Class 12 chapter not for profit organisation
Define NPO
NPO’s are voluntary organisation founded with objective of promoting, art culture , education and other social and charitable purpose without any intention of earning profit. For Example, hospital, college , schools, universities, religious organisation, culture institution , professional accounting bodies , i:e ICAIICSI etc,
Difference between NOP’S and profit making organisation
| NPO’S | profit making entities |
| 1.the ultimate goal is to serve the community in -terest | 1.the ultimate goal is the earn profit |
| 2.it receives its fund in the form of donations subscriptions, etc known as capital fund. | 2.it receives its fund from its owners or partners , known as capital |
| 3.their final accounts includes receipt and payment A/c income and expenditure A/c and balance sheet | 3.their final account includes trading A/c , profit & loss A/c and balance sheet |
| 4.the net result of the activities of such entities is known as the surplus/ deficit | 4.the net result of the activities of such entities is known as the profit / loss |
Difference between receipts and payment account and income and expenditure A/c
| Receipts and payment account | Income and expenditure account |
| 1.it is prepared on the basis of cash book | it is like P& L a/c i:e it is a nominal A/c |
| 2.it is real account | it records only revenue transactions related to current year i:e after adjustment |
| 3.it records all types of transactions whether revenue or capital nature and relates to any year | 3. if follows accrual basis of accounting |
| 4.it follows cash basis of accounting | 4. if does not have an opening balance. at the end it shows the surplus, i;e excess of inco me over expenses or deficit i:e excess of expense over income |
Important Formats
Total subscription / Income / Expenses for Current year
| 1st january 20–(opening ) | 31st (December)20–(closing) | ||
| outstanding (-) | xxxx | outstanding (+) | xxxx |
| (+) Advance / prepaid | xxxx | (-) Advance / prepaid | xxxx |
subscription Account
| particulars | Amount | particulars | Amount |
| To balance b/d (out.at the beg) To Income & expenditure A/c (bal. fig) To balance c/d (Adv, at the end ) | xxxxxx xxxxxx xxxxxx | by balance b/d (Adv. at the beg) by cash A/c (sub. received during the year) by bad debts (if any) by balance c/d (out. at the end ) | xxxxxx xxxxxx xxxxxx |
| xxxxxx | xxxxxx |
statement showing calculation of subscription
| Total subscription received during the year (whether relates to any year) | xxxxxx |
| less: subscription O/S at the beg. of current year | xxxxxx |
| less: Advance subscription received during the current year(relates to any future period ) | xxxxxx |
| Add:O/S subscription at the end of current year (including sub: o/s for previous year till the end of current year) | xxxxxx |
| Add: o/s subscription received in advance at the end of current year | xxxxxx |
| subscription to be shown in income and expenditure a/c | xxxxxx |
Note: subscription o/s as on means total o/s subscription on a particular date (including previous year o/s if any till date ) and subscription o/s for the year means only to current year, for at the end we have to add o/s for previous year till date in this
Note: if purchase of consumable item is given instead of payment than o/s creditors and advance paid to creditors will not be adjusted (add or less) in the above format. in this case consumed amount will be =op stock+purchases -closing stock-sale of consumable item (if any)
Creditors Purchase
| payment made to creditors | xxxxx |
| Add: closing balance of creditors | xxxxx |
| less: opening balance of creditors | xxxxx |
| credit Purchases of consumable item | xxxxx |
Receipt and payment account
| Receipts | Amount | payments | Amount |
| balance b/d | |||
| balance b/d | xxxxx | cash at bank (overdraft) | xxxxx |
| cash in hand | xxxxxx | capital payments: | xxxxx |
| cash at bank | xxxxxx | building constructions | xxxxx |
| capital receipts | xxxxx | sports equipments or materials | xxxxx |
| legacies | xxxxx | cost of leasehold land | xxxxx |
| sale of office furniture sale of sports equipments | xxxxx | investment | xxxxx |
| Donation for special purpose i:e building , prizes etc life membership fees sale of investments endowment fund receipts | xxxxx | advance for purchase of buildings | xxxxx |
| Receipts on account of special funds e:g prize fund, tournament fund etc, | xxxxx | government’s loan | xxxxx |
| interest on specific fund investment entrance fees. | furniture | xxxxx | |
| Revenue Receipts: | xxxxxx | revenue payments | xxxxx |
| subscriptions | xxxxx | prizes paid | xxxxx |
| general donations | xxxxx | entertainment expenses | xxxxx |
| proceeds from entertainments | xxxxx | printing and stationery | xxxxx |
| interest or dividends | xxxxx | newspapers and periodicals | xxxxx |
| sale of old newspapers, waste papers etc, | xxxxx | Repairs | xxxxx |
| Miscellaneous receipts | xxxxx | postage | xxxxx |
| balance c/d | xxxxx | honorarium | xxxxx |
| cash at bank (bank overdraft) | xxxxx | expenses on special food to patients | xxxxx |
| Insurance , rent salaries | xxxxx | ||
| advertisement | xxxxx | ||
| audit fee | xxxxx | ||
| Telephone, electric charge | xxxxx | ||
| gardening | xxxxx | ||
| bar expenses | xxxxx | ||
| up-keep of lawns | xxxxx | ||
| municipal taxes | xxxxx | ||
| charity | xxxxx | ||
| printing of year book | xxxxx | ||
| Drawings | xxxxx | ||
| balance c/d (closing balance ) | xxxxx | ||
| cash in hand | xxxxx | ||
| xxxxx | cash at bank | xxxxx |
Note; there will be either or the two amounts i;e bank overdraft or cash at bank and not both.
