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NON – PROFITABLE ORGANISATION

At the end of the year the profit making organization prepare a Profit and Loss A/c to know their profitable position and a Balance sheet to know their financial position. Similarly there are various Non – Trading organization like schools, colleges, clubs, charitable trusts, hospitals etc. They also have to prepare their financial statement and since profit making is not a objective of such institution, instead of the usual Profit of Loss A/c they prepare income and expenditure A/c and the balance sheet as usual.

Point to remember

➢ Instead of Profit and Loss A/c here the word used will be Income & Expenditure A/c ➢ If the income side is more it is surplus, and if the expenditure side is more it is deficit. ➢ The recurring income and expenses are recorded in the Income and Expenditure A/c and the Non – recurring item are recorded in the Balance Sheet. ➢ Donations is one of the income of a N.P.O

Donations Specific Donation

Non Specific Donations / General Donations When the Donation is received with the particular purpose, then it is specific donations and therefore it is assumed as Non - recurring item & therefore it is written on a balance sheet liability side. When the Donation is received in general there is no specific purpose to it then it is non – specific donation. Such donation is assumed to be recurring & therefore it is written in income & expenditure A/c. ➢ Subscription is one of the recurring income of N.P.O and therefore it will be written in the Income & Expenditure A/c ➢ Any special type of fund created like price fund, sports fund, tournament fund etc. will be written on the balance sheet liability side. If any expenses are incurred from it, then they will be reduced from the fund directly and if there are any incomes relating to the fund, they will be added to the fund directly. On the balance sheet liability side. ➢ If any asset is sold, then the profit or loss on the sale of the asset is written in the income & expenditure account.

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Important for ma t of Income and Expenditure accounts. Expenditure

Amou nt

To Salaries To Rent To Printing & Stationary To Electricity Expenses To Telephone Expenses To News Papers & Periodicals. To Repairs and Maintenance To Office Expenses To Gardening To Insurance premium To Tennis Expenses To Billiard expenses To Bar Expenses To Purchases of Medicines To Miscellaneous Expenses. To wages To Lecturer’s Fees To Refreshment Expenses To depreciation on assets To Bad debts To Magazine expenses To annual function expenses To loss on sale of old assets To drama expenses To Surplus

xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx

Income By Subscriptions By interest on Investments By grants from Governments. By Hire of Hall By Tennis court receipts By Billiard fees By Tennis fees By Miscellaneous Receipts By Drama Receipts By proceeds from charity show By Subscription for annual dinner By Proceeds from entertainments By Profit on sale of old assets By Donation (General)

xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx

xxxx

xxxx

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1. Dr. Ramesh started practice as a medical practitioner: On 1 Jan, 1997. He gives you the Receipts and Payment accounts for the year 1997and the adjustments to be made. Prepare the Income and Expenditure account and his Balance sheet for the year 1997. Receipts Rs. Payments Rs. To cash introduces 7,500 By Furniture 3,000 To visits 24,000 By Equipments 3,750 To Receipts from dispensary 15,000 By Drugs 4,500 To sundry Receipts 150 By salaries 3,000 By Rent 2,250 By Conveyance 1,500 By Stationery 150 By lighting 225 By journals 375 By Drawings 18,000 By Balance C/F 9,900 46,650

46,650

Adjustments: 1. Receipts in arrears are visits Rs. 1,500/- and dispensary Rs. 900/2. Salaries Outstanding are Rs. 300/- and Rs. 300/- are outstanding for expenses on drugs. 3. 40% amount of the conveyance was for domestic use. 4. Stock of drugs in hand at the end of the year RS. 1,200/5. Depreciate furniture and equipment s@ 10%. 2. From the following information supplied to you prepare income and expenditure account for the year ended on 31st December 1980 and Balance sheet as on that date for Subhash Sports Club, Aurangabad. Balance sheet as on 1st January 1980 Liabilities Rs. Assets Rs. Subscription received in 1,000 Land & Building 50,000 advance 2,800 Furniture] 10,000 Out standing expenses 10,000 Cash in hand 20,000 8% Loan 67,200 Outstanding Debtors for subscription 700 Locker Rent Capital fund 300 81,000

