1 / 91
910 likes | 922 Views
class 12<br>sub : accountancy<br>Not for profit organisation <br>in this ppt i have covered full lesson theory practical.<br>
E N D
Non Profit organization • established for a Social/Charitable/Cultural purpose & not for earning profit. • Managed by trustees who are fully accountable to their members and the society • This is also a legal requirement and helps them to keep track of their income and expenditure • Have to maintain proper accounts and prepare the financial statement • Receipt and Payment Account; • Income and Expenditure Account; • Balance Sheet.
FEATURES NPO is a 'Separate Legal Entity', i.e. it is not owned by any individual or an enterprise. So, it is neither affected by admission of a new member nor by death of an existing member. • Separate Entity
Managed by the people who have been elected by its members, known as Managing or Executive Committee. • Management:
Set up as charitable trusts or societies, with the main objective of rendering social, educational, charitable or religious services. • Form
Established with the purpose of service to its members or society and does not function with the objective of earning profit. • Service Motive
It raises its funds from the contributions made by its members known as subscriptions, donations received from various resources, legacies, etc. • Sources of Funds
The surplus of Not-For-Profit Organisation is not distributed amongst its members. It is reinvested in the organisation, i.e. it is added to the Capital Fund. • Surplus not Distributed among its Members:
They prepare Annual Accounts in the form of Receipts and Payments Account, Income and Expenditure Account and the Balance Sheet • Accounts:
Steps in preparation of Final Acc in NPO Done on daily/monthly basis Recording of cash transactions in cash book Prepared at the end of year Summarization of Cash book (Preparation of receipt and payment account)
Receipt And Payment Account Prepared at the end of the accounting year on the basis of cash receipts and cash payments recorded in the cash book Summarization of Cash book (Preparation of receipt and payment account) Recording of cash transactions in cash book
Preparation of Receipt And Payment Account Cr.(-) Dr. (+) • It is an asset account, i.e. Increase in asset is debited and decrease is credited. • Receipts are recorded on the debit side and payments on the credit side. Nature of Account
Preparation of Receipt And Payment Account Cr.(-) Dr. (+) Records all cash receipts and payments, irrespective of the fact whether they are of capital nature or of revenue nature. Capital and Revenue Items
Preparation of Receipt And Payment Account Cr.(-) Dr. (+) Maintained on cash basis of accounting, i.e., Transactions which have been settled in cash are recorded in the account. Basis of Accounting
Preparation of Receipt And Payment Account Cr.(-) Dr. (+) All receipts and payments, whether related to current year, previous year or future year are recorded. Period:
Preparation of Receipt And Payment Account Cr.(-) Dr. (+) • Starts with the opening cash and bank balance. • Cash always has debit balance while bank balance may have debit or credit balance (overdraft). • Similarly, closing balance shows cash in hand or at bank at the end of the accounting period Cash and Bank Balances :
Steps on preparation Receipt and payment Account • Take the opening balances of cash in hand and cash at bank and enter them on the debit side. In case there is bank overdraft at the beginning of the year, enter the same on the credit side of this account. Cr.(-) Dr. (+) Receipt And Payment Account 31st march 2016 23000 By balance B/d To balance B/d Cash = 5000 Bank saving = 6000 Bank fixed deposit = 1000 12000 By balance C/d Cash = 3000 Bank saving = 5000 Bank fixed deposit = 1000 18000 To balance C/d 9000
Steps on preparation Receipt and payment Account • Show the total amounts of all receipts on its debit side irrespective of their nature (whether capital or revenue) and whether they pertain to past, current and future periods. Cr.(-) Dr. (+) Receipt And Payment Account 31st march 2016
Non- Recurring In Nature Non- Recurring In Nature Recurring In Nature Recurring In Nature Either Reduces Assets or Increase the Liabilities Either increases Assets or decrease the Liabilities Creates income Creates expenditure
Treatment of opening and closing balance of receipt and payment account Balance sheet as at 1st April 2015 Cash = 5000 Bank saving = 6000 Bank fixed deposit = 1000 Bank overdraft 23000 12000 Cr.(-) Dr. (+) Receipt And Payment Account 31st march 2016 Closing balance of previous year 23000 By balance B/d Indicates bank overdraft of previous year To balance B/d Cash = 5000 Bank saving = 6000 Bank fixed deposit = 1000 12000 By balance C/d Cash = 3000 Bank saving = 5000 Bank fixed deposit = 1000 18000 To balance C/d 9000 Indicates bank overdraft of current year Closing balance of Current year Balance sheet as at 31st March 2016 Cash = 3000 Bank saving = 5000 Bank fixed deposit = 1000 18000 Bank overdraft 9000