Income and expenditure Account
| Expenditure | Amount | Income | Amount |
| expenses account(e,g salary) total salaries paid during the year xxxx Add: outstanding at the end xxxxx less: outstanding in the beginning xxx(or accrual amount paid for last year) Add: advance paid in the previous year xxxx less: advance paid for the salaries in the current year xxx salary of the year xxxxx expenses on consumable xxxxx materials:(e:g, stationery)xxxxx opening stock of stationery xxxx Add: purchases during the year less: creditors for stationery in the beginning xxx Add: creditors for stationery at the end xxxx Add: advance payments for stationery last year xxx less: advance payments for stationery in the current year xxx less: stock of stationery at the end xxxx stationery actually consumed xxxx loss on the sale of an assets, book value of the assets less: sale price xxx net loss on sale other expenses and Iosses after necessary adjustments xx expenses for specific purpose (e:g cinema shown ) expenses paid. xxxx less: collection xxxx net expenses of specific item xxxx Depreciation xxx excess of income over expenditure to be added to capital fund in the balance sheet (bal, figure) | Income account (e;g subscriptions) total amount of subscription received during the year xxxx Add: outstanding at the end less: outstanding in the beginning xxx(or actual amount of last year ) Add: advance received this year xxxx current Income xxx profit on sale of assets:xxxx sale price of the assets xxxxx less: book value of the assets sold xxx net profit on sale xxx Receipts for specific item xxxx (cinema shown ) less: amount spent xxxx net Income and gains with adjustments xxxx excess of expenditure over income to be deducted from the capital fund in the balance sheet (balance figure)xxx | ||
| xxxxxx | xxxxxx |
Balance sheet.
| Liabilities | Amount | Assets | Amount |
| capital fund: | Assets: | ||
| opening balance xx | last balance xxxx | ||
| Add: excess of income over expenditure xxx | Add: purchase in the current year xxxx | ||
| less; excess of expenditure over income xxx | closing balance xxxx | ||
| capitalised income of xxx | stock of xxxxx | ||
| the current year on account of; xxx | consumable materials xxxx | ||
| legacies xxxx | balance as given in the questionxx | ||
| life membership fees (these may be added to capital fund too) | last balance xxxx | ||
| special fund / donations last balance (if any) xxxx | Add: purchase during the year xxx | ||
| Add: Receipts for the item during the year xxxxx | less: value consumed during the year xxxx | ||
| Add: Income earned on fund investment xxxx | closing balances:xxxx | ||
| less: expenses paid out of fund / donation xxxx | cash in hand xxxx | ||
| creditors for purchase of supplies xxxxx | cash at bank in xxxx | ||
| bank overdraft (at the end)xxxxx | current account, xxxx | ||
| outstanding expenses last balance b/d xxxxx | fixed | ||
| less: paid during the year xxxxx | Deposit account etc, xxxxx | ||
| Add: outstanding at the end xxxxx | outstanding income last balance xxxxx | ||
| Income Received in advance at end xxxx | less : Received in the current year xxxx | ||
| net balance xxxx | |||
| pre-paid expenses at the end xxxx | |||
| xxxxxxx | xxxxxxx |