p,.-,._-n Account ..

ld Income and &peadllft Aaalal

IG AND CONCEPT OF NOT-FOR-PROFIT

NO7 ORGANISATION

ties smce tilf'l main oqective IS to earn profiL In mntrast to these

Org sa ose main objective s not to earn profit

, Non-profit Organisations are set up th the

o pub c sen res to public and/or
such r g ~ ons are: schools.
••••• r promob of sports, arts and culture

-Profit Organisaban are normally sourced contribuled)

membership fees and subscripoons.

a Nn1·-1nr-Pro6 OrganisabOr1 ma be:

Membe p Fee r Entrance Fee SubscriptiOII- d

( F r o m ~ andJor lnstitu
 1.2
ORGANISATION
CHARACTERISTICS OR FEATURES OF NOT-FOR-PROFIT
t pr lllllll

,I hi" t10 1 I l'h ·wu pr,)ft • lllll 11 ,,L,/t d

~ t' ,lt I, I l'

l 1• nt,1t,k , , 1 •t, t' t ,t 1hu.., 11 1 not tl\\ l1l i b, m mdl\ h.t

\ \
.. 1 t l'lt•lnn • ... fl) the ., 'l 1d\
l t l

Pn1ht I" not till' Oh1t 'lfIH '' ;\pt fo r O 1t 01g m1-.,ltlllll dl l''- nnl rundH)ll \\ 1th lhl' obw~h
, Ill'' n()f nw nth 1t 1t c mnot t ,11 n pl'l,ht tl'rm l d ., Surplw, Surpl
1
'drw f
1 1m its, ..-.l'(-. 11d ,1},1, opt: ,ltHm -. Surplus l'i usl'd tor lhl' ObJl
ll.i ... wt d,-,tn! utt d 1ml'ng 1t-. nwmbl'l'S
1du,1I Olil'l l <.:,tlltld
s. ~1 nJglmc.:nt :\11t ,, l"'h, 1t <Jrg nus 1t)l)n I" m.m.,µt•d b, ,1 group ot mdl\
ru,lt -; , Managmg Conmuttee
t,. f undc; u 1,.. ,, t-- 1~~ ahon~ .m.' gl\ l'n
b, 1r.- nwmlw1 s ,md donors ,1s I ntrJlll."t: F
\ 1l'lt: 1 p L C,ub-.l. Ft on and don,1hon, It 1:, -.uppl,
nwn kd b, tilll plu:, fr om opt•r,1tions.
1

t'n , t.1,1r" h1ch mdu drs Rece1pts

.. Finana,31 Statements: lt pn: pJrt:, 1h hn,mu.11 :-t.ltenwnb e,
tht' B,1lanc< ~heet.
nd Pl\ n n,., \l.Li.'unt Inconw ,md E\p~nd1hm' \tl.Ount .rnd
Prof it Earn ing Orga nisa tion
Difference beh een Not- for-P rofit Orga nisa tion and

ub service

2 Sources of
Funds S
'
n
- .. o Membersh p Fee
s and Su p us from
They are raised as capital by the p,rnn11M111
partners m the case of Partnersh p
n he nee Sheet t 1s shown as Share Capital or borrowed funds On the
or Cap ta Fund o Corpu~ Fund Compamesl. Profits not d1stnbuted to
and shareholders are shown as ReseM!S.
nts prepared are Receipts and Financial Statements prepared are
3 Financial
Pa me ts t ncome and Expe d tu e Account. Profit and loss Account and
Statements
A Sheet
mean cc nee o t e Profit and loss Accou
4 Surplus/Profit
us orDefic t loss
td stnbuted buted among ts
5 Distribution of
Surplus/Profit

Financial Statements of Not-for-Profit Organisation

showmg the finanaal transactio
Not-for-Profit Organi,ation prepares annual or final accounts
of the organic:ation for its members and to comph ,,
1th ,tah1ton requirements.
nisation mdu de.
Fmancial Statements or Fmal accounts of a Not-for-Profit Orga
1. Receipts and Pa, ments Account
2. Income and Expenditure Account and
3. Balance Sheet.
 Staemetits d Nol•-f'tallr OlgilliYlion5 1.J

~IPTS At~D PAY,.,PHS ACSOtY~T

It begins
..u.,.,.n,~.
g Cash and Barn.. Ba ances and ends ",th Oosmg Cash and Bank Balances ot the
ng penod Recetpts are sho, 'TI m the debit Side "hereas pa,ments are sho·wn m tM
de ot the account. Receipts and Pannents of e, el) nature are shown m this acro\Dll
ther 1t 1c; capital or re, enue m nature or,._ hether 1t relates to the current ,-ear p~ ous

of Receipts and Payments Account

RECE PTS AND PAYMENTS ACCOUNT

for the Yft)Tend«i-

' a, Blha ~1111111

caetflllilO.U..,.

