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Unit- 2


Accounting of Non Trading Organization and Single Entry System

Non-Trading Organisations

 


Non-Trading Organisations, also known as Not for Profit Organisations (NPO) are such entities that do not have Profit motive. Such organisations work for the benefits of its members or for common public.These concerns focus on providing best possible services to the mankind. They collect very less charges for their services, sometimes they work for free.

NPOs collect funds from Government or their agencies. They receive income in form of Government Subsidies, Concessions and Donations. Sometimes, they also collect the amounts from the members in form of Subscriptions, Entrance Fees, Admission Fees, etc.NPOs are formed to promote art, education, religion, health, etc.

NPOs prepare Receipts and Payments A/c to enter the Cash Transactions. This A/c is debited when the NPO receives Cash and it is credited when it pays a sum of money. An Income and Expenditure A/c is prepared to find its surplus or deficit (profit or loss). Balance Sheet is prepared in a usual way. The only difference is the way in which Capital Fund is created. In a business form of organisation, Capital is created out of owner’s funds + Reserves and Surplus; whereas in an NPO, Capital Fund is created out of Entrance Fees or Legacies or Surplus or Donation received for the purpose of creating Capital Fund.

 


Many small business entities don’t find time to prepare a full set of accounting system under Double Entry System of Book Keeping. They record partial books of accounts to find out the financial position of the business.

It is a system of book keeping in which only Cash A/c and various Personal A/c are prepared is known as Single Entry System of Book Keeping.

In this system, Real Accounts and Nominal Accounts are not prepared. Only Cash A/c and accounts of Debtors and Creditors are prepared.

A Statement of Profit or Loss is prepared to find the amount of Net Profit or Net Loss. To find the Opening Capital and Closing Capital of the business, Opening Statement of Affairs and Closing Statement of Affairs are prepared, respectively. These statements are just in the form of Balance Sheet, having Liabilities and Assets columns.

 

Q.1. Following is the Receipts and Payments A/c of Senior Citizens Pune, for the year ended March 31,2018.

Receipts and Payments Account for the year ended 31st March 2018

Receipts

Amount

Amount

Payments

Amount

Amount

To Balance b/d

Cash

Bank

 

To Subscription

2016-17

2017-18

2018-19

 

To Donations

 

To Entrance Fees

 

To Sale proceeds

Of Furniture

(Book Value

7,800)

 

To Interest on

Fixed Deposits

 

To Picnic

Receipts

 

 

9,100

16,400

 

6,000

90,000

7,500

 

 

25,500

 

1,03,500

 

20,000

 

10,000

 

6,500

 

4,500

 

15,000

 

By Salary

2015-16

2016-17

2017-18

 

By Fixed Deposit

 

By Printing and

Stationery

 

By General

Expenses

 

By Travelling

Expenses

 

By Audit Fees

 

By Medical

Check-up Fees

 

By Picnic

Expenses

 

By Refreshment

Expenses

 

By Office Rent

 

By Balance c/d

Cash

Bank

 

500

8,000

58,000

 

2,365

15,000

 

66,500

 

50,000

 

13,850

 

1,500

 

12,300

 

1,350

 

4,050

 

11,500

 

1,585

 

5,000

 

17,365

 

1,85,000

1,85,000

 

You are given the following additional information:

1) Office Rent includes 500 paid for 2016-17 and 1000 for 2018-19. Outstanding Office Rent for current year 2,500.

2) 50% of Entrance Fees are to be capitalised.

3) Outstanding Subscription 10,000.

4) The bill for paper and periodicals 7,150 is outstanding.


Prepare Income and Expenditure A/c for the year ended on 31.3.2018.

