In this presentation, you will find notes , accounting treatment and practical questions on the unit Financial Statements of not for profit organisations.

1. prepared by Preksha Mehta
Prepared BY
Preksha Mehta

2. Basis
of
Accounting
TWO
Revenue
and
Capital
Expenditure
and Receipts
THREE
Types
of
Accounts
ONE
Cash Book
Four
Prepaid Expense,
Outstanding
Expense,
Accrued income,
unearned income
Five
prepared by Preksha Mehta

3. 01
02
03
01
Personal Account
Debit the receiver,
Credit the giver
02
Real Account
Debit what comes
in,
Credit what goes
out
03
Nominal Account
Debit all expenses
and losses,
Credit all incomes
and gains
prepared by Preksha Mehta

4. 01
02
01
Cash Basis
Revenues are
recorded when
they are received
in cash.
Expenses are
recorded when
they are paid in
cash.
02
Accrual Basis
Revenues are
recorded when
they are earned.
Expenses are
recorded when
they are incurred.
prepared by Preksha Mehta

5. Incurred for day
to day working of
the business.
01
Incurred for
acquiring assets or
increasing capacity
of existing asset.
01
Short Term
(Upto one year)
02Long Term02
Dr side of
Trading or Profit
& Loss A/c
03Assets Side03
Capital Expenditure Revenue Expenditure

6. Recurring
Nature
04Non Recurring
Nature
04
Salary paid,
Rent paid,
Interest paid
05
Purchase of
furniture,
purchase of
machine
05
Capital Expenditure Revenue Expenditure

7. Incurred for day
to day working of
the business.
01
Amount received
leading to increase in
capital or liabilities or
reduction in assets,
01
Recurring 02Non
Recurring
02
Cr side of
Trading or Profit
& Loss A/c
03Balance
Sheet
03
Capital Receipts Revenue Receipts

8. Salary received,
Rent received,
Interest received
04
Capital Introduced,
Loans received,
Sale of assets
04
Capital Receipts Revenue Receipts

9. Not For Profit
Organisations
No Need to prepare
profit and loss A/c
Organisations
which are set up
not to earn profits
but to provide
services.
Main Sources of
Income
a. Subscriptions
b. Donation
c. Legacy
d. Grant in Aid
prepared by Preksha Mehta

10. 01
02
03
01
Receipts
and
Payments A/c
02
Income
and
Expenditure A/c
03
Balance Sheet
prepared by Preksha Mehta

11. Receipts
and
Payments A/c
prepared by Preksha Mehta
1. It starts with
opening balance of
cash in hand and
cash at bank
2. Nature of
Account: Real
3. Basis of
Accounting:
Cash Basis
4. Non cash items
are not recorded.
Features
4. Nature of
items recorded:
All cash receipts and
payments are
recorded whether of
capital nature or of
revenue nature.
5. Purpose: To
show closing
balance of cash in
hand and cash at
bank.

12. RECEIPTS AND PAYMENTS A/C
Ques: From the following information taken from
the cash book of a health club, prepare receipts
and payments a/c:
prepared by Preksha Mehta
Particulars Amount
Opening Balance of cash in hand
Opening balance of cash at bank
Subscription
Donation
Investment purchased
Rent paid
General expenses
Postage and stationery
Courier charges
Sundry expenses
Closing cash in hand
5000
25000
165000
35000
80000
20000
21500
2000
1000
2500
12000

13. Solution:
RECEIPTS AND PAYMENTS A/C
prepared by Preksha Mehta
Receipts Amount Payment Amount
To Balance b/d
Cash in hand
Cash at bank
To Subscription
To donation
5000
25000
165000
35000
By Investment
By Rent
By General
expenses
By Postage and
stationery
By Courier
charges
By Sundry
expenses
By balance c/d
Cash in hand
Cash at bank
80,000
20,000
21500
2000
1000
2500
12000
91000
230,000 230,000

14. Income and
Expenditure A/c
This account shows
incomes and
expenditure.
prepared by Preksha Mehta
1. Nature of
Account:
Nominal
2. Basis of
Accounting:
Accrual Basis
Features
3. Nature of
items recorded:
Items of only
revenue nature are
recorded.
4. Purpose: To
determine surplus
or deficit.