....
.,.,,...,
a,s...
•.
ByAdweldllllllllt---

.,.,---
ByNa,....slllCIMltl . . . . .

,.....
......
By - - -

.........
....
. . . . .Pll'-Cilaa& .,., ..........
,..Dlllli.....
Splla, ......
., OlrG--
., _..OftSlloW-
Ir Mtsa.lMIIM . . . .111

of tM ""9 wtll appau

 1,4 f 11lilt f 1111 y [i I l ~ I I c pin J ( fl• f )(II

of Hoco lpl ond Paym ont Acco unt

t ntuu
l •f Cd It rPcc·i i,t 11 cI cd'l11 pt1yml'nL
1 N,1h1r,• It I lll l · t•I 111 < m 111t, 11 ll111 n g , , 1111m m,11y •,
111 ( lud111f li.111 ~ h 11 ,11 tl'
, c-tion~ .:i d even~
,. . n, ltt of l'1t•p ntlng: It 1, p ,1 p ,1 11'd 0 11 ('.i i,Ji Bc1s11, nf ACl.:011nti11g' ,·r•., tr,1n- '1 n
II H• ac1 ount .
"hh h h,nc• bl t n ll u•1vc•d in p,rn l in ( ll'ih tlH'
1 b h 0\4,!J1 Ill

e: Jt 1L'1 1J1 d, ,111 11.:u.• 1pl<, an d p c1ym enls whC'tlwr

they drc> of rl.'vcnuc
('apil,11 :n1d Hcvr•nu
n ,ttnc• m t,1p1t,1l 11,1lt.11 c

4. P('no d• It n ·,':'<,rd'> ,1II CJsh and bunk tran..,acti

ons whelhC'r it n.•lat<?s to curre nt, prev,ou& or
u< rc.•(•d mg (11l'X t) ,lC'coun tmg pt.•riods
nce of this acco unt show s cJsh in hand
S. Ope ning and Clos ing Hala nccs : Op~ ning bala
.,t d and dosi ng balc1nce show s casr
.rnd/ or bt.1 nk in the· bcgm nmg of the acco untm g perio
d.
in hand ,m d /or tlt ba nk a1 the t•nd of the acco untin g pcno
, prep aid cxpcns<?s, accn ied income or
6. Adju stme nts: AdJU 5tme nt for outs tand ing exp<?nscs
e in this acco unt as it is mamt,iined
mco m, n cdvt d 111 adva nce, ,md dcpr ecrnt 1on are ,wt mad
on ca h b.1~1s of acco un tmg.
and paid unde r diffe rent head s during
7. Purp ose: 1 h1.: pur po&C' 11-1 to show amo unt recei ved
th<" ncco untm g y<m.

Limitations of Receipts and Payments Acc oun t

untin g perio d. Expenses and Incomes
(1) 11 does n o t show expe nses a nd inco mes for the acco
n. Beside5 paym ents of JiabilitJes
of earli er perio ds and follo wing perio d s are aJso show
capi tal rece ipts are also show n in the acco un t.
nisat ion is a ble to mee t its day-to-da}
(1i) It doe~ not show whe ther the Not-for-P rofit Orga
expenses out of its inco me or not.
oun t and Cas h Boo k
Difference betw een Rec eipts and Pay men ts Acc

transaction of rece·pt and payme-

It Is a summary of Cash Book and is prepared from It records each
separately.
the Cash look.
~~ .,.. ,. and Payments Account is prepared at the Cash---
--i i-- --- --- --- --- --- -+ --~ --;--•--- --
Book is maintained on daily basis.
- -- - - - - - ; - - 10 1~e
g __
__..;;;..;...
_otl'ldn
~~""""-"'--~.....d_acx >W• _ _ _ _ _ _ _- - J ~ -
fftlftSICtlons art not shown datewise but are Transactions are recorded datewise
Ii.. ,. fn summarised form, i.e., summarising Cash Book.
done nature together. . b It Not for-Pr
by Che Not.for-Profit Organisation. It Is prepared by all organi~tions e
Organisation or an enterprise. des.
~~ ,.,. .-- --- --- --- --. J-. ,;;: _-----::" -
llll" '!llltt.. . . . .: ae receipts and paym
ents sides Cash Book is divided into e
d bit and credits

