Unit – 2

Accounting of non-trading organisations

2.1 Accounting of non-trading organisations—Preparation of Receipts

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.

2.2 payments Account, Income , Expenditure Account , Balance Sheet

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

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

Books Recommended :

1. J. R. Batliboi —Advanced Accounts

2. M. C. Shukla —Advanced Accounts

3. S. M. Shukla —Advanced Accounts

4. Pickles —Advanced Accounts

5. N. K. Jha —Basic Financial Accounting

6. S. K. Singh & R.U. Singh —Financial Accounting