Financial Statements of not-for Profit Organisations

 

Illustration 9.
Following is the Receipt and Payment Account of Tulsi Literary Society for the ended March 31, 2011. Prepare Income and Expenditure Account for the year ended March 31, 2011 and the Balance Sheet as on that date.

Receipt and Payment Account for year ended March 31, 2011

On April 1, 2010 the society had Books of Rs10,000 Investments Rs20,000 and Future Rs10,000. Subscriptions outstanding as on April 1, 2010 were Rs1,200 and as on March 31, 2011 were Rs 1,400.
Creditors for stationery on April 1, 2010 were Rs 400.
Additional books and computers are purchased on April 1, 2010.
Bills outstanding for repairs as on March 31, 2011were Rs 2,200 and wages outstanding were Rs 1,000.
75% of the Entrance Fee is to be capitalized.
Depreciation is to be provided on computers @ 25% p.a. and books @ 10% p.a.

Solution :

Important Points :
In the obsence of any instruction, Entrance Fee is treated as Income.

Points to Remember :

1. Not-for-profit Organsations established for providing services to its members and society and not to earn profit.
2. Financial statements prepared by Not-for-Profit Organizations at the end of accounting period :
   (i) Receipts and Payments Account
   (ii) Income and Expenditure Account
   (iii) Balance Sheet


3. Receipts and Payment Account records only the actual receipt and payment of cash during the concerned accounting period.
4. Debit side of Income Expenditure Account includes all the expenses pertaining to a particular period and credit side includes all the income pertaining to the same period.
5. Closing balance of Income and Expenditure Account shows 'Surplus' or 'Deficit'.
6. Surplus is added to the Capital fund and Deficit is subtracted from Capital Fund.
7. 'Capital fund' is also known as 'General Fund' or 'Accumulated Fund'
8. Life Membership Fees, Legacy and Specific Fund Donations are capitalized.
9. Subscription and Donation are treated as income.
10. 'Income from investment of Specific Fund' is added to concerned fund and not to be shown in Income and Expenditure Account.

 

CBSE Accountancy Class XI ( By Mr. Aniruddh Maheshwari ) 
Email Id : [email protected]