(or Ledger folrJ.

dtdltslda
!!!!!•!!J~l!!~!f!:.......__ __J~ca~s~h~Book~~ha~s~a~se~pa~ra~te~c:.:o.:.:lu.:,;.m_n_~
 Chapter 1 · Financ ial Statements of Not-fo r-Profi t Organisation s 1.5

Illustration 1.
Pay ment s Acco unt of Frien d s Club,
From the infor rnabo n given below, prepa re Rece ipts and
Delhi, for the year ende d 31st Marc h, 2020:
00; Domitions ~ 80,000; Entra nce
Cash Balan ce on 1st April , 2019 ~ 44,000; Subs crjpti ons t 3,76,0
Electricity Charges t 34,400; Taxes
Fees { 43,000; Rent Reali sed from Club Hall r 52,500;
tary r 25,000; Jntcr es t Received
{ 5,000; Salar ies and Wage s { 2,]5,000; Hono rariu m to Secre
; Petty Expe nses t 9,000; lnsurancc
on Inves tmen ts t 29,500; Print ing and Statio nery t 3,500
Prem ium Pa id {3,10 0.
Solution: Friends Club, Delhi
Cr.
Dr. RECEIPTS AND PAYMENTS ACCO UNT for the year ended 31 st March, 2020
f
Receipts
To Balanc e bi d (Cash)
{

44,000
Payments
By Electricity Charges
-
34,400
By Taxes 5,000
To Subscriptions 3,76,000
2, 15,000
To Donations 80,000 By Salaries and Wages
By Honorarium to Secretary 25,000
To Entrance Fees 43,000
By Printing and Stationery 3,500
To Rent Realised fromClub Hall 52,500
9,000
To Interes t on Investments 29,500 By Petty Expenses
3,100
By Insurance Premium
By Balance cld:
Cash in Hand (Balancing Figure) 3,30,000
6,25,000
6,25,000

Illustration 2.
From the infor matio n g iven below, prepa re Recei pts
and Pay ment s Acco unt of Oldmen
Recreat10n Cl u b f or th e year en d e d 3 l s t March 2020 I

t Particulars t
Particulars
Salaries 75,600
Opening Balance: 4,800
Cash in Hand 20,000 Rent Paid
Electricity Expenses 7,600
Cash at Bank 50,000
Books Purchased 20,000
Subscription Received:
2018-19 7,000 10% Investments Purchased (1st September,2019) 30,000
1,21,600 Interest on 10% Investments 1,750
2019-20 4,000
2020-2 1 5,200 Entrance Fee
70,000 Closing Balanc e:
Donations for Building 25,600
14,000 Cash in Hand
Donations for Match ?
Match Expenses 6,000 Cash at Bank