15. INCOME AND EXPENDITURE A/C
prepared by Preksha Mehta
Expenditure Amount Income Amount
To Rent
To General
expenses
To Postage and
stationery
To Courier
charges
To Sundry
expenses
To surplus
20,000
21500
2000
1000
2500
153000
By Subscription
By donation
165000
35000
200,000 200,000

16. 01
02
03
04
05
06
Entrance Fees
•Income
•Liability (if it is specified to be
capitalised)
Subscription
•Income
Life Membership Fees
•Liability
Legacy
•Liability
Donation
•General Donation – Income
•Specific Donation - Liability
Honorarium
•Expenditure

17. 07
08
09
Sale of old newspapers
and sports materials
•Income
Sale of assets
•Deducted from the asset
•Profit on sale – Income
•Loss on sale – Expenditure
Endowment Fund
•Liability

18. Ques: From the following receipts and payments a/c of a club,
prepare income and expenditure for the year ended 31st March 2019.
prepared by Preksha Mehta
Receipts Amount Payment Amount
To Balance b/d
To Subscription
(including Rs 600
received in advance)
To interest on
investment (cost of
investment Rs 50,000)
To Bank interest
To sale of furniture
(book value Rs 5000)
To life membership fee
6000
40000
6000
200
2400
8100
By salary
By rent
By stationery
By postage
By bicycle
By govt bonds
By balance c/d
15400
12300
700
400
1800
12500
19600
62700 62700

19. INCOME AND EXPENDITURE A/C
prepared by Preksha Mehta
Expenditure Amount Income Amount
To salary
To rent
To stationery
To postage
To loss on sale of
furniture (5000-
2400)
To surplus
15400
12300
700
400
2600
14200
By subscription
(40,000-600)
By interest on
investment
By bank interest
39400
6000
200
45600 45600

20. General Fund Specific Fund
In case of NPOs,
there is no capital
a/c. The difference
between assets and
outside liabilities is
known by the name
of ‘Capital Fund’.
The difference of
income and
expenditure is
transferred to this
fund every year.
Specific funds are
funds which are
created for any
specific purpose.
All the incomes
related to the fund
is added/credited
to the fund and all
the expenses out of
these funds are
debited to the fund.

21. FUND BASED ACCOUNTING
prepared by Preksha Mehta
Particulars Amount
Prize Fund on 1st April 2018
Interest on prize fund investment
Prizes given
Prize Fund Investment on 1st April 2018
Donations for prize fund
80,000
6,000
10,000
60,000
25,000
Show how will you deal with the following items in the final
accounts of Chetak Club, Jaipur as at 31st March 2019.

22. FUND BASED ACCOUNTING
prepared by Preksha Mehta
Liabilities Amount Asset Amount
Prize Fund 80,000
Add: Interest on prize fund
investment 6000
Less: Prizes given (10,000)
Add: Donations for prize
fund 25,000
101000 Prize Fund
Investment
60,000
Balance Sheet
(as at 31st March 2019)

23. FUND BASED ACCOUNTING
prepared by Preksha Mehta
Particulars Amount
Sports Fund on 1st April 2018
10% sport fund investment
Interest received on sports fund investment
Donations for sports fund
Sports prizes awarded
Expenses on sports events
5,00,000
5,00,000
37,500
120,000
100,000
15,000
Show how will you deal with the following items in the final
accounts of Chetak Club, Jaipur as at 31st March 2019.

