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    Difference Between Profit Making and Non-Profit Making Organisation

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    Jean Emanuel
    The document discusses non-profit organizations and how they differ from profit-making organizations. It provides details on how non-profits generate funds through subscriptions, donations, and ancillary activities. Key differences between non-profits and for-profits include their use of income/expenditure statements instead of income statements and accumulated funds instead of capital. The document also contrasts receipts and payments accounts with income and expenditure accounts and provides an example format for an income and expenditure statement.

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    Difference Between Profit Making and Non-Profit Making Organisation

    Uploaded by

    Jean Emanuel
    82 views3 pages
    The document discusses non-profit organizations and how they differ from profit-making organizations. It provides details on how non-profits generate funds through subscriptions, donations, and ancillary activities. Key differences between non-profits and for-profits include their use of income/expenditure statements instead of income statements and accumulated funds instead of capital. The document also contrasts receipts and payments accounts with income and expenditure accounts and provides an example format for an income and expenditure statement.

    Original Description:

    Non profit organisation Accounting

    Original Title

    Nonprofit#

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    The document discusses non-profit organizations and how they differ from profit-making organizations. It provides details on how non-profits generate funds through subscriptions, donations, and ancillary activities. Key differences between non-profits and for-profits include their use of income/expenditure statements instead of income statements and accumulated funds instead of capital. The document also contrasts receipts and payments accounts with income and expenditure accounts and provides an example format for an income and expenditure statement.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    82 views3 pages

    Difference Between Profit Making and Non-Profit Making Organisation

    Uploaded by

    Jean Emanuel
    The document discusses non-profit organizations and how they differ from profit-making organizations. It provides details on how non-profits generate funds through subscriptions, donations, and ancillary activities. Key differences between non-profits and for-profits include their use of income/expenditure statements instead of income statements and accumulated funds instead of capital. The document also contrasts receipts and payments accounts with income and expenditure accounts and provides an example format for an income and expenditure statement.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Non-Profit Organisation

    Non-profit organisation is an institution that operates for the benefits of its members and not
    for profit making.
    Non-profit organisation generates fund:
     Subscriptions (General and life)
     Ancillary Activities
     Donation (General or Specific)
     Gift

    Difference between profit making and non-profit making organisation


    Profit making Non-profit making

    a. Income statement a. Income and Expenditure


    b. SOFP b. SOFP
    c. Capital c. Accumulated fund
    d. Profit (loss) d. Surplus (deficit)
    e. Bank account e. Receipt and payment

    Difference between receipts and payment account and Income and expenditure account
    Receipts and Payment Income and Expenditure account
    account
    Prepared under cash basis Prepared under accrual basis
    Included capital and revenue Included only revenue income
    income
    Includes capital and revenue
    Includes only revenue expenditure
    expenditure
    Does not contained non-cash
    items such as depreciation Contains non-cash items
    Final balance represent cash in Final balance represents surplus or
    hand and cash at bank deficit
    Is mainly prepared for internal Is mainly prepared for presentation
    use at AGM and filling with registrar
    of association
    Format Income and Expenditure account
    INCOME $ $
    Ordinary / annual subscription xxx
    Life Subscription xxx
    Bar/Refreshment/Café profit xxx
    Gifts and Donation (general) xxx
    Collection at Matches / Sales of tickets xxx
    Profit on fund raising activity xxx
    Profit on disposal xxx
    Interest Received xxx

    xxx
    Total Income
    EXPENDITURE
    Subscription written off xxx
    Bar/Refreshment/Café loss xxx
    Depreciation xxx
    Loss on disposal xxx
    Wages xxx

    Total Expenditure (xx)

    Surplus (Deficit) xxx

     Subscription- it is contribution made by members. It can be annual or life.

    Annual subscription can be calculated as follows (using same concept of accruals and
    prepayment of income)

    Dr Subscription Account Cr
    01-Jan Balance b/d (Accrued xxx Balance b/d(prepaid) xxx
    Income and Expenditure xxx Bank xxx
    Balance c/d (Prepaid) b balance c/d(accrued) a

    balance b/d(accrued) a Balance b/d (Prepaid) b


    Life subscription- it is where members pay their subscription once in their life time.
    However, an equal amount is transferred to income and expenditure and the
    remaining is transferred to accumulated fund.

     General donation is an income and Special donation is added to accumulated fund.


     Legacy is wealth given by a person after his death which is capitalised with
    accumulated fund.
    SOFP
    Finance by
    Accumulated fund xxx
    Legacy xxx
    Donation xx
    Life membership xx
    Surplus (deficit) xx
    xxx

    Q1. Annual subscription

    2008 2008
    1 Jan 31 Dec
    Subscription (Due) $300 $400
    Subscription (Prepaid) $250 $500

    Subscription received by cheque $4,500.

    Calculate annual subscription.

    Q2. Annual subscription

    2009 2010
    1 Jun 31 July
    Subscription (Due) $150 $200
    Subscription (Prepaid) $350 $400

    Annual Subscription is $5000.


    Subscription written off $500
    Calculate subscription received.

    Q3. Life subscription

    On 1 Jan 2012, life subscription amounted to $300 per members. It was to be credited to ordinary
    revenue over 20 years. During the year ended 31 December 2012, the club received $1800 on
    account of life subscription.

    Calculate:
    a. Annual amount of life subscription per member to be credited to ordinary revenue
    b. Number of members who paid lifer subscription
    c. Total amount of life subscription to be credited to ordinary revenue for the year ended 31
    dec 2012.
    d. Life subscription account for the year ended 31 Dec 2012.

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