Accounts Ch-6 Class 12th (Not for Profit Organisation)
Ch-6 (Not for Profit Organisation)
Features of N.P.O
1.Service Motive.
2.Form - Such organisation are established on the form of all charitable trust or societies and the subscribers of these organisation are called members.
3.Separate Entity - A N.P.O has an existence separate from its members.
4.Sources of Finance:-
a)Members Subscription.
b)Donation.
c)Grant in aid from Govt.
d)Income and Investment.
5.Surplus is not distributed among the members :-
>Surplus (When the incomes is more then the expenditure the excess and is called Surplus).
6.Preparation Of Accounts :-
The accounts of the N.P.O are prepared and the basis of Double Entry System.
a)Receipts & Expenditure A/c.
b)Income & Expenditure A/c.
c)Balance Sheet.
A) Receipts and Payment Account.
1. Receipts and Payment A/c is the summary of cash book.
2. All the cash receipts and payments are recorded in this account even related to current year , previous year or next year.
3.It is started with the opening balance of cash and bank.
4.All the cash transactions even revenue nature or capital nature also be recorded in this account.
5.It is based on the real A/c
Debit What Comes In.
Credit What Goes Out.
6.The closing balance of this account is cash or bank.
B)Income and Expenditure A/c.
1.It is similar to profit and loss A/c.
2.It is based on the principle of Accrual Concept.
3.In this account only current year. Incomes and Expenditure are recorded.
4.Only revenue nature transaction will be recorded.
5.It is a nominal A/c. So Dr. all expenditure and credit all Incomes.
6.Surplus or Deficit :-If credit sides of Incomes and Expenditure A/c is more than the Debit side the result is called Surplus and its vice-versa Deficit.
7.Surplus or Deficit transferred to capital fund A/c.
(General Fund)
C)Balance Sheet
1. Balance is prepared to know the financial position of the N.P.O at a particular date.
2. Only capital nature transactions are recorded.
4. Both sides of the Balance Sheet must be come to equal.
5. The balances of Personal and Real A/c are recorded into the Balance Sheet.
Basis Accounting of N.P.O
1.Subscription :-
a)It is a revenue nature income.
b)It is write down in the credit side of Income & Expenditure A/c.
>Cash / Bank A/c Dr.
To Subscription A/c
>Subscription A/c Dr.
To Inc. & Exp A/c
2.Life Membership Fees:-
It is a capital nature Income.
For Example:-
Incomes
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Revenue Nature (Cr.) Capital Nature Incomes (Reduced to Fixed Asset (Income) (Liabilities Cr.)
JOURNAL ENTRY :-
Cash / Bank A/c Dr.
To Life Membership Fees
It will be shown on the liability side of the Balance Sheet.
3.Endowment Fund :-
> It is a capital nature receipts.
>It will be shown on the liability side of the Balance Sheet
4.Entrance Sheet / Admission Fees :-
a) Revenue Nature.
Credit Side of Inc. & Exp. A/c
b)Capital Nature.
Liability Side of Balance Sheet.
(Special Note:-If question is silent asset the nature of entrance fees then it will be nature).
5.Donation
a) Simple (General) Donation.
>Revenue Nature Income.
>Cr. Side of Inc. & Exp. A/c
b) Specific Donation
>Capital Nature Income.
>Liability Side of Balance Sheet.
6.Legacy :-
It refers to that amount which is received as per the will of decreased person.
a)It is a capital nature incomes.
b)It will be shown on the liability side of the Balance Sheet.
7.Sale of Old Fixed Assets:-
It is also capital nature receipt and it will subtracted from the particular asset.
Balance Sheet.
1.Bank A/c Dr. 80,000
To machinery A/c 80,000
2.Inc & Exp A/c Dr. 20,000
To machinery A/c 20,000
8.Profit or Loss on the sale of Fixed Assets :-
It will be shown in the Inc & Exp A/c.
9.Sale of old Newspapers , Magazines , Sports Materials etc.
>It is also Revenue Nature Income.
>It will be shown in the Cr. Side of Inc & Exp A/c.
10.Remuneration (Salary) Employees ;-
>It is a revenue nature expenditure.
>It will be shown on Dr. Side of Inc & Exp A/c.
11.Honararium :-
>It is provided to outsiders.
>It is revenue nature expense.
>It will be shown on Dr. side of Inc & Exp.A/c
Basis of Accounting
1.Fund Based
2.Non Fund Based
1.Fund Based
a)All the funds will be shown on the liability side of the Balance Sheet.
b)The Income & Expenses related to that fund will added and subtracted from that particular fund.
c)For Ex. Sports Fund , Match Fund , Prize Fund etc.
Prize Fund - Rs.2,00,000
Prize Awarded - Rs.50,000
Donation received regarding Prize Fund - Rs.1,00,000
BALANCE SHEET
Prize Fund Investment A/c Dr. 2,00,000
To Bank A/c 2,00,000
Bank A/c Dr. 10,000
To Int. on Prize Fund Investment 10,000
Int. on Prize Fund Investment Dr. 10,000
To Prize A/c 10,000
2.Non Fund Based
All entries were in Income & Expenditure.
"SUBSCRIPTION"
Outstanding Subscription (Accrued Subscription)
a)Income of Current Year
b)Asset
Advance Subscription (Unearned Subscription)
a)It is not the income of current year.
b)Liability.
Consumable Goods
Income and Expenditure A/c
For Example:-
1.
31.03.2017 31.03.2018
Stock 50,000 60,000
Creditors 20,000 70,000
Purchase made during the year = Rs.2,00,000
2.
31.03.2017 31.03.2018
Stock 50,000 60,000
Creditors 20,000 70,000
Payment made during the year Rs.2,00,000
Working Note :-
Payment's made during the year = 2,00,000
Add: Creditors of Current Year = 10,000
Less: Creditors of Previous Year = 20,000
1,90,000
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