24. FUND BASED ACCOUNTING
prepared by Preksha Mehta
Liabilities Amount Asset Amount
Sports Fund 500,000
Add: Interest received 37500
Add: Interest accrued 12500
Add: Donations 120000
Less: Sports prizes (100000)
Less: Expenses on sports
events (15000)
555000 Sports Fund
Investment
Interest accrued
500,000
12,500
Balance Sheet
(as at 31st March 2019)

25. FUND BASED ACCOUNTING
prepared by Preksha Mehta
Ques: Donations for tournament Rs 50,000, tournament expenses
Rs 60,000.
Sol: Excess of tournament expenses of Rs 10,000 will be shown on
the debit side of the income and expenditure a/c.

26. Ques: From the following receipts and payments a/c of a club,
prepare income and expenditure for the year ended 31st March 2019.
prepared by Preksha Mehta
Receipts Amount Payment Amount
To Balance b/d
To Subscription
2017-18 35000
2018-19 950,000
2019-20 55,000
To donation
To entrance fee
To locker rent
To donation for
building
75,000
10,40,000
90,000
60,000
20,000
150,000
By salary
By office expenses
By sports equipment
(purchased on 1st
October 2018)
By telephone charges
By electricity charges
By travelling
expenses
By 10% Fixed
Deposits (purchased
on 1st July 2018)
By balance c/d
22,000
8,000
600,000
12,000
18,000
6,000
700,000
69,000
14,35,000 14,35,000

27. Additional Information:
a. Outstanding subscription for 2018-19 Rs
80,000.
b. Outstanding salary as on 1st April 2018 were Rs
2000 and as at 31st March 2019 were Rs 4000.
c. Locker Rent is Rs 2000 per month.
d. Depreciation on sports equipment @10% p.a.
prepared by Preksha Mehta

28. Solution
INCOME AND EXPENDITURE A/C
(for the year ended 31st March 2019)
prepared by Preksha Mehta
Expenditure Amount Income Amount
To salary 22000
Add o/s (end) 4000
Less o/s (beg)(2000)
To office expenses
To depreciation on
sports equipment
To telephone charges
To electricity charges
To travelling
expenses
To surplus
24000
8,000
30,000
12000
18000
6000
11,58,500
By subscription
950,000
Add:
outstanding 80,000
By donation
By entrance fee
By locker rent20000
Add: accrued 4000
By interest on
investment
10,30,000
90,000
60,000
24,000
52,500
12,56,500 12,56,500

29. SUBSCRIPTIONS
Amount to be credited to Income and Expenditure
A/c
prepared by Preksha Mehta
Particulars Amount
Subscriptions received during the year
Add: outstanding at the end of current year
Less: outstanding at the beginning of current
year
Less: advance received in advance at the end of
current year
Add: advance received in advance at the
beginning of current year
Amount to be credited to Income and
Expenditure A/c

30. QUESTION
As per receipts and payments a/c for the year ended
31st march 2017, subscriptions received were Rs
600,000. Additional information given is as
follows:
a. Subscriptions outstanding on 1st April 2016 Rs
60,000.
b. Subscriptions outstanding on 31st March 2017 Rs
40,000.
c. Subscriptions received in advance on 1st April 2016
Rs 32000.
d. Subscriptions received in advance on 31st March
2017 Rs 38,000.
prepared by Preksha Mehta

31. SOLUTION
Amount to be credited to Income and Expenditure
A/c
prepared by Preksha Mehta
Particulars Amount
Subscriptions received during the year
Add: outstanding at the end of current year
Less: outstanding at the beginning of current
year
Less: advance received in advance at the end of
current year
Add: advance received in advance at the
beginning of current year
600,000
40,000
(60,000)
(38,000)
32,000
Amount to be credited to Income and
Expenditure A/c
574,000

