Final Accounts of Charitable Trust
There are specific organizations established to serve members and the general public. Such organizations include clubs, charities, schools, religious groups, trade unions, welfare organizations, and organizations for the promotion of arts and culture. These organizations serve their primary purpose and it's not a profit as it is in a business organization. Generally, these organizations do not carry out business activities and are controlled by a trustee who is fully responsible to members and society for the use of funds raised to achieve the purpose of the organization. Therefore, you also need to maintain a proper account and prepare financial statements in the form of receipt and payment accounts. Balance sheet; and balance sheet. At the end of all accounting period (usually the fiscal year). This is also a legal requirement and helps track income and expenses that are different in nature from those of a corporate organization.
Meaning and characteristics of non-profit Organization
A non-profit organization is an organization established as a charity that is used for the welfare of society and functions for no commercial purpose. Their main purpose is to serve a particular group or the general public. Generally, they do not manufacture, buy, or sell merchandise and may not engage in margin trading. Therefore, they do not need to maintain many books and trading and P & L accounts (as trading concerns do). Funds raised by such organizations are credited to the Capital Fund or the General Fund. Their main sources of income are usually donations from members, grants and income from investments. Main purpose
Keeping records in such organizations is to meet statutory requirements and assist them in managing the use of funds. You will also need to prepare financial statements at the end of each accounting period (usually the fiscal year), review your income and expenses, and your financial position and submit them to a statutory authority called a social registrar.
The main characteristics of such an organization are:
1. Such organizations were established to serve specific groups or the general public, such as education, medical care, recreation and sports, without regard to caste, beliefs or colours. Its sole purpose is to provide the service for free or for a small fee, not for profit.
2. These are organized as public interest trusts / associations, and the members of such organizations are called members.
3. Their work is usually managed by a management / executive committee elected by their members.
4. The main sources of income for such organizations are (i) subscriptions from members, (ii) donations, (iii) heritage, (iv) grants, and (v) income from investments.
5. The funds raised by such organizations through various sources are redited to capital or general revenue.
6. Surpluses generated in the form of income in excess of expenditure will not be distributed among members. It is simply added to the capital stock.
7. Non-profits do not gain a reputation based on their contribution to social welfare Customer or owner satisfaction.
8. The accounting information provided by such organizations is intended for current and potential contributors and is intended to meet statutory requirements.
As mentioned earlier, such organizations are usually not engaged in any transaction or business activity. Their main sources of income are membership subscriptions, donations, government financial support, and investment income. Most of their transactions are done through cash or banks. These three non-profit accounting institutions in 2018-19 are required by law to maintain proper accounting records and properly manage the use of funds. This is why they usually keep a cash book with all receipts and payments properly recorded. They also maintain a ledger containing all income, expense, asset and liability accounts that facilitates the preparation of financial statements at the end of the accounting period. In addition, inventory registration must be maintained in order to maintain a complete record of all fixed assets and consumables. They do not maintain a capital account. Instead, they maintain capital, also known as general revenue, that continues to accumulate for surpluses, lifetime membership fees, donations, heritage, etc. received each year. In fact, a proper accounting system is desirable to avoid or minimize the possibility of misappropriation or embezzlement of funds donated by members or other donors. Final accounting or financial statements: also, non-profits Financial statements must be prepared at the end of each accounting period.
These organizations are non-profit organizations and do not need to prepare trading and income statements, but they need to know if their income for the year was sufficient to cover their costs. not only that
You must provide the necessary financial information to members, donors, contributors, and social registrars. For this purpose, they need to prepare the final accounting at the end of the accounting period, the general principles of accounting are fully applicable to their preparation as mentioned above, and the final accounting of the "non-profit organization". Is below:
(I) Receipts and payment accounts
(II) Income and Expenditure account and
(III) Balance sheet.
Receipt and payment accounts are an overview of cash and banks transactions that help you create balance sheets and balance sheets. This is also a legal requirement as the balance sheet must also be submitted to the social registry along with the balance sheet and balance sheet.
The profit and loss account are similar to the profit and loss account. Non-profits typically create balance sheets and balance sheets using receipt and payment accounts. However, this does not mean that you will not create a trial balance. To check the accuracy of your ledger accounts, we also create trial balances that make it easy to create accurate deposit, balance, and balance sheets.
In fact, if your organization follows a double-entry bookkeeping system, you need to prepare a trial balance to check the accuracy of your ledger accounts. This also makes it easier to prepare receipts and payment accounts. Balance sheet and balance sheet.