81,000

Receipt and Payments Accounts for the year ended 31st December 1980 Receipts Rs. Payments

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To Balance (01.01.0980) Subscription : 1979 400 1980 4,000 1981 300 Entrance fees Locker Rent Income from refreshment Donations

20,000 By expenses: 1979 2,400 1980 4,000 6,400 By Furniture (01 -07 1980) 8,000 4,700 By Loan Repayment (01.0701980) 10,000 1,300 By interest on Loan account 400 1,000 4,200 7,000 By refreshment Expenses 6,000 1,000 By balance ( 31.12.1980) 35,000 35,000 Following adjustments are to be taken into consideration: 1. Outstanding subscriptions for 1980 Rs. 1,500/2. Outstanding Expenses for 1980 Rs. 500 3. Outstanding Salary Rs. 1,000/4. Depreciate Land and Building at 2% and Furniture @ 10% per annum. 5. Entire amount of donations and one – half amount of entrance fees are to be capitalized. 6. Locker Rent outstanding for 1980 is Rs. 200/3. Mr. SASA started practice as a medical practitioner: On 1st Jan, 1997. He gives you the Receipts and Payment accounts for the year 1997and the adjustments to be made. Prepare the Income and Expenditure account and his Balance sheet for the year 1997. Receipts Rs. Payments Rs. To cash 9,500 By Equipments 3,000 To visits 24,000 By Furniture 3,750 To Receipts from dispensary 16,000 By Drugs 4,500 To sundry Receipts 1150 By salaries 3,000 By Rent 2,250 By Conveyance 1,500 By Stationery 1150 By lighting 1225 By journals 2375 By Drawings 18,000 By Balance C/F 9,900 50,650

50,650

Adjustments: 1. Receipts in arrears are visits Rs. 1,500/- and dispensary Rs. 900/2. Salaries Outstanding are Rs. 300/- and Rs. 300/- are outstanding for expenses on drugs. 3. 80% amount of the conveyance was for domestic use. 4. Stock of drugs in hand at the end of the year RS. 1,200/5. Depreciate furniture and equipment s@ 15%. 4. From the following Receipts and Payments account of Hanuman Vyayam Shala, Jalgaon; and the adjustment given you are required to prepare Indome and Expenditure account and a balance sheet.

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Receipts and Payments Account for the Year ended 31-12-1996 Receipts Rs. Payments To Balance b/d 4160 By Salaries To Subscriptions By Entertainment Expenses 1996 16,000 By Lighting 1997 412 16,412 By General Expenses To Donations 5,000 By Taxes To Receipts from 3,644 By Investments entertainment By Printing & Stationery To Interest 324 By Expenses of 1995 Paid To Entrance Fees 4500 By Fixed Deposit By Balance c/d

Rs. 5500 2580 1000 1536 500 12000 944 2400 4000 3580

34040

34040

Adjustments:1. There are 450 members paying and annual Subscription of Rs. 40/- each 2. Salary outstanding was Rs. 1,000/3. Land and building stood in the books at Rs. 60,000/- and furniture at Rs. 4,600/- and it is required to write off depreciation at 2% and 10% respectively. 4. Interest on Investments AT 5% p.a. has accrued for 3 months. 5. The capital fund was Rs. 66,360/- On 1st January, 1996. 6. 50% of the entrance fees is to be capitalized. 5. From the following Receipt and Payment A/c of Tarun Mitra Mandal, Jalgaon for the year ending 31-12-1981 and the adjustments given below, prepare Income And Expenditure A/c for the year ending 31st December 1981 and the Balance Sheet on 31-12-1981, Receipts Amount Payments Amount To Balance 01-01-1981 23,000 By Taxes 1500 To Donations 5,000 By rent 12000 To Entrance Fees 3,500 By stationery 2500 To subscriptions 20,000 By wages 3000 To locker rent 1,000 By billiard table 1950 To Income from Annual 1,500 By electrical fittings 1150 program By Investments 12000 To Sale of furniture 15,000 By repairs 800 (Cost of Rs. 20,000) By annual programmer 1100 expenses By Match expenses 3000 By Bank Balance 25000 By cash 5000 69000