32. QUESTION
As per receipts and payments a/c for the year ended
31st march 2017, subscriptions received were Rs
650,000. Additional information given is as
follows:
a. Subscriptions outstanding for 2016-17 Rs 25,000.
b. Subscriptions outstanding on 1st April 2016 Rs
20,000. (out of which Rs 16,000 were received
during 2016-17)
c. Subscriptions received in advance on 31st March
2016 Rs 7500.
d. Subscriptions received in advance on 31st March
2017 Rs 10,000.
prepared by Preksha Mehta

33. SOLUTION
Amount to be credited to Income and Expenditure
A/c
prepared by Preksha Mehta
Particulars Amount
Subscriptions received during the year
Add: outstanding at the end of current year
Less: outstanding at the beginning of current
year
Less: advance received in advance at the end of
current year
Add: advance received in advance at the
beginning of current year
650,000
25,000
(16,000)
(10,000)
7,500
Amount to be credited to Income and
Expenditure A/c
6,56,500

34. PRACTICE QUESTION
Subscriptions received during the year Rs 5000.
Amount received in advance for the next year is
Rs 300. Amount outstanding for the current
year is Rs 400. Amount of subscriptions to be
credited to Income and Expenditure A/c is
_______?
prepared by Preksha Mehta

35. ANSWER
Subscriptions received during the year Rs 5000.
Amount received in advance for the next year is
Rs 300. Amount outstanding for the current
year is Rs 400. Amount of subscriptions to be
credited to Income and Expenditure A/c is
_______?
Answer → Rs 5100
prepared by Preksha Mehta

36. QUESTION
Calculate amount of subscriptions to be credited to income
and expenditure a/c for the year ended 31st March
2019:
a. Subscriptions in arrears on 31st March 2018 Rs 12500.
b. Subscriptions received in advance on 31st March 2018
for the year ended on 31st March 2019 Rs 9000.
c. Total subscriptions received during the year ended 31st
March 2019 (including Rs 10,000 for the year ended
31st March 2018, Rs 8000 for this year ended 31st
March 2020 and Rs 3000 for the year ended 31st March
2021) Rs 460,000.
d. Subscriptions outstanding for the year ended 31st March
2019 Rs 20,000.
prepared by Preksha Mehta

37. SOLUTION
Amount to be credited to Income and Expenditure
A/c
prepared by Preksha Mehta
Particulars Amount
Subscriptions received during the year
Add: outstanding at the end of current year
Less: outstanding at the beginning of current
year
Less: advance received in advance at the end of
current year
Add: advance received in advance at the
beginning of current year
460,000
20,000
(10,000)
(11,000)
9,000
Amount to be credited to Income and
Expenditure A/c
4,68,000

38. COST OF CONSUMABLE GOODS
Amount to be debited to Income and Expenditure
A/c
prepared by Preksha Mehta
Particulars Amount
Opening Stock
Add: purchase
Less: closing stock
Amount consumed during the year

39. PURCHASE OF CONSUMABLE GOODS
prepared by Preksha Mehta
Particulars Amount
Amount paid
Add: creditors at the end
Less: creditors at the beginning
Add: Advance at the beginning
Less: Advance at the end
Amount purchased during the year

40. COST OF CONSUMABLE GOODS
Ques: On the basis of given information, calculate the
amount of sports materials to be debited to the income
and expenditure a/c of a sports club for the year ended
31st March 2019:
prepared by Preksha Mehta
Particulars 1/4/2018 31/3/2019
Stock of sports materials
Creditors for sports materials
Sports materials purchased
during the year ended 31st
March 2019 were Rs 494000.
87000
239000
107000
341000

41. COST OF CONSUMABLE GOODS
Amount to be debited to Income and Expenditure
A/c
prepared by Preksha Mehta
Particulars Amount
Opening Stock
Add: purchase
Less: closing stock
87000
494000
(107000)
Amount consumed during the year 474000