- Receipts and payment accounts
- Income and Expenditure account
- Balance sheet
This is an overview of the income and expenditure for the fiscal year. It's like an accrual income statement for a corporate organization. This includes only revenue items and the last balance is in the black or in the red. The balance account serves the same purpose as the profit and loss account of a corporate organization. All revenue items related to the current period are displayed in this account, and the expenses and losses on the expenditure side and the income and profit on the income side of the account are displayed. Net operating results are shown in the form of a surplus (that is, excess income for expenditure) or a deficit (that is, excess expenditure for income) that is transferred to the capital fund shown on the balance sheet.
Accounts are accrued using receipts and accounts, along with additional information about unpaid and prepaid expenses, depreciation, and so on. Therefore, many items that appear on receipts and payments need to be adjusted. For example, as shown in Example 1 (Page No. 10), the Rs.2, 65,000 subscription amounts received in 2014-15 will be displayed to the recipient of the receipt and payment account and will be received for a period other than the current period. It is included. Limit. But the Rs subscription amount. 2,25,000, which are relevant only this year, will appear as income in the 2014-15 balance account.
Format of Income and Expenditure
Added: Finally, unresolved
Less: Conspicuous at first
To insurance premiums
To printing and stationery
To sports expenses
To the electricity bill
To the loss due to the sale of furniture
To miscellaneous expenses
To newspapers and periodicals
To the surplus on the balance sheet
By Admission fee
By sports fee
By Sale in old newspapers
By Due to interest in investment
By Deficit (taken on the balance sheet)
Steps in the Preparation of Income and Expenditure Account
The following steps may help you set up an income and spending account from specific receipts and payment accounts:
1. Thoroughly persuade your receipt and payment account.
2. Exclude cash and bank opening and closing balances.
It's not income.
3. Exclude receipts and payments of capital as it appears on the balance sheet.
4. Consider only the receipt of income displayed on the income side of the balance account. Some of these should be adjusted by excluding the amounts related to the period before and after and including the amounts related to the current year that have not yet been received.
5. Bring income and expenses to the expenditure side of the income and expenditure account and make appropriate adjustments according to the addition. Information provided in connection with the amount received in advance and things you haven't received yet.
6. Consider the following items that do not appear in your deposit account that you need to consider to determine your surplus / deficit for this year.
a) Depreciation of fixed assets.
b) Allowance for doubtful accounts, if necessary.
c) Gains and losses from the sale of fixed assets.
Create a balance account for the same period from the following balance accounts for the year ending March 31, 2017 at People's Club.
Receipt and Payment Account
Balance c / d bank
Interest on bank deposits
Shipping and Stationery
5% Government Purchase Paper
Balance C / D
The following information is available:
Add: Unprocessed 6,750
Shipping and stationery
Entertainment fee 4,052.00
miscellaneous expenses on
Admission fee (50% of 4500)
Bank interest 2,025
Added: Unpaid interest 675
Interest in investment
It is created at the end of the fiscal year based on the receipts and payments of cash recorded in the cashbook. This is a summary of cash and banking transactions under various heads. For example, subscriptions received from members on different dates that appear on the debit side of the cashbook shall appear as one item on the receiving side of the receiving and paying account.
With that total amount. Similarly, salaries, rents and electricity charges are paid from time to time as recorded on the credit side of the cashbook, but the total salaries paid, the total rent paid and the electricity charges paid annually. The total of is displayed on the payer side of receipt and payment. account. Therefore, receipts and payment accounts
It provides a summary diagram of various receipts and payments, whether related to the current period, the previous period, or the next period, or whether they are of the nature of capital or income. Please note that this account does not show any non-cash items such as depreciation. Beginning balance of receipt and payment account represents the cash on hand / bank cash displayed on the receipt side, and the closing balance of this account represents the cash on hand and the bank balance as of the end of the year displayed on the credit side of the receipt and payment account. However, if it is overdraft at the end, it will be debited as the last item.
Format of Receipts and payment Account
To the opening balance (bal b / d.)
Cash on hand
Cash at the bank
To capital receipt (subscription)
In the case of the previous year
For next year
To Grant for a specific purpose
To general grants
To general donations
To Rent received
To receive with interest
For a lifetime membership fee
To sell fixed assets
Balance c / d (overdraft)
Balance b / d (opening bal.)
