Hsslive XII Accountancy Ch1 Not For Profit Organization
Hsslive XII Accountancy Ch1 Not For Profit Organization
Hsslive XII Accountancy Ch1 Not For Profit Organization
ORGANISATION ORGANISATION
NOT-FOR-PROFIT ORGANISATION Usually NOT-FOR-PROFIT ORGANISATION follow the
cash system of accounting. A NOT-FOR-PROFIT
There are certain organisations which are set up for
ORGANISATION prepares three statements at the end of the
providing services to its members and the public in general.
accounting year, which form its final accounts. These
Such organisations are called NOT-FOR-PROFIT
statements are:
ORGANISATION.
1. Receipt & Payment Account
Eg: Clubs, charitable institutions, schools, religious institutions
2. Income & Expenditure Account
trade unions, welfare societies etc.
3. Balancesheet
NOT-FOR-PROFIT ORGANISATION is defined as “a non-
RECEIPT AND PAYMENT ACCOUNT
profit seeking entity which does not usually involve in trading
activities, but engage in rendering services to members and The Receipt and Payment account is a real account
society” which is prepared at the end of an accounting year giving a
summary of all cash receipts and payments recorded in cash
Features of accounting for not-for-profit organisation
book. It is debited with all items of receipts and credited with
1. Their main objective is to render services to its all payments. At the end of the period, the account is balanced.
members and the public The final balance in this account represents the balance of cash
2. They don’t normally engage in trading activities in hand or at the bank or overdraft.
3. They are not expected to earn profit
Features of Receipt and Payment Account
4. Credit transactions are not usually made
5. No trail balance is prepared 1. It is a real account
6. Do not prepare Trading, Profit & Loss a/c 2. It is a summary of cash book
7. Their affairs are manages by executive committee 3. All receipts are debited and payments are credited
elected by its members 4. It usually begins with opening balance of cash in hand
or at bank
5. It usually ends with closing balance of cash in hand or
at bank
6. It doesn’t disclose the working results of the concern
xxx
Less: opening Expenses Outstanding xxx
Less: Closing Expenses Paid in Advance xxx
The amount of Expenses debited to Income and xxx
Expenditure Account