 450 Members, each paying an annual Subscription of ` 500. ` 4,500 were in, arrears for the year ended 31st March,2020. In the beginning of the year ended 31st, March 2021. Calculate the Subscription to be shown in income and Expenditure, Account for the year ended 31st March 2021 and also show treatment of, Subscription in the Income and Expenditure A/c and Balance Sheet., Q3- From the following extract of Receipts and Payments A/c and the additional, information, you are required to compute Subscription for the year ended 31 st, March 2021 and show it in the final account of the Club:, Dr., , Receipts and Payments Account, Receipts, , Topic - Not for Profit Organization, , Amount, , Payments, 12th, , Cr., Amount, Aditya Saxena - 8178650210

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A + ACCOUNTANCY, To Subscription, 2020-2021, 2021-2022, 2022-2023, , 18,000, 1,00,000, 25,000, , Additional Information:, 1- Subscription outstanding as at 31st March 2021 ` 20,000., 2- Subscription outstanding as at 31st March 2022 ` 30,000., 3- Pre-Received Subscription as at 31st March,2021 ` 20,000., , Q4- From the following information, Calculate the amount that will be shown against, Stationery account in Income and Expenditure Account for the year ended 31st, March 2022:, Particulars, Creditors for Stationery, Stock of Stationery, , 1stApril 2021, 4,600, 15,000, , 31stMarch 2022, 11,800, 30,400, , During the year ended 31st March 2022, payment made to creditors amounted to, Rs.56,800. Stationery Purchased in cash during the year was 20% of the total, purchase of stationery., , Q5- How are following cases dealt with while preparing final accounts of National Club, for the year ended 31st March 2021?, Dr., Receipts, To Sale of Sport Material, (Book Value 1,00,000), , Receipts and Payments A/c, Amount, 1,30,000, , Cr., , Payments, By Creditors For sport Material, By Cash Purchases of Sport, material, , Amount, 3,05,000, 50,000, , Additional Information:Particulars, Stock of Sport Material, Creditors for Sport Material, , Topic - Not for Profit Organization, , 1st April 2020, 1,00,000, 35,000, , 12th, , 31stMarch 2021, 1,25,000, 75,000, , Aditya Saxena - 8178650210