42. COST OF CONSUMABLE GOODS
Ques: On the basis of given information, calculate the
amount of stationery to be debited to the income and
expenditure a/c for the year ended 31st March 2019:
prepared by Preksha Mehta
Particulars Amount
Stock of stationery on 1/4/2018
Creditors for stationery on 1/4/2018
Advance paid for stationery on 1st April 2018
Stock of stationery on 31/3/2019
Creditors for stationery on 31/3/2019
Advance paid for stationery on 31/3/2019
Amount paid for stationery during 2018-19
7000
4000
6000
3000
8000
1500
42000

43. COST OF CONSUMABLE GOODS
Amount of stationery purchased during 2018-19
prepared by Preksha Mehta
Particulars Amount
Amount paid
Add: creditors at the end
Less: creditors at the beginning
Add: Advance at the beginning
Less: Advance at the end
42000
8000
(4000)
6000
(1500)
Amount purchased during the year 50,500

44. COST OF CONSUMABLE GOODS
Amount to be debited to Income and Expenditure
A/c
prepared by Preksha Mehta
Particulars Amount
Opening Stock
Add: purchase
Less: closing stock
7000
50,500
(3000)
Amount consumed during the year 54,500

45. Ques: From the following receipts and payments a/c of a club,
prepare income and expenditure for the year ended 31st March 2019
and balance sheet as at date.
prepared by Preksha Mehta
Receipts Amount Payment Amount
To Balance b/d
To Subscription
(including Rs 750 for
2019-20)
To donation
To interest on
securities
To hall rent
To telephone receipts
20,800
21250
10,000
1000
1250
50
By establishment
charges (includes Rs
400 for 2019-20)
By telephone charges
By electric charges
By stationery
By travelling
expenses
By meeting expenses
By rent
By books
By donations
By balance c/d
6000
540
250
600
150
500
5400
3000
5000
32910
54,350 54,350

46. Additional Information:
1. The club holds 6% government securities of Rs
40,000 and books of Rs 20,000 on 1st April
2018.
2. Half of the donations received is to be
transferred to the capital fund.
3. Rent Rs 300 is still payable.
prepared by Preksha Mehta

47. Balance Sheet
(as at 1st April 2018)
prepared by Preksha Mehta
Liabilities Amount Assets Amount
Opening capital fund
(Balancing figure)
80,800 6% Government
securities
Books
Cash in hand
40,000
20,000
20,800
80,800 80,800

48. Income and Expenditure A/c
(for the year ended 31st March 2019)
prepared by Preksha Mehta
Expenditure Amount Income Amount
To establishment charges
6000
Less prepaid (cy) (400)
To telephone charges
To electric charges
To stationery
To travelling expenses
To meeting expenses
To rent 5400
Add: outstanding end
300
To donation
To surplus
5600
540
250
600
150
500
5700
5000
10,860
By subscriptions 10,000
Less: advance end (750)
By interest on securities
1000
Add: accrued 1400
By hall rent
By telephone receipts
By donations
20,500
2400
1250
50
5000
29,200 29,200

49. Balance Sheet
(as at 31st March 2019)
prepared by Preksha Mehta
Liabilities Amount Assets Amount
Opening capital fund
80800
Add surplus 10860
Outstanding rent
Subscriptions in
advance
Donation
91660
300
750
5000
6% Government
securities
Accrued interest
Books
Cash in hand
Prepaid
establishment
charges
40,000
1400
23,000
32910
400
97,710 97,710

50. Ques: From the following receipts and payments a/c of a club,
prepare income and expenditure for the year ended 31st March 2019
and balance sheet as at date.
prepared by Preksha Mehta
Receipts Amount Payment Amount
To Balance b/d
To Subscription
To interest
To tournament fund
To donation
To donation for
building extension
To receipts from
advertisement
4400
46100
2500
12000
6000
20000
5200
By salary
By rent
By printing and
stationery
By expenses on
charity show
By tournament
expenses
By investment
purchased
By furniture
By balance c/d
18200
15000
7300
16100
7500
10,000
6000
16100
96200 96200