Solut ion: Oldmen Recreation Club

Cr.
Dr. RECEIPTS AND PAYMENTS ACCOuNT fior theyear ended 3 1st March,2020
~ Payments ~
Receipts
To Balance bid: By Match Expenses 6,000
20,000 By Sal<1ries 75,600
Cash in Hand
Cash at Bank 50,000 70,000 By Rent 4,800
To Subscriptions: By Electricity Expenses 7,600
2018-19 7,000 By Books 20,000
201 9-20 1,21,600 By 10% Investments 30,000
2020- 21 5,200 1,33,800 By Balance cld:
To Donations for Building 70,000 Cash in Hand 25,600
To Donations for Match 14,000 Cash at Bank (Balancing Figure) 1,23,950 1,49,550
To Interest on 10% Investm ents 1,750 ·-
To Entran ce Fee 4,000
2,93,550 2,9"3, 550
 1.6 l)ouhll> I ntr y Book K0<'1,l11 J Cl!,[ XII
•
llh19t, .1tim1 >,
I r'11m tlw follow mH p \1rt1< ttl ,lr t,il <:n f1 um !11 • <.n 1, f1qrik o l At:~Pllll l,111(' ( l11h, pn , 11, It•
1
1{1' ( eipt & nnd ri., ' lllt:ril A,, t H111t :
P~rtkulars f{ I' 1rtl1ul 1
Ope111ng Bolan e (I sr Apr/I, ,oI lJ) t/r1 /,,q /111/ull( t' ( 11~, Mmr/1, )010)
Ca~h r;oo C1' l1 l;/)fJ(J
Bank 1,000 Bink
I
Rt:ceipt~: t>aymPnt .
St1hscrlpt1ori 10,000 fi/)OIJ
f ntrance Fees 10,000 IO ()
I rfe MembNsh1p re,•s 10,000 ,por I Pur h 1'Nj 4,0(J(l

j General Dorwtion$
Locker Hent
10,000
4,000
11.Jr•w p;;rw1 s 1111d P r1~1dlci1h
ftHnlltrrt
J,)(JO
IC1,11tio
Interest on 10% G~neral Fund l11ve\1 m(•nt ~ 1O,OCJCJ <inl,Hlf', 11, ,!10
Sale of Old New:;papers 100 Cll,rrit y % ow r )(jJ('I b(h 4,(11 J()
Proceeds from Charity Show l'>,900
Sale of Sports Materials l.00

Sol ution: Accountant'-. flub

Dr. R[ Cf:IPI S ANDfJ/\YMfN T',/\CCOUhll Im t/,r yr mn,tl1•d Jf <tMmt/11 '/0lO
Cr
Recr>ipts l',,ynwrits ~
lo Balance bid: By Hc11t 6,000
Cash 500 Uy 111:.ur ,nn Prernlurn 6,000
Bank 1,000 1,500 By f,por tc; M,111•rirtl~ '1,<JliO
To Subscriptions 10,000 By New.,prlpN· ;Jnd r •tl(1dicdl 1,?()0
To Entrance Fee~ 10,000 lly furniture 10,000
To Life Member~1hip Fees 10,000 By ',.rl,11 IP'> 14,500
To General Donations 10,000 By fharlty c,how l xrwn , 4,000
To Locker Rent '1,000 By Bc1l,inc.c· cl<I.
To Interest on 10% General Fund Investments 10,000 C.)sh JJ,000
To Sale of Old Newspapers 100 Bank (Billanr inq I lgure) 4,000 36,000
To Proceeds from Charity Show 2'J,900
To Sale of Sports Materrals 200
81,700 01/0()

•~,~1 r• "1)'" -',J}j

2. INCOME AND EXPENDITURE ACCOUNT , ·· .5;· ~;(;~;~~ 1

, :,,,./•::.,&:i:.~ ,I

Not-for-Pro fit 01 ganlsations are not .sc•l u r for Llic>pu rpo<-.P of 1•t1 11) i11 g P" ,fi I. l ht:n.:•forr, th<; y do
not prepare Prof1l <Jnd Loss Account. l11 s t<•a<l, tlwy pn.. p,1 re• lrn omc n nd I•xp1•nd iI urc A1. t 01 111t ,1t
the end of the accounting pNiod to dctt'rminc s urplus or d<'fici t. lnt 011ws ond g.uns MC•, rcd11cd
to th is account whiJe <·x-pc•nscs t1nd Jrn,sc•s an• dcbil ed I lw d iff l'H ' IH <' bet wc<•n ll1c two f; td <·~
is either surplus (Wlwn total of cn•cJit skit• is mmc thc1n ti H lot;i l o f <ll'bil ~Hit ) or (hfiut (Wh, n
totaJ of debit &ide 1s more lh<.1n the total of credit sid,) ½111 pltts is added lo Ilic> < dpi t,d h ind,
w hereas, Deficit is dcduch•d from Capital hmd in lh< IS,d.inc<' Sl1t•<'I.
Income and Dxpcnd,ture J\rrn11J1f ,,., prcpun d ([/ /hr c•11d of IJH• nrrn1111lin:,; p1•riod mc1lc:lu11g Ifrvu111e
1

Receipts (income) with I<ev,·nue I l/H'JI. es lo rJ, lcr111111t· SlfYJ1!1rn or rl1jicit.

