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    Subect: Accountancy CLASS: XII (SESSION 2020-21) Unit 1 - Financial Statements of Not-For-The-Profit Organisations Handout - 1

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    ayesha
    This document provides an overview of not-for-profit organizations and their accounting practices. Not-for-profit organizations exist to provide services to members and society, rather than earn profits. They are typically charitable trusts managed by elected committees. Their main sources of funding include subscriptions, donations, fees, and government grants. Any surplus generated is added to capital rather than distributed. Key accounting records include a receipts and payments account, income and expenditure account, and balance sheet. The receipts and payments account summarizes cash transactions, while the income and expenditure account is like a profit and loss statement showing only current period revenue and expenses.

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    Subect: Accountancy CLASS: XII (SESSION 2020-21) Unit 1 - Financial Statements of Not-For-The-Profit Organisations Handout - 1

    Uploaded by

    ayesha
    36 views2 pages
    This document provides an overview of not-for-profit organizations and their accounting practices. Not-for-profit organizations exist to provide services to members and society, rather than earn profits. They are typically charitable trusts managed by elected committees. Their main sources of funding include subscriptions, donations, fees, and government grants. Any surplus generated is added to capital rather than distributed. Key accounting records include a receipts and payments account, income and expenditure account, and balance sheet. The receipts and payments account summarizes cash transactions, while the income and expenditure account is like a profit and loss statement showing only current period revenue and expenses.

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    This document provides an overview of not-for-profit organizations and their accounting practices. Not-for-profit organizations exist to provide services to members and society, rather than earn profits. They are typically charitable trusts managed by elected committees. Their main sources of funding include subscriptions, donations, fees, and government grants. Any surplus generated is added to capital rather than distributed. Key accounting records include a receipts and payments account, income and expenditure account, and balance sheet. The receipts and payments account summarizes cash transactions, while the income and expenditure account is like a profit and loss statement showing only current period revenue and expenses.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    36 views2 pages

    Subect: Accountancy CLASS: XII (SESSION 2020-21) Unit 1 - Financial Statements of Not-For-The-Profit Organisations Handout - 1

    Uploaded by

    ayesha
    This document provides an overview of not-for-profit organizations and their accounting practices. Not-for-profit organizations exist to provide services to members and society, rather than earn profits. They are typically charitable trusts managed by elected committees. Their main sources of funding include subscriptions, donations, fees, and government grants. Any surplus generated is added to capital rather than distributed. Key accounting records include a receipts and payments account, income and expenditure account, and balance sheet. The receipts and payments account summarizes cash transactions, while the income and expenditure account is like a profit and loss statement showing only current period revenue and expenses.

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    SUBECT: ACCOUNTANCY

    CLASS: XII(SESSION 2020-21)


    UNIT 1 – FINANCIAL STATEMENTS OF Not-for-the-Profit ORGANISATIONS
    Handout -1

    Not-for-Profit Organisations are those organisations whose objective is not to earn profit but to render services
    to its members and to the society.
    Not-for-profit organisations refers to the organisations that are used for the welfare of the society and are set up
    as charitable institutions which function without any profit motive.

    MAIN CHARACTERISTICS:

    1. They are formed for providing service.


    2. They are organised as charitable trusts and managed by executive committee elected by the members
    3. The main sources of income are
    a) Subscriptions
    b) Donations/ Legacies
    c) Membership fees or Entrance fees
    d) Grants (from Government and / or Institutions)
    e) Income from investment etc.
    4. The surplus generated is not distributed to the members but added to capital fund.
    5. They are managed by a group of individuals often called TRUTEES or MANAGING COMMITTE
    6. They also have to prepare the financial statements at the end of each accounting period and ascertain their
    income and expenditure and the financial position and submit them to the statutory authority called Registrar
    of societies.

    ACCOUNTING RECORDS:

    1. Receipts and Payments account


    2. Income and Expenditure account
    3. Balance Sheet.

    RECEIPTS AND PAYMENTS ACCOUNT:


    It is a summary of cash and bank transactions. It gives the summarized picture of various receipts and payments.
    It includes receipts of all nature (Capital, Revenue, Current year, previous year and next year) It does not show
    non-cash items. It starts with opening balance of cash and bank and ends with cash balance and bank / bank
    overdraft balance.

    INCOME AND EXPENDITURE ACCOUNT:


    It is the summary of income and expenditure. It resembles a profit and loss account. It includes only revenue
    items relating to the current period and the balance at the end represents deficit or surplus. It is prepared on
    accrual basis.
    DIFFERENCE BETWEEN RECEIPTS AND PAYMENTS ACCOUNT AND INCOME ANDINCOME AND
    EXPENDITURE ACCOUNT:
    BASIS INCOME AND EXPENDITURE ACCOUNT RECEITPS AND PAYMENTS ACCOUNT
    Nature It is like a profit and loss Account It is the summary of cash book
    (Nominal Account) (Real Account)
    Nature of It records income and expenses of revenue in It records all receipts and payments of both
    items nature only Capital and Revenue nature.
    Period All items relate to current period/year Items relates to current year, previous year
    and next year also
    Basis Accrual Cash / actual
    Debit side Records expenses and losses Records receipts (what comes in)
    Credit side Records incomes and gains Records payments (what goes out)
    Depreciation Included Not included as it is a non cash item
    Adjustments Made related to outstanding and prepaid No adjustments are made
    expenses and / or incomes
    Opening No opening balance Balance of cash and bank in the beginning of
    balance the year
    Closing Surplus or deficit Balance of cash, bank/bank overdraft at the
    balance end of year.
    Surplus – excess of income over expenditure
    Deficit – excess of expenditure over income

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