Income and Expenditure Account for the year ended 31st March, 2018

Expenditures

Amount

Amount

Incomes

Amount

Amount

To Salaries

To Printing and

Stationery

 

To General

Expenses

 

To Travelling

Expenses

 

To Audit Fees

 

To Medical

Check-up Fees

 

To Loss on Sale

Of Furniture

 

To Refreshment

Expenses

 

To Office Rent

(-) Paid for 2016-17

(-) Paid for 2018-19

 

(+) Outstanding

 

To Outstanding

Bills for paper

And periodicals

 

To Surplus

 

 

5,000

500

 

1000

 

3,500

2,500

58,000

 

13,850

 

1,500

 

12,300

 

1,350

 

4,050

 

1,300

 

1,585

 

6,000

 

7,150

 

25,915

By Subscription

(+) Outstanding

 

By Donations

 

By Entrance

Fees

(-) 50%

Capitalised

 

By Interest on

Fixed Deposits

 

By Picnic

Receipts

(-) Picnic

Expenses

90,000

10,000

 

10,000

 

5,000

 

15,000

 

11,500

 

1,00,000

 

20,000

 

5,000

 

4,500

 

3,500

 

25,915

 

Q.2. Lalit Kala Kendra gives you the following information for the year ended March 31, 2013 and you are required to prepare:

Income and Expenditure A/c for the year ended 31.03.2013 and

Balance Sheet as on 31.03.2013

Receipts and Payments Account for the year ended 31st March 2018

Receipts

Amount

Payments

Amount

To Balance b/d

Cash

Bank

 

To Locker Rent

To Entrance Fees

To Sale of Old

Newspapers

To Receipts from Drama

To Legacies

To Miscellaneous

Receipts

 

 

1,300

9,500

 

500

1,900

 

150

7,850

11,000

 

800

By Stationery

By Furniture

By Investments

By Expenses of Drama

By Postage and Telegram

By Magazines and

Newspapers

By Salaries

 

By Balance c/d

Cash

Bank

500

5,000

10,000

3,350

250

 

400

2,200

 

300

11,000

You are given the following additional information:

1) Capital Fund as on 1.4.2012 was 10,800.

2) Legacies are to be capitalized.

3) Outstanding Salary 300.

4) 50% of Entrance Fees are to be capitalized.

Solution:Income and Expenditures Account for the year ended 31st March 2018

EXPENDITURES

AMOUNT

AMOUNT

INCOMES

 

AMOUNT

To Stationery

To Postage

And Telegram

To Magazines

And

Newspapers

To Salaries

(+) Outstanding

 

To Excess of

Income over

Expenditure

(Surplus)

 

2,200

300

500

 

250

 

400

 

2,500

 

3,250

By Locker Rent

 

By Entrance

Fees

(-) 50%

Capitalized

 

By Sale of Old

Newspapers

 

By Receipts

From Drama

(-) Expenses

 

By Miscellaneous

Receipts

 

 

1,900

 

950

 

7,850

 

3,350

500

 

950

 

150

 

4,500

 

800

 

TOTAL

6,900

TOTAL

6,900

 

Balance Sheet as on 31st March, 2013

LIABILITIES

AMOUNT

AMOUNT

ASSETS

AMOUNT

AMOUNT

Capital Fund

(+) Legacies

(+) Entrance

Fees

(+) Surplus

 

Outstanding Salary

10,800

11,000

950

3,250

 

26,000

 

300

Furniture

Investments

Cash in Hand

Cash at Bank

 

5,000

10,000

300

11,000

TOTAL

26,300

TOTAL

26,300

 


Part II – SINGLE ENTRY SYSTEM

PROFORMA:

PARTICULARS

AMOUNT

AMOUNT

Capital at the end of the year

ADD: Drawings during the year

                 In Cash

                 In Kind

LESS: Additional Capital introduced during the year

 

ADJUSTED CLOSING CAPITAL

 

LESS: Capital at the beginning of the year

 

PROFIT OR LOSS BEFORE ADJUSTMENTS

ADD: Income and Gains during the year

          Interest on Drawings

          Prepaid Expenses

          Undervaluation of Assets

          Overvaluation of Liabilities

 

LESS: Expenses and Losses during the year

          Interest on Capital

          Outstanding Expenses

          Overvaluation of Assets

          Undervaluation of Liabilities

          Interest paid on Loan taken

          Depreciation on Assets

          Bad Debts

          Reserve for Bad and Doubtful Debts

          Income paid in Advance

          Salary to Partners

 

NET PROFIT OR LOSS FOR THE YEAR

 

Xx

Xx

 

Xx

Xx

Xx

Xx

 

Xx

Xx

Xx

Xx

Xx

Xx

Xx

Xx

Xx

xx

 

XXXX

 