It is prepared following ar:cr1H1l basis of nc<rn111l111g, the refore:
I. RcvcnuC' Expcns£•t:i for the ar.counling pt>Jirn.l ;in• li1kP11, wlmtlw1 tl11 •y hnv<' b1x•n p, tid u1 not.
2. Revenue Incomes for the ace minting period ,m' t<1kt•n, whctlwr lh<·y h.i v~ hcl'n 1e1;civt.'d rn nol
 Chapter 1 · Financial Statements of Not for-Profit Organisations 1.7

3 \.on-Cash E'\penses such as DepreLiation are accounted.

. not cons1dL~red 'beec-m.,e they art:> ._ho\\ n in
- ot Land a1e
4. Capitai b,penditu re e.o0 pu rel1a:,e
the Balance Sheet.
::>. Capital Incomes or Receipts e g. donabon tor specrhc purpose are not considt'red.

IMPORTANT NOTE
It should be noted that lncom e an d Expen dIture Account does not have an opening balance

IClos,ng balance •s either surplus or def1c1t, which iS trans1erred to Capital Fund (also known as
• General Fund or Corpus Fund) and shown in the Balance Sheet

ICurrent accounting perrod·s revenue items on 1y are considered and ·incomes and expenditures
relating 10 the preceding or succeeding (next) accounting periods are excluded while preparing
the Income and Expenditure Account.

• Capital Expenditure: Capital expenditure is an expenditure the benefit of which

extends beyond one accountin g period, i.e., ,t spreads over more than one
accountin g period. It results in the acquisition of assets which m the case of
Not-for-P rofit Organisations, are used for the furtherance of ,ts act1vit1es
Examples: The cost of land and building and any addition thereto.
• Revenue Expenditure: Revenue expenditure is that expenditure benefit of which expires
within the accounting period. In the context of Not-for-Profit Organisations revenue
expenditu re means expenditure incurred for social or charitable activities for which
it is set up but excluding the capital expenditure.
Examples: Salaries to staff, rent, educational grants, honorariums paid sports
material used, insurance, etc.
• Capital Receipts: Capital Receipts are the receipts which are not revenue receipts
or are receipts for the purpose specified by the donor.
Examples: Life Membership Fee, Corpus Donations, Building Fund, Receipts from
sale of Fixed Assets, etc.
• Revenue Receipts: Revenue receipts are the receipts which are received as an income
by the organisation in carrying out the activities.
Examples: Entrance Fee, Subscription for the year from members, General Donations.
Rent Received, Sale of Old Newspapers, etc.

Features of Income and Expenditure Account

1. Nature: It is a Nominal Account. Hence, it is debited with e"\penses and losses and it is
credited with incomes and gains.
2. Basis of Accounting: It records incomes, expenses and losses of revenue nature on accrual
basis of accounting.
3. Accounting Period: It records only those incomes, expenses and losses ·which relate to the
current accounting period, whether paid or not.
 1.8 [),,ofAc f;ntry f;oo~ v., c·pln'J r P, 1/,II

4 Opening J n<l CJc,.,jng Balance~: ft dor not h,,v t:1n <,p '111 b<lla c J balanc.c at th d
1

j (•1tli<•r urplu or dd1ut which I tran forn:d lo Cap1tdl fund in th f~aJan Sh et eo

5. Atljut1tmc nt5: J h1 t.1 ,,unt I pnpar d or a rn l bc1 1 of d unt1 g and thu al
1
,JdJU trmmt , elating le, pn. paid c,r uLJt ta1 ding !.!zpen c. and m omc , pro j..,,ion for
dl'prc<.1at,c,n or doubtful 1.fo bl an mac.Jc
} ormat of Jnwmc and J xpcnditur c Ac.c.ount
Name ,it the Organisatio n
Dr INCOMEM•ID E1/.PENUIT Jf'E: / CCOIJl.sT for the '/"Or ended

