TN Samacheer Kalvi 12th Accountancy Important Formulas Accounts Of Not–For–Profit Organisation

Dear students,

Before you get started with chapter 2, Accounts Of Not–For–Profit Organisation, do a quick revision of all the important formulas. Also be thorough with the format of the different accounts. Then, when you start working out the problems, you will do it with confidence and also do it easily. Here are the key points you must remember in this chapter.

The three principal accounting statements of a not–for–profit organisation include:

• Receipts and Payments Account
• Income and Expenditure Account; and
• Balance Sheet.

Format of Receipts and Payment Account
Receipts and Payments Account of ……… for the year ending ……..

Receipts	Rs.	Rs.	Payments	Rs.	Rs.
To Balance b/d		xxx	By Balance b/d
Cash in hand	xxx		Bank overdraft		xxx
Cash at bank	xxx	xxx	Revenue payments:
Revenue receipts:		xxx	By Salaries
To Subscription		xxx	By Rent paid
To Entrance fees		xxx	By Electricity charges
To General donations		xxx	By Postage
To Grant-in-aid		xxx	By Rent and taxes
To Sale of old newspapers		xxx	By Insurance
To Interest on investment		xxx	By Advertisement
To Dividend		xxx	By Telephone charges
To Locker rent received		xxx	By Entertainment expenses
To Rent received		xxx	By Audit fees
To Sundry receipts		xxx	By Repairs
Capital receipts:		xxx	By Upkeep of ground
To Life membership fees		xxx	By Conveyance charges
To Donation for		xxx	By Newspapers and
specific purpose		xxx	periodicals
To Legacies		xxx	By Office expenses
To Endowment fund		xxx	By Gardening expenses
To Sale of fixed assets		xxx	By Sundry expenses
To Sale of investments		xxx	Capital Payments:
To Receipt for specific		xxx	By Fixed assets
purpose or fund		xxx	By Investments
To Interest on specific		xxx	By Repayment of loan
fund investments		xxx	By Balance c/d
To Balance c/d		xxx	Cash in hand	xxx
(Bank overdraft)			Cash at bank	xxx
Total		xxx	Total		xxx

Note: Outstanding salary and depreciation are non-cash items. Both these items will not appear in the Receipts and Payments account.

How to Deal with Items Specific to Not–for–Profit Organisations

Items	How to Deal with Them
Subscription	Revenue receipts
Interest on investment/fixed deposit	Revenue receipts
Sale of old sports materials	Revenue receipts
Sale of old newspapers	Revenue receipts
Receipts relating to:
a) Tournament	Revenue receipts
b) Sports	Revenue receipts
c) Matches	Revenue receipts
d) Entertainments	Revenue receipts
e) Dinner	Revenue receipts
Life membership fee	Capital Receipt
Legacy	Capital Receipt
Sale of fixed assets	Capital Receipt
Admission fee or Entrance fee	Revenue receipt if it is recurring or Capital Receipt if one time payment
Grants from government and other organisations	Grants received towards construction of buildings, acquisition of assets, etc., are treated as capital receipts.
	Grants received towards maintenance of assets, payment of salaries, etc., are treated as revenue receipts
Donations:
General donation:	If received without any specific condition, it is a revenue receipt.
Specific donation:	If received with a specific condition for a particular purpose like donations for sports fund, prize fund etc., it is a capital receipt.
Honorarium	Revenue expenditure
Charity	Revenue expenditure
Audit fees	Revenue expenditure
Printing and stationery	Revenue expenditure
Postage and courier charges	Revenue expenditure
Expenses relating to:
a) Tournament	Revenue expenditure
b) Sports	Revenue expenditure
c) Matches	Revenue expenditure
d) Entertainments	Revenue expenditure
e) Dinner	Revenue expenditure
Purchase of sports materials	Amount of consumed sports materials are taken as revenue expenditure and value of unconsumed sports materials (stock) are shown as asset in the balance sheet.
Purchase of sports equipment	Capital expenditure
Purchase of books for library	Capital expenditure

Format of Income and Expenditure Account
Name of the Club / Institution
Income and Expenditure Account for the year ended ….

Expenditure		Income
To Salaries	xxx	By Subscription	xxx
To Charities	xxx	By Donation received	xxx
To Rent	xxx	By Admission fee received	xxx
To Donation paid	xxx	By Grant received	xxx
To Stationery	xxx	By Rent received	xxx
To Loss on sale of asset	xxx	By Interest received	xxx
To Depreciation	xxx	By Profit on sale of asset	xxx
To Surplus (Bal.fig)	xxx	By Deficit (Bal.fig)	xxx
(Excess of income over expenditure)		(Excess of expenditure over income)
Total	xxx	Total	xxx

How to treat Subscription in the Income and Expenditure Account

Income and Expenditure Account for the year ended…

Expenditure	Rs.	Income	Rs.	Rs.
		By Subscription	xxx
		Less: Subscription for the previous year	xxx
		Less: Subscription for the subsequent year	xxx
		Add: Outstanding subscription for the current year	xxx
		Add: Received in advance during the previous year for the current year	xxx	xxx

Balance sheet as on …

Liabilities	Rs.	Assets	Rs.
Subscription received in advance for the subsequent year	xxx	Outstanding subscription for the:
		current year	xxx
		previous year	xxx

Treatment of Consumable Items (sports materials, stationery items, medicines)

(i) Consumables consumed during the year will appear on the debit side of income and expenditure account.

(ii) Consumption = Opening stock + Purchases during the current year – Closing stock

(iii) Closing stock will appear on the assets side of the balance sheet as at the end of the year.

(iv) Sale of old sports materials, etc., is shown on the credit side of income and expenditure account or can be subtracted from the respective items consumed on the debit side of income and expenditure account.

Treatment of incomes and expenses pertaining to specific funds

(i) Specific fund is to be shown on the liabilities side.

(ii) Specific fund investments account is shown on the assets side of the balance sheet.

(iii) Incomes and expenses relating to the specific fund account should not be recorded in income and expenditure account. Incomes relating to the fund should be added to the fund account and expenses relating to the fund should be subtracted from the fund account in the balance sheet at the end of the year.

(iv) Interest accrued on specific fund investments for the current year should be added along with the fund account on the liabilities side. It should also be shown on the assets side of the balance sheet as accrued interest on investments.