Xx

Xx

 

Xxx

 

Xx

 

Xxx

 

Xxx

 

Xxx

 

XXXX

 

IMPORTANT NOTE FOR STUDENTS:If in the question, Opening and Closing Capital are not given in the question directly, then its calculation can be done by preparing a Statement of Affairs (Balance Sheet). The total of the Liabilities column will be less than that of the Assets side. This balancing amount represents the amount of the Capital. (Refer Solved Questions)

 

Q1) Mrs.Ankita keeps her book under Single Entry System and gives the following information:

Particulars

01-04-2011

 

31-03-2012

Investments

-

12,000

Bank Overdraft

-

10,000

Bills Payable

5,000

8,000

Creditors

26,500

31,500

Furniture

9,000

19,000

Debtors

35,000

50,000

Stock in Trade

15,000

19,000

Bank Balance

18,000

28,000

 

Mrs. Ankita withdrew 4,000 for her personal use. She received 15,000 from her father as gift, which she brought into the business.Additional furniture was purchased on 1st October 2011. Depreciate furniture by 10% p.a.Write off 1,000 as bad debts and provide 5% R.D.D. On debtors.

Find the profit or loss of her business for the year ended 31st March, 2012.

Solution: Opening and Closing Statement of Affairs for the year ended …

Liabilities

1.4.2011

31.3.2012

Assets

1.4.2011

31.3.2012

Bank Overdraft

Bills Payable

Creditors

 

Capital (Bal.Fig.)

-

5,000

26,500

 

45,500

 

77,000

10,000

8,000

31,500

 

78,500

 

1,28,000

 

Furniture

Investments

Debtors

Stock in Trade

Bank Balance

9,000

-

35,000

15,000

18,000

 

77,000

19,000

12,000

50,000

19,000

28,000

 

1,28,000

 

 

Statement of Profit or Loss for the year ended on 31.03.2012

PARTICULARS

AMOUNT

AMOUNT

Capital at the end of the year

ADD: Drawings during the year

                 In Cash

                 In Kind

 

LESS: Additional Capital introduced during the year

 

ADJUSTED CLOSING CAPITAL

 

LESS: Capital at the beginning of the year

 

PROFIT OR LOSS BEFORE ADJUSTMENTS

 

ADD: Income and Gains during the year

 

LESS: Expenses and Losses during the year

          Depreciation on Assets

          Bad Debts

          Reserve for Bad and Doubtful Debts

 

NET PROFIT OR LOSS FOR THE YEAR

 

4,000

NIL

 

 

 

1,400

1,000

2,450

 

78,500

 

4,000

82,500

15,000

 

67,500

 

45,500

 

22,000

 

NIL

 

4,850

 

17,150

 

Q2) Miss Kavita commenced her business with a capital of 1,30,000 on 1st April 2010. Her financial position was as follows as on 31st March 2011: Cash 9,120; Stock 10,250; Bills Payable 12,880; Creditors 17,180; Debtors 31,550; Bills Receivable 29,120; Premises 85,750; Vehicles 40,250.

Additional information:

1        She brought additional capital 20,000 on 30th Sept.2010. Interest on capital is to be provided at 5% p.a.

2        She withdrew 10,000 for personal use on which interest is to be charged at 6% p.a.

3        R.D.D. Is to be provided at 2.5% p.a. After providing Bad Debts 1,000.

4        Depreciate Vehicles at 2% and Premises at 4%.

Solution: Closing Statement of Affairs as on 31st March, 2011 

Liabilities

31.3.2011

Assets

31.3.2011

Bills Payable

Creditors

 

Capital (Bal. Fig.)