fr.per d1ture lncom

To ~;ililrle By ' ub er pt o
Add Outsldnd1ng at the end Add Out ta d n
Adto ce: g
Le s OuLtandlng in thio beginning
To Rent Les Out tand' g in t
To Insurance Prem um
less Prepa rl ~s Advance at the e d
To Aud t Fe.,s By Entrance/Adm ss on Fees
To P11nt ng end Sta•,onery By GPnerd Donation
To HonrJrar um By Legacy Donat on Ge era
To Telephone £:zpenses e, Sale of Old Newspapers
To Rep~lrS By Rent
To Depre"atkm By Ga,n (Profit on Sale off xed Asse
To Loss on Sale of Fxed Assets By Sundry Receipts
To Sports Mater al Used By Deficit
To 5urplu:. (Ezress of E1pend ture over lncom *
(Excess of Income over Expenditure)*

Either of the two will appear

JJlu~tration 4.
From the fo11owing information, prepare fncom,, t1nd f xpcnd1ture Account:
Particulars
(1) Fees collected, lndudmg t 80,000 for the previous year
380000
10,000
(i1} Fees outstanding for the year
28000
(iu) Salary paid, including ? 3,000 for the previous year
I 000
Ov) Salary outstanding at the end of the year
3.000
M Entertainment Expenses
12.000
(vi 1 Tournament Expenses
18,000
(vu, Meeting Expenses
6000
(vii, Travelling fxpense
29000
(1x) Purchase of Books and Penod,cals, including t 19,000 for Purchase of Books 10,000
(x) Rent paid I5,oOO
(x1) Postage and Telephones 4,000
{xfi) Printing and Stationery 20,(f/J
{)dU} Donations Received
 Chapter 1 · Financial Statements of Not-for Profit Organisations 1.9

Solution:
INCOME AND EXPENDITURE ACCOUNT
Dr. for the year ended ... Cr

Expenditure t Income f

To Salaries 28,000 By Fees 3,80,000

Add: Outstanding at the end 1,000 Add: Outstanding at the end 10,000
29,000 3,90,000
Less: Outstanding in the beginning 3,000 26,000 Less: Outstanding in the beginning 80,000 3,10,000
-
To Entertainment Expenses 3,000 By Donations 20,000
1
To Tournament Expenses 12,000
To Meeting Expenses 18,000
To Rent 10,000
To Travelling Expenses 6,000
To Books and Periodicals 29,000
Less: Purchase of Books* 19,000 10,000
To Postage and Telephones 15,000
To Printing and Stationery 4,000
To Surplus: Excess of Income over Expenditure 2,26,000
3,30,000
I 3,30,000

*Amount spent on the purchase of books is a capital expenditure, hence it is not shown in Income and
Expenditure Account.

Difference between Income and Expenditure Account and Profit and Loss Account
I '
Income and Expenditure Account Profit and Loss Account
I Basis

1. Object Object of Income and Expenditure Account is Object of Profit and Loss Account is to determine
to determine surplus, i.e., excess of income over net profit earned or net loss incurred.
expenditure or deficit, i.e., excess of expenditure
over income.
- - - - - ---- - - Not-for-Profit
-- ---- ----
Organisations. It is prepared by business enterprises.
2. Prepared by It is prepared by
-- - -- -- - - - -
3. Method It is prepared from the Trial Balance, where It is prepared from the Trial Balance and other
complete set of books of account are maintained information.
or from the Receipts and Payments Account and
other information, where complete set of books
of account are not maintained.
- - - - ---- . - -i---

4. Balance The balance in the account is termed as surplus The balance in the account is termed as net profit
or deficit. or net loss.
 1.10 Double Entr}' Book Keeping-CBSE XII

Difference between Receipts and Payments Account and Income and Expenditure Account
,.. Rictipt$. a,td,W,,,,.,ts ~Ultt Income and Expenditure Account

1. Purpose Purpose of the account is to show difference Purpose of the account is to show net result of
between two sides showing Cash and Bank activities undertaken during the year resulting in
balances at the end. surplus or deficit.

2. Nature It is a classified summary of cash transactions It is like a Profit and Loss Account (Nominal
showing Receipts and Payments under different Account).
heads for the period (Real Account).

IDebit side of this account records Receipts and Debit side of the account records Expenses and

----
3 Form
credit side records Payments. Losses and credit side records Incomes and Gains,

4. Balance Balance in the beginning is cash in hand and bank There is no balance in the beginning. Balance
balance in the beginning and balance at the end is at the end is either surplus or deficit, which Is
_ _ _ _ _ _ Jcash in hand and bank balance at the end.