51. Additional Information:
1. The club has furniture valued Rs 8000 and
investments valued Rs 15000 on 1st April 2018.
Additional furniture was bought on 1st July
2018. Depreciation on furniture to be charged
at 10 percent p.a.
2. Subscriptions outstanding on 31st March 2018
were Rs 4500 and on 31st March 2019 were Rs
6000.
3. Rent outstanding at the beginning of the year
was Rs 1000 and in the end was Rs 1500.
prepared by Preksha Mehta

52. Balance Sheet
(as at 1st April 2018)
prepared by Preksha Mehta
Liabilities Amount Assets Amount
Outstanding rent
Opening capital fund
(Balancing figure)
1000
30900
Furniture
Investment
Cash in hand
Outstanding
subscription
8000
15000
4400
4500
31900 31900

53. Income and Expenditure A/c
(for the year ended 31st March 2019)
prepared by Preksha Mehta
Expenditure Amount Income Amount
To salary
To rent 15000
Add: o/s (end) 1500
Less: o/s (beg) (1000)
To printing and
stationery
To expenses on charity
show
To depreciation on
furniture
(800+450)
To Surplus
18200
15500
7300
16100
1250
2950
By subscriptions
46100
Add: o/s (end) 6000
Less: o/s (beg)(4500)
By interest
By donation
By receipts from
advertisements
47600
2500
6000
5200
61300 61300

54. Balance Sheet
(as at 31st March 2019)
prepared by Preksha Mehta
Liabilities Amount Assets Amount
Opening capital fund
30900
Add surplus 2950
Outstanding rent
Donation for building
extension
Tournament fund
12000
Less: tournament
expenses (7500)
33850
1500
20,000
4500
Furniture 8000
Add: purchased 6000
Less: dep (1250)
Investment
Cash in hand
Outstanding
subscription
12750
25000
16100
6000
59850 59850

55. Ques: From the following receipts and payments a/c of a club,
prepare income and expenditure for the year ended 31st
March 2018 and balance sheet as at date.
prepared by Preksha Mehta
Receipts Amount Payment Amount
To Balance b/d
To subscriptions
(including Rs
10,000 for 2018-19)
To life membership
fees
To interest on
investment (@7%
p.a)
240,000
580,000
25,000
28000
By rent
(paid for 11
months)
By insurance
By salaries
By stationery
purchased
By balance c/d
176000
3000
264000
60,000
370,000
873000 873000

56. Additional Information:
1. Subscriptions in arrear on 31st March 2017 were
Rs 30,000 and on 31st March 2018 were Rs
48,000.
2. Stock of stationery on 31st March 2017 was Rs
5000 and on 31st March 2018 Rs 14000.
3. Insurance was paid on 1st January 2018 to run
for one year.
prepared by Preksha Mehta

57. Balance Sheet
(as at 1st April 2017)
prepared by Preksha Mehta
Liabilities Amount Assets Amount
Opening capital fund
(Balancing figure)
675000
Outstanding
subscription
Cash in hand
Stock of stationery
Investment
30000
240,000
5000
400,000
675000 675000

58. Income and Expenditure A/c
(for the year ended 31st March 2018)
prepared by Preksha Mehta
Expenditure Amount Income Amount
To rent 176000
Add: o/s 16000
To insurance 3000
Less: prepaid (2250)
To salaries
To stationery
consumed
To surplus
192000
750
264000
51000
108250
By subscriptions
580000
Add: o/s (end)48000
Less: o/s (beg)
(30000)
Less: advance(end)
(10,000)
By interest on
investment
588000
28000
616000 616000

59. Balance Sheet
(as at 31st March 2018)
prepared by Preksha Mehta
Liabilities Amount Assets Amount
Capital fund 675000
Add: surplus 108250
Life membership fees
Advance subscription
Outstanding rent
783250
25000
10000
16000
Outstanding
subscription
Cash in hand
Stock of stationery
Investment
Prepaid insurance
48000
370000
14000
400,000
2250
834250 834250