12,880

17,180

 

1,75,980

 

Cash

Stock

Debtors

Bills Receivable

Premises

Vehicles

9,120

10,250

31,550

29,120

85,750

40,250

2,06,040

Statement of Profit or Loss for the year ended on 31.03.2011

PARTICULARS

AMOUNT

AMOUNT

Capital at the end of the year

ADD: Drawings during the year

                 In Cash

                 In Kind

LESS: Additional Capital introduced during the year

 

ADJUSTED CLOSING CAPITAL

 

LESS: Capital at the beginning of the year

 

PROFIT OR LOSS BEFORE ADJUSTMENTS

 

ADD: Income and Gains during the year

          Interest on Drawings

 

LESS: Expenses and Losses during the year

          Interest on Capital

          Depreciation on Assets

          Bad Debts

          Reserve for Bad and Doubtful Debts

 

NET PROFIT OR LOSS FOR THE YEAR

 

10,000

NIL

 

 

 

 

 

300

 

7,000

4,235

1,000

764

1,75,980

 

1,85,980

20,000

 

1,65,980

 

1,30,000

 

35,980

 

300

36,280

 

12,999

 

23,281

 

Q3) Mr.Govind keeps his books on Single Entry System and disclosed the following information of his business.

 

Particulars

01-04-2010

31-3-2011

Investments

-

30,000

Bills Payable

-

18,000

Creditors

52,500

69,000

Furniture

15,000

15,000

Debtors

60,000

90,000

Stock in Trade

30,000

37,500

Cash at Bank

36,000

54,000

 

Additional information:

1        Mr.Govind transferred 300 per month during first half year and 200 each month for the remaining period from his business to his personal account. He also took goods of 700 for private use.

2        Mr.Govind sold his personal asset for 7,000 and brought the proceeds into his business.

3        Furniture to be depreciated by 10%.

4        Provide R.D.D. 5% on Debtors.

Prepare: Opening and Closing Statement of Affairs and Statement of Profit or Loss for the year ended 31st March 2011.

Solution: Opening & Closing Statement of Affairs as on ………

Liabilities

1.4.2010

31.3.2011

Assets

1.4.2010

31.3.2011

Bills Payable

Creditors

 

Capital (Bal. Fig.)

 

-

52,500

 

88,500

 

18,000

69,000

 

1,39,500

 

Investments

Furniture

Debtors

Stock in Trade

Cash at Bank

-

15,000

60,000

30,000

36,000

 

30,000

15,000

90,000

37,500

54,000

 

1,41,000

2,26,500

1,41,000

2,26,500

 

Statement of Profit or Loss for the year ended on 31.03.2011

PARTICULARS

AMOUNT

AMOUNT

Capital at the end of the year

ADD: Drawings during the year

                 In Cash

                 In Kind

 

LESS: Additional Capital introduced during the year

 

ADJUSTED CLOSING CAPITAL

 

LESS: Capital at the beginning of the year

 

PROFIT OR LOSS BEFORE ADJUSTMENTS

ADD: Income and Gains during the year

 

LESS: Expenses and Losses during the year

Depreciation

RDD

 

NET PROFIT OR LOSS FOR THE YEAR

 

3,000

700

 

 

 

 

 

1,500

4,500

1,39,500

 

3,700

1,43,200

7,000

 

1,36,200

 

88,500

 

47,700

NIL

 

s6,000

 

41,700

 


Q4) Asha and Usha were partners sharing and losses in the ratio 2:1. Prepare their Statement of Profit or Loss for the year ended 31st March 2012 from the following Statement of Affairs as on 31st March 2011.

Liabilities

 

Amount

Assets

Amount

Creditors

Bills Payable

Capital:

Asha

Usha

 

33,000

9,000

 

62,000

32,000

 

1,36,000

Cash at Bank

Cash in Hand

Building

Machinery

Furniture

Stock

Debtors

Bills Receivable

6,000

2,000

41,000

21,000

10,000

18,000

25,000

13,000

 

1,36,000

The assets and liabilities as on 31st March 2012 were:

Sundry creditors 35,000, Bills Receivable 18,000, Bills Payable 15,000, Cash in Hand 3,000, Stock 32,000, Cash at Bank 6,000, Debtors 38,000. There were no changes in Fixed Assets. Additional Information are as follows:

1        Asha and Usha had drawn 10,000 and 8,000 respectively for personal use.

2        They also brought additional capital of 6,000 and 4,000 respectively.

3        Building to be depreciated by 5% and machinery and furniture at 10%.

4        Charge interest at 10% p.a. On opening capitals and interest on drawings of Asha and Usha were 700 and 500 respectively.