69000

1. Locker rent includes Rs. 200/- for the year 1980 and Rs. 50 is still outstanding for current year.

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2. Subscriptions include Rs. 1000/- for the year 1980 and 800/- are outstanding for this year while Rs. 200/- are received in advance in the year 1982. 3. Rent Rs. 800/- for the month of December 1981 is still outstanding. 4. ½ of the donations and ½ of entrance fees are to capitalized. 5. Opening stock of stationery stood at Rs. 500/- on 1.1.1981, while at the end of the year the stock of stationery stood at Rs. 1,000/6. The assets on 1.1.1981 were: Furniture Rs. 25,000/- Sports materials Rs. 5000/- while the capital fund on 01 – 01 – 1981 stood at Rs. 54700/6.

Receipts and Payments Accounts For the Year ended 31.12.1997 Receipts To Subscriptions To Bar Receipts To Interest on Securities To cricket fees To tennis fees To Billiard Fees To Life member’s fees To Donations To entrance fees To Tournament fund

Amount 1,100 600 150 250 300 250 2000 24800 3000 1000

Payments By salaries By printing and Stationery By telephone By gardening By cricket By insurance By tennis By billiards By bar expenses By investments By land and buildings By tournament expenses By furniture By sports material By current a/c balance By cash in hand

33450

Amount 1000 100 150 120 200 100 300 400 1200 5000 2000 1000 1200 1000 1000 680 33450

Additional Information:1. Subscriptions outstanding for the year Rs. 550. 2. Subscriptions of Rs. 100 were received in advance. 3. Salaries unpaid for 1997 amounted to Rs. 200 4. Insurance prepaid Rs. 50. 5. Half of the entrance fees received was to be capitalized 6. Donations and Life member’s Fees were to be capitalized. 7. Interest due but not received Rs. 100/8. Sports materials were valued at Rs. 800. 9. Depreciate furniture by 5% and land and building by 2. ½ % From the above information, prepare an Income and Expenditure Account for the year ended 31.12.1997

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7. The following is the Receipts & Payments Account of Pensioner’s Association for the year ending 31st March 1998. Receipts & Payments A/c For the year ended 31 – 03 – 1998 Receipts Amount Payments Amount To Balance : 1.4.97 1,500 By Traveling Expenditure 2,000 To Entrance Fees 375 By Stationery 1,500 To Subscriptions By Salaries 3,700 1995 – 96 200 By Wages 8,000 1996 – 97 15,000 By Repairs 1,250 1997 – 98 700 By Interest 470 To Special subscription for 3,250 By balance 31.03.1998 4,105 Chairman’s Party 21,025

21,025

1. 2. 3. 4.

Stationery expenses include Rs. 300 for the year 1996 – 97. Similarly, salary for the month of March 1998 Rs. 700 is not yet paid. Subscription unpaid for the current year is Rs. 300. Special subscription of the Chairman’s party Rs. 100 is yet outstanding. From the above information, you are requested to make out an Income and Expenditure account of the Association for the year ending 31.03.1998. 8. From the following information, prepare Income and Expenditure account for the year ended 31st march, 1998 and a balance sheet as on that date: Receipts & Payments A/c for the year ended 31.03.1998 Receipts Amount Payments Amount To Cash in hand (1 . 04 .1997) 1750 By Bank Overdraft 2500 To Subscriptions By Salaries 5300 1996 – 97 150 By Furniture 2000 1997 – 98 14,100 By Investments in Securities 4000 1998 – 99 75 14325 By Printing and Stationery 800 To Proceeds from Drama 2500 By Cost of staging drama 1500 To Entrance Fees 800 By Sundry Expenses 1300 To Interest on Securities 500 By Cash at Bank 2500 To Sale of Old furniture 200 By Cash in hand 175 20075

20075

1.