By audit fee
By Due to miscellaneous expenses
By Bank overdraft
By balance c / d (settlement balance)
Cash on hand
Cash at the bank
Receipt and payment account preparation steps
1. Take the opening balance of cash on hand and bank cash and debit it. If you have an overdraft at the beginning of the year, enter the overdraft on the credit side of this account.
2. Debit the total amount of all receipts, regardless of their nature (capital or income) and whether they are related to past, present, and future periods.
3. Shows the total amount of all payments on the credit side, regardless of nature (capital or income) and whether related to past, present, and future periods.
4. Accounts receivable and expense are not entered in this account as there is no inflow or outflow of cash.
5. Find the difference between the total debit and total credit of your account and credit with the same cash / bank balance. However, if the total credit is greater than the total debit, the bank will show the debit difference as an overdraft and close the account.
A "non-profit" organization creates a balance sheet to check the financial position of the organization. Creating a balance sheet is the same pattern as an entity. Shows assets and liabilities as of the end of the year. Assets are displayed on the right and liabilities are displayed on the left. However, there is capital or general financial resources instead.
Capital and, in some cases, surplus or deficit per balance account added to / deducted from the capital fund. It is also common practice to add some of the capitalized items, such as heritage, admission fees, and lifetime membership fees, directly to the Capital Fund.
In addition to capital funds or general funds, there may be other funds created for specific purposes or to meet donor / donor requirements such as building funds, sports funds, etc. These funds are listed separately on the liabilities side of the balance sheet.
You may need to create a balance sheet, as at the beginning of the year, to keep track of your capital / general revenue balance at the beginning of the year.
Creating a balance sheet
The following steps are used to create the balance sheet.
1. Acquire capital / general revenue according to the opening balance sheet and add surplus from the balance sheet. In addition, we will add the admission fee, heritage, lifetime membership fee, etc. received that year.
2. After billing the depreciation expense (balance account), acquire all the added fixed assets (not sold / discarded / destroyed during the year) (from the balance account) and display them on the asset side.
3. Compare the items on the receipt side of the deposit account with the items on the income side of the balance account. This is to confirm the following amount:
(A) Subscriptions that have expired but have not yet been received:
(B) Income received in advance. (C) Sale of fixed assets made that year. (D) Items that are capitalized (that is, brought directly to the balance sheet) (eg, heritage, interest in a particular fund investment, etc.).
4. Similarly, with the item on the payer side of the receipt
Income and spending payment accounts Expenditure account. This is to confirm the amount in the following cases.
(A) Unpaid Expenses;
(B) Prepaid Expenses.
(C) Fixed purchase
Assets of the year;
D. Depreciation of fixed assets.
(E) Inventory Consumables such as stationery on hand.
(F) Cash settlement balance
Cash at the bank at hand.
A proforma balance sheet is provided to help you better understand how to create a balance sheet.
Non-profit Balance Sheet: General Financial Resources
For non-profits, capital is accumulated during the year along with receipts and receipts of capital capitalized by further increasing the surplus or reducing the deficit. At the beginning of non-trading concerns, there is no formal capital fund. In such cases, the surplus earned that year constitutes a year-end capital fund.
Non-profit balance sheets are created in the same way as companies do. Organizational assets are recorded on the right and liabilities are recorded on the left. Non-profits do not use the term capital. Instead, general or cumulative funds are displayed on the balance sheet.
NPOs may also create special funds such as prizes and match funds. Its purpose is to meet the costs associated with the purpose for which it was created. The amount of income invested from these funds is generated only in the funds, not in the balance account.
Accounting for general financial resources and preparation of balance sheet
Let's understand the format of the non-profit balance sheet from the following figure, which we will consider in the below question.
Some unique items
The final accounts of non-profits are created in a pattern similar to corporate organizations. However, some items of income and expenses of such organizations are slightly different in nature and require special care in their final accounting. They are unique to these organizations. Some of the common specific items are explained as follows:
Subscription: A subscription is a membership fee paid annually by a member. This is the main source of income for such organizations. Subscriptions paid by members will appear as receipts in your receipts and payment accounts, and as incomes in your income and spending accounts. Note that the Receipt and Payment Account shows the total amount of subscriptions you actually received.
The amount displayed in the income and expenditure account is limited to the current value regardless of receipt.
Donation: This is a kind of gift of cash or property received from a person or organization. It will be displayed on the receipt side of the receipt and payment account. Donations can be made for specific or general purposes.