 

Solution: Statement of Affairs as on 31st March, 2011

Liabilities

 

Amount

Assets

Amount

Creditors

Bills Payable

Capital:

Asha

Usha

 

35,000

15,000

 

79,333

39,667

 

1,69,000

Cash at Bank

Cash in Hand

Building

Machinery

Furniture

Stock

Debtors

Bills Receivable

6,000

3,000

41,000

21,000

10,000

32,000

38,000

18,000

 

1,69,000

 

Statement of Profit or Loss for the year ended on 31.03.2012

PARTICULARS

AMOUNT

AMOUNT

Capital at the end of the year

ADD: Drawings during the year

                 In Cash

Asha

Usha

                 In Kind

 

LESS: Additional Capital introduced during the year

Asha

Usha

 

ADJUSTED CLOSING CAPITAL

 

LESS: Capital at the beginning of the year

 

PROFIT OR LOSS BEFORE ADJUSTMENTS

ADD: Income and Gains during the year

          Interest on Drawings

Asha

Usha

 

 

LESS: Expenses and Losses during the year

          Interest on Capital

Asha

Usha

          Depreciation on Assets

 

NET PROFIT OR LOSS FOR THE YEAR

 

10,000

8,000

 

 

6,000

4,000

 

 

 

700

500

 

6,200

3,200

1,19,000

 

18,000

 

1,37,000

 

10,000

 

 

1,27,000

 

94,000

 

33,000

 

1,200

 

34,200

 

9,400

5,150

 

19,650

 

Q5) Mrs.Riddhi keeps her books on Single Entry System and following information were disclosed from it:

Particulars

01-04-2012

 

31-03-2013

Furniture

Debtors

Stock

Cash

Bills Payable

Sundry Creditors

Loan from Bank

Investments

15,000

30,000

30,000

36,000

-

26,250

-

-

15,000

45,000

37,500

54,000

18,000

31,500

5,000

30,000

 

Mrs.Riddhi withdraws 250 each month during the half of the year and 200 each month during the second half of the year from her business for personal use.

She also took away 500 worth of goods for personal use.

Furniture to be depreciated by 5% and provide R.D.D. Of 3% on debtors.

She sold her personal asset for 35,000 and sale proceeds were introduced in business. Interest on investment receivable amounted 3,000 and Interest on loan payable amounted to 250.

Prepare Opening and Closing Statement of Affairs and also prepare Statement of Profit and Loss for the year ended on 31st March 2013.

Solution: Opening & Closing Statement of Affairs as on …

Liabilities

1.4.2012

31.3.2013

Assets

1.4.2012

31.3.2013

Bills Payable

Sundry Creditors

Loan from Bank

 

Capital

(Balancing

Figure)

-

26,250

-

 

84,750

 

18,000

31,500

5,000

 

1,27,000

 

Furniture

Debtors

Stock

Cash

Investments

15,000

30,000

30,000

36,000

-

 

15,000

45,000

37,500

54,000

30,000

 

1,11,000

1,81,500

1,11,000

1,81,500

 

Statement of Profit or Loss for the year ended on 31.03.2013

PARTICULARS

AMOUNT

AMOUNT

Capital at the end of the year

ADD: Drawings during the year

                 In Cash

                 In Kind

 

LESS: Additional Capital introduced during the year

 

ADJUSTED CLOSING CAPITAL

 

LESS: Capital at the beginning of the year

 

PROFIT OR LOSS BEFORE ADJUSTMENTS

 

ADD: Income and Gains during the year

          Interest Receivable

 

LESS: Expenses and Losses during the year:

          Interest paid on Loan taken

          Depreciation on Assets

          Reserve for Bad and Doubtful Debts

 

NET PROFIT OR LOSS FOR THE YEAR

 

2,700

500

 

 

 

 

 

3,000

 

250

750

1,350

1,27,000

 

3,200

1,30,200

35,000

 

95,200

 

84,750

 

10,450

 

3,000

13,450

 

2,350

 

11,100

 

Reference-

  • S. M. Shukla : Financial Accounting.
  • Singh and Singh : Financial Accounting.
  • Bhrigu Nath Ojha & Others. : Company Accounting.
  • M. C. Shukla : Advanced Accounts.
  • R. D. Gupta : Advanced Accounts.
  • T. S. Grewal : Financial Accounts.
  • Paul and Paul : Financial Accounting

 


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