The society has 1500 members, each paying an annual subscription of Rs. 12.

2.

Subscriptions of Rs. 100 pertaining to the year 1996 -97 are still in arrears.

3.

Value of stationery at hand on 31.3.1997 was Rs. 200 and on 31.3.1998 was Rs. 150

4.

Entrance fees are to be treated as Capital receipts.

5.

Salary of Rs. 700 for the current year is unpaid.

6.

Balances as on 31.03.97. Investments Building Furniture

7.

Depreciate Building by 2 ½ and furniture by 5%

Rs. 4500 Rs. 25000 Rs. 200

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9. Dr. Narendra commenced practice in the month of January 1998. He prepared the following Receipts and Payments Account for the year ended 31.12.98 Receipts & Payments A/c for the year ended 31.12.98 Receipts To cash To visits To Sundry Receipts

Amount Payments 10,000 By Furniture 7,000 By Equipments 400 By Drugs By Salaries By Rent By conveyance By Stationery By Lighting By Periodicals By Drawings By Balance C/d 17400

1. 2. 3. 4. 5.

Amount 1500 2500 2000 1000 500 700 100 125 100 4375 4500 17400

Rs. 200 were to be received on account of visits. Unpaid salaries Rs. 200 60% conveyance is for private purposes. Value of furniture and equipment 10% Depreciate furniture and equipment by 10% Prepare Income and Expenditure Account and Balance sheet.

10. From the following information, prepare Income and Expenditure account for the year ended 31.12.1998 and a balance sheet as on that date Receipts and payments account for the year ended 31.12.1998

Receipts To Balance B/d To Donations To Subscriptions: 1997 250 1998 3,500 1999 750 To Entrance Fees To interest on Investments 1. 2. 3. 4. 5.

Amount Payments 3,500 By Salaries 1,500 1997 250 1998 2,250 By Rent By Postage 4500 By Printing and Stationery 1000 By Balance c/d 2000 12,500

Salaries unpaid Rs. 250. Printing & stationery include Rs. 600 Printing paid includes Rs. 500 pertaining to the previous year. Subscriptions outstanding Rs. 650 Balances on 1.1.98 Furniture – Rs. 6000 Investments Rs. 50,000 Buildings Rs. 20,000

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Amount 2500 4300 300 3000 2400 12,500

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11. From the following information relating to thane Cricket Association, prepare the Income & expenditure account for the year ended 31st March 1999 and the Balance sheet as at that date. The following is the abstract form the Cash Book for the year.

Particulars To Members Subscriptions To Members Admission Fees To Miscellaneous Receipts To Hire of Ground To Subscription fee for Tournaments To Cash drawn from Bank To Donations for instituting a prize

Amount Particulars 10000 By Tournament Expenditure 300 By Maintenance Charges of ground 400 By Rates and Insurance 1000 By Telephone 3000 By Printing and Stationery By General charges 6000 By Honorarium to Secretary 1000 By Fixed Deposit in Bank By Investment 30700 By Sports equipment By Payment into Bank

Assets on 1st April 1998 were:Sports and Equipment Cash at Bank Prepaid Insurance Subscription due to the Association