(I) Specific Donation: When a donation received is used to achieve a specific purpose, it is called a specific donation. Specific objectives include expanding existing buildings in 2018-19, building new computer labs, and creating book banks. Such donations are capitalized and appear on the debt side of the balance sheet. Is it large or small? The purpose is to use that amount only for a specific purpose.
(II) General donations: Such donations are used to promote the general purpose of the organization. Since these are regular sources of income, they are treated as receipts for income. Therefore, it is included in the income side of the income and expenditure account for the current year.
Heritage: It is the amount received according to the will of the deceased. Due to its non-regular nature, it appears on the receipt side of the receipt and payment account and is added directly to the capital fund / general funds on the balance sheet. However, a small amount of heritage is treated as income and may appear on the income side of the balance account.
Lifetime membership fee: Some members prefer to pay a lump sum as a lifetime membership fee instead of a subscription. Such amounts are treated as receipts of capital and are credited directly to capital / general funds.
Admission fee: The admission fee, also known as the admission fee, is paid only once by the member at the time of admission. For organizations like clubs and some charities, admission is limited and the amount of admission is quite high. Therefore, it is treated as a non-recurring item and credited directly to capital / general funds. However, in some organizations such as educational institutions,
Admission is a regular income and the amount involved may be small.
In their case, it is customary to treat this item as a receipt for income. However, if you have specific instructions, we recommend that you treat the entire amount as a capital receipt and add the relevant amount directly to your capital / general funds.
Sale of Old Assets: Receipts from the sale of old assets will appear in your receipts and payments account for the year of sale. However, any gain or loss from the sale of the asset will be recorded in the income and expenditure account for the year. For example, for item furniture with a book value of Rs. It is sold for 800 rupees. 700, Rs of this amount. The 700 will appear as a receipt on your receipt and payment account and Rs. 100 on the spending side of the balance account as a loss from the sale of old assets and while displaying furniture in the balance Sheet Rs. 800 is deducted from its total book value.
Periodical Sale: This is an item of a recurring nature and will appear as the income side of your income and expenditure account.
Sale of Sporting Goods: Sporting goods (used materials such as old balls, bats and nets) are sold regularly at any sports club. This is usually displayed as income in the balance account.
Reward payment: The amount paid to a person who is not a full-time employee of the institution. Paying an artist to perform in a club is an example of a reward. The payment of this reward will be displayed on the spending side of the balance account.
Donation Fund: A fund that results from a bequest or gift, the income of which is used for a specific purpose. Therefore, this is a receipt for capital and appears on the liabilities side of the balance sheet as an item for a purpose-built fund.
Government subsidies: schools, universities, public hospitals, etc.Their activities rely on government subsidies. Regular grants in the form of maintenance grants are treated as receipts for income (that is, income for the current year) and credited to your income and expenses account. However, grants such as building grants are treated as receipts of capital and are remitted to the building fund account. Please note that some non-profits receive cash subsidies from governments or government agencies. This subsidy is also treated as income for the year in which it was received.
Non-profit offices create special funds for specific purposes / activities such as "prize money", "match fund", "sports fund". Such funds are invested in securities and the income earned from such investments is added. It will be sent to each fund, but not to the balance account.
Similarly, costs incurred for such specific purposes will be deducted from the Special Fund. For example, a club may maintain a special fund for sports activities. In such situations, interest income from the sports fund investment will be added to the sports fund and all sports costs will be deducted from it. The special fund will appear on your balance sheet. However, if the balance of the specified fund or special fund is negative after adjusting the balance, it will be transferred to the debit of the balance. Describe or adjust according to the prescribed instructions.
How do you view your subscription amount on your non-profit balance sheet from the following Receipt and Payment accounts and additional information?
Start of Balance Sheet
Pre-subscription (previous year) out.
Subscription (previous year)
Closing the Balance Sheet
Advanced Subscription (Next Year)
Unprocessed Subscription (This Year)
Unpaid subscription (previous year)
Calculate sports material debited to Income & Expenditure a / c. Yearly. It ended on March 31, 2007, based on the following information. The amount paid for sports material during the year. It was Rs.19,000
Inventory of sports materials
Creditors of sports materials
1 = 4 = 2006 (Rs.)
Option 2. Rs.20700
Description: Amount debited to income and expenditure as consumption of sports materials = payment amount + starting inventory-ending inventory-starting creditor + ending creditor. Amount debited to income and expenses = 19000 + 7500-6400-2000 + 2600 = Rs. 20,700
The non-profit has received Rs.10,000 as an admission fee for new members. If 20% of the fee needs to be capitalized, what is the amount of the fee that needs to be displayed in the balance account?