Problem • From the information given below, prepare Receipts and Payments Account of Friends Club,Delhi, for the year ended 31st March, 2020: • Cash Balance on 1st April, 2019 Rs. 44,000; Subscriptions Rs. 3, 76,000; Donations Rs. 80,000; Entrance Fees Rs. 43,000; Rent Realised from Club Hall Rs. 52,500; Electricity Charges Rs. 34,400; Taxes Rs. 5,000; Salaries and Wages Rs. 2, 15,000; Honorarium to Secretary Rs. 25,000; Interest Received on Investments Rs. 29,500; Printing and Stationery Rs. 3,500; Petty Expenses Rs. 9,000; Insurance Premium Paid Rs. 3,100. Salary Outstanding Rs 10,000. Depreciation Rs 6000. Solution
Problem Solution
Income and expenditure A/c Not-for-Profit Organisations are not set up for the purpose of earning profit. Therefore, they do not prepare Profit and Loss Account, instead they prepare Income and Expenditure Account at the end of the accounting period to determine surplus or deficit. Incomes and gains are credited to this account while expenses and losses are debited
Important note Cr. Income and expenditure A/c Dr. To revenue expenditure By revenue income Non-Cash Expenses such as Depreciation are accounted. . Revenue Incomes for the accounting period are taken, whether they have been received or not. Capital Expenditure, e.g., purchase of Land, are not considered because they are shown in the Balance Sheet. Revenue Expenses for the accounting period are taken, whether they have been paid or not Capital Incomes or Receipts, e.g., donation for specific purpose are not considered. • Accrued income • Unearned income • Outstanding Expenses • Prepaid Expenses
Income and expenditure A/c Cr. Dr. To salaries To rent To Carriage On Purchases To Audit Fees To printing and stationery To Honorarium To Depreciation To Insurance Premium By subscription By donations By interest on investment By sales of news paper By proceeds from charity show ` By deficit transferred to Capital Account If Debit Side Exceeds Credit Side To Surplus transferred to Capital Fund If Credit side Exceeds Debit side Balance sheet Capital fund Add Surplus Less Deficit
Following is the receipts and payments account of Modem for the year ending 31st March, 2019: Income and expenditure A/c Solution Capital receipts and expenditure (shown in balance Sheet To Surplus (Excess of income over exp) 25280
From the following cash transactions relating to Royal Club, Green Park,: Income and expenditure A/c Solution Capital receipts and expenditure (shown in balance Sheet To loss on sale of Furniture 2400 To Surplus (Excess of income over exp) 29230
From the following cash transactions relating to Royal Club, Green Park,: Income and expenditure A/c Solution Capital receipts and expenditure (shown in balance Sheet By deficit (Excess of exp over income) 6600
From the following cash transactions relating to Royal Club, Green Park,: Income and expenditure A/c Solution To Excess of tournament expenses Over tournament fund 5000 Capital receipts and expenditure (shown in balance Sheet To Surplus (Excess of income over exp) 47000
From the following cash transactions relating to Royal Club, Green Park,: Income and expenditure A/c Solution Capital receipts and expenditure (shown in balance Sheet To Surplus (Excess of income over exp) 3200
From the following cash transactions relating to Royal Club, Green Park,: Income and expenditure A/c Solution By Profit on sale of Furniture Capital receipts and expenditure (shown in balance Sheet 1400 To Surplus (Excess of income over exp) 33300
Balance Sheet • Balance Sheet shows the financial position of an organisation as at a particular date. • The method of preparing the Balance Sheet of a Not-for-Profit Organisation is similar to that of an enterprise (business firm). • The Balance Sheet shows assets, liabilities and capital fund. Important note Where Opening Balance of Capital Fund is not given, it is determined by preparing Opening Balance Sheet
Balance Sheet Cash in hand Cash at Bank Prepaid expenses Accrued income Investments Books Vehicles Building Sports equipment Govt Bonds Fixed Deposits • Life Membership Fees • Endowment fund • Legacies • Tournament Fund • Prize Fund, • Match Fund • Building fund • Unearned income • Outstanding expenses • Bank overdraft • Capital fund • Less:- deficit • Add :- Surplus
Following is the receipts and payments account of Modem for the year ending 31st March, 2019: Opening Balance Sheet Solution Closing Balance Sheet
From the following cash transactions relating to Royal Club, Green Park,: Solution Opening Balance Sheet Closing Balance Sheet
From the following cash transactions relating to Royal Club, Green Park,: Solution Opening Balance Sheet Closing Balance Sheet
From the following cash transactions relating to Royal Club, Green Park,: Solution Opening Balance Sheet Closing Balance Sheet
From the following cash transactions relating to Royal Club, Green Park,: Solution Opening Balance Sheet Closing Balance Sheet
From the following cash transactions relating to Royal Club, Green Park,: Solution Opening Balance Sheet Closing Balance Sheet