Amount 1800 1500 600 150 300 500 1300 6000 9550 2000 7000 30700

3000 6000 200 600

Liabilities on 1st April 1998 were: Printing and Stationery 100 Honorarium to Secretary 100 You are furnished the following further information:Donations of Rs. 10000 should be kept in a separate account. Subscription received for the year 1999-2000 are Rs. 1000/- while Subscriptions outstanding on 31st March 1999 Rs, 400/Investments are of the face value of Rs. 10,000/- and were purchased on 1st October 1998. Interest thereon at 12% per annum has accrued due. Write off 50% of Sports equipment, Prepaid Insurance amounts To Rs. 250/- and the Secretary is to be given a bonus of Rs. 500/12. From the following Receipts & Payments account of a Credit Club and the subjoined information, prepare Income and Expenditure Account for the year ended 31-12-1994 Receipts & Payments Accounts Particulars To Balance – cash A/c Current A/c To Fixed deposit at 6% To Membership Subscription(including 600 for 1993) To Entrance Fees To donations To Interest on Fixed Deposit To tournament Fund To sale of Crockery (Book Value of Rs. 120)

Amount 352 2738 3000 4000

Particulars By Crockery purchases By Maintenance By Match Expenses By Salaries By Conveyance By upkeep of Lawn By Postage stamps By Purchase of Cricket goods By Sundries By investments By Tournaments Expenses By Balance : Cash in hand 220

275 501 90 2000 200 13156

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Amount 265 682 1324 1100 82 424 105 972 200 570 1880

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Current A/c By Fixed Deposit

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2332 3000 .

5552 13156

Additional Information:1. Monthly Salary is Rs. 100 2. The value of unused postage stamps in as follows: 31st December,1993 75 31st December,1994 90 Stock of Cricket Equipment are as follows: 31st December, 1993 321 21st December, 1994 280 Arrears of Membership subscriptions: 1993 660 1994 800

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15. Receipts To Balance b/c To Subscriptions: 1997 2,000 1998 17,500 To Interest To donation for special fund To Rent: 1997 1,300 1998 650

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Receipts& payments A/c For the year ended 31.12.1998 Amount Payments 3,500 By Books By Printing and Stationery By Salary and Wages 19,500 By Advertising 2,000 By Sundry Expenses By Balance C/d 750

Amount 7,500 750 6,250 500 1,600 11,100

1,950 27,700

27,700

Income and Expenditure A/c For the year ended 31.12.1998 Expenditure Amount Income Amount To insurance 600 By Interest 1,900 To salaries 6,500 By subscriptions 19,000 To sundry Expenses 1,600 By Rent 1,300 To Depreciation on Building 3,750 To Printing and Stationery 750 To Advertising 450 To Surplus 8550 22,200 22,200 On 1.1.1998 the assets of the institution were as follows: Buildings Rs. 85,000 Books Rs. 75,000 Furniture Rs. 5,000 Investments Rs. 25,000 Liabilities: Loan Rs. 5,000 From the above particulars, your are requested to prepare the Opening Balance Sheet and closing Balance sheet. 16. The following is the Receipts and Payments account of Charitable Hospital for the year ending 31st December,99. Receipts Amount Payments Amount Opening balance_ Furniture Cash 625 Salaries Bank 3,625 Surgical Instruments Govt. Securities 90,000 Diet Expenses Receipts_ Surgical and Dispensary Subscription 12,500 Rent and Rates Interest 4,500 Insurance Donations 5,750 Office Expenses Sundry Receipts 325 Traveling Expenses Medicines Closing Balance_ Cash Bank Govt. security

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117325 117325 You are asked to prepare the Income and Expenditure account for the year ended on 31st Dec. 1999 and the Balance sheet as on that date after taking into account the following information. The assets on 1st Jan 1999 were as follows Furniture Rs. 1000 Land Rs. 25,000 Building Rs. 75,000 Surgical instruments Rs. 1750 Write of Depreciation a 2 ½ % on Building, 6% on Furniture and 20% on Surgical instruments. The Govt. Securities were of the face value of Rs. 1,00,000 and represents the investments of the Endowment fund. The subscriptions received included Rs. 5000 for the previous years, whereas the outstanding subscriptions f0or the current year amounted to Rs. 3500. Salaries of staff include Rs. 500 for the last year and salaries Rs. 750 is outstanding for the current year. Interest received include Rs. 1000 for the year 1998 and Rs. 1150 are outstanding for the current year.

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