Option 2 Rs.8000
Description: These are the fees collected from all members upon enrolment in membership. Once you become a member of society or a club, you will only be paid once by new entrants. It is treated in two ways: -when capitalized, it appears on the debt side's balance sheet. -If it is considered a receipt for income, it will be displayed in the income and expenditure account on the income side. Therefore, Rs. 20% means Rs. 2000 (10,000 * 20%) appears on the balance sheet on the debt side and the balance of Rs. 8000 is displayed in the income and expenditure account on the income side.
Prize Rs.10000, Prize Investment Interest Rs.1000, Prize Payment Rs.2000, Prize Investment Rs.8000. What will happen to that treatment?
Option 4. Rs.9000, Rs on the debt side. 8000 on the asset side
Description: The balance sheet calculation looks like this: -Prize-9000 Addition: -Interest 1000 deduction for prize investment: -Prize payment 2000 Debt side amount = Rupee. 9000 prize investment Rs. 8000 is displayed on the asset side.
Bell, a non-governmental non-profit organization, received special pledged funding from a donor to another non-governmental non-profit medical organization during its annual campaign. How does Bell need to record these funds?
Option 2. Increased assets and increased liabilities
Description: Bell, a non-governmental NPO, is responsible for the funds for the annual campaign and is recorded on the balance sheet. And if the organization pledges this fund to another non-governmental NPO, it becomes a property of the Bernon government. Organisation recorded on the asset side of the balance sheet.
From the information below, we will calculate the amount of stationery that will be posted to the Income and Expenditure account of the Cultural Association of India for the year ending March 31, 2018.
Stationery purchased in the year ended March 31, 2018 was Rs 75,000. Also, please present relevant items on the social balance sheet as of March 31, 2018.
To Balance b / d
By income and expenditure in balance A / c
To Bank balance
By balance c / d
Balance sheet as of March 31, 2018
From the information below, we will calculate the amount of the subscription that will be credited to the 2007-2008 balance account.
Subscriptions received for year
Outstanding subscriptions on March 31, 2007
Unprocessed subscriptions on March 31, 2008
Subscriptions pre-received on March 31, 2007
Subscriptions received in advance on March 31, 2008. The 2006-07 delinquency is still 1,500.
Subscriptions received for year
(+) March 31, 2008 Unprocessed Subscriptions (6,000 – 1,500)
(+) Subscriptions received in advance on March 31, 2007
(-) Subscription received in advance on March 31, 2008
(-) Unprocessed subscriptions on March 31, 2007 (20,000 – 1,500)
Revenue from 2007-08 subscription
Find out the cost of drugs consumed in 2015-16 from the following information:
Purchase price of medicine
Creditors of purchased medicines
April 1, 2015
March 31, 2016
April 1, 2015
March 31, 2016
April 1, 2015
March 31, 2016
Payment for drug purchase
(-) Decrease in drug creditors in 2016 (25,000 – 17,000)
(-) Increase in drug advance payments in 2016 (18,200 – 11,500)
2016 drug purchase
(+) Starting inventory of pharmaceutical products on April 1, 2015
(-) End of stock of pharmaceutical products on March 31, 2016
= Medicines consumed in 2016
From the following receipt and payment accounts for the Cricket Club and the additional information provided, prepare the balance sheet for the year ending December 31, 2018 and the balance sheet for that date.
Receipt and Payment Accounts
Year ending December 31, 2018
To bal b/d
-Time deposit @ 6%
By Match cost
To subscription (2017 including Rs 6000)
By maintaining the lawn
To Interested in time deposit
To Tournament Fund
By purchasing cricket products
To Sale of tableware (book value Rs. 1200)
By Miscellaneous expenses
By Tournament costs
By Balance c / d:
Cricket Club Income and Expenditure Account
Year ended December 31, 2018
less: Rec. Last year
To Lawn Maintenance
Add: untreated this year
To match cost
By Admission fee
By Interest on time deposits
To Postage stamps:
Added: Unpaid due
Balance at the beginning
By Gain on sale of tableware (2000-1200)
Less: Closing Inventory
To cricket goods:
Less: Closing price
To miscellaneous expenses
To income that exceeds expenditure (Bal Fig)
As of December 31, 2018
Less: Tournament costs
Capital (balance Fig)
Interest accrued on time deposit
Subscription expiration date
Stamps and stationery
Cricket product inventory