5. Nature of items It shows Receipts and Payments during the year

transferred to Capital Fund.
--!--------- ---
-
It shows incomes and expenditure of only revenue
I
1e<Drded-Cap;1a1 of both capital and revenue nature nature relating to the current accounting period.
and Revenue
--- ---
6. Period to It shows Receipts and Payments during the It shows incomes and expenditures of the current
which items year whether they relate to past, current or year alone
relate succeeding (next) year.
-----
7. Adjustments It is based on cash system of accounting. Hence, It is based on accrual system of accounting. Hence,
adjustments are not made. adjustments are made for prepaid expenses,
outstanding expenses,accrued income and Income
Received in Advance.

8. Depreciation It does not record non-cash items, e.g., It records non-cash items, e.g., depreciation
depreciation.

Balance Sheet shows the financial position of an organisation as at a particular date. The method
of preparing the Balance Sheet of a Not-for-Profit Organisation is similar to that of an enterprise
(business firm). It is prepared after having prepared the Income and Expenditure Account.
Surplus or deficit of the Income and Expenditure Account is transferred to the Capital Fund.
The Balance Sheet shows assets, liabilities and capital fund.
Where Opening Balance of Capital Fund (or General Fund or Corpus Fund) is not given, it is
determined by preparing Opening Balance Sheet.

Opening Capital Fund is excess of assets over liabilities in the beginning of the period.
Capital Fund = Total Assets - Total Liabilities.
 \

... ()() l)(l(l

l ,) ', ·' hl l~i Uit~~
} ,l 1\tl ,' l>,) llll(l
f :, ' l' J ,l 1-1 .2, {Xld
3(} l)( )()
~~ ..-,, rt,,~, ·"t',t''' ,,Mt:'
l~., · -~ ,. \ ,' ,if,,ft ')o O{l(}
,"-, ,.,):1 -in~ ~,ll,1 rtt',
., Ot)O
'
lA'i,' T ',' \.·,,t)l ~.'l Fun-.. ,', 1.' ~ . ·< \rnl 2t)2tl.
~ulnti,,u: S.~ .. .\~1. · > ·: ·:TO 'l°'L ~u INDIA Cll R

~s uoo
't b~-r pt " ,~ RE'Ce1v.ib e
30 )00

Furn ture 65000

bn.:I ,l 1d Su fdmg 00l100

\\
, Bal.m,:t.'
I ., F \:.. "''':, F:,,•d \,st't , ,1JTt',1rin~ m tlw prt.'\ i1.lt1:- \Tdr
...iurm g thl' \l'ar .md dt-prt'l.i,1ti1.>n.
:-- 1~',, ~,.... J ,'t.' .h~ ~1.:.;1;',': '1.'r ,,<1.' duHn f tht.' \t'\1;· pur1..·'.1,1,1.'
ld bl.' rwtt'd that if ,hmn g the
The ,1..: t.-:.~,- .mH't nt 1::; s'.1,,,, :1 i:1 tht' B.1'.1,Kt' ::-he-.'t lt -.lwt1
, e.1r .1 F-H 1.' the a--~t't ·~.1-- b,>t>'l ~,-.1d tht'n ,:11.' l'1.'1...,k ,
.1lul' t1t thi.-.' .h-~1.' i, drd.ud1.'d from
t 11.' ~.1 '.t:' F'H)('t.'1.~ds ,ind thl' l1 1.)1.)I...
the C\' .et'n~eJ A:-,c.'t \1..Y1.)Ulh .1 1 ,i : ,1e ditfert'n1..·e h:.':" Cc'n
\al.It' ~-- <,t. .Wll J, ~-UH (rrof it) (lT :1.1:-:'- ·n tht> l:1.(\'tTilt'
and E,pt'n d1tlll 't' \1.'(1.>ur1.t. h.)r l?:\.,lmpk.
1 OOL)
l1l1 t\10. Fumiai:1.' i1,1, in~ h1t1:..., ,1lm' \1, { ·\
t'}'lt'l lll'f -1a .mce m Ftm1.1tufi.:' \\'(t°'un~ 1._ \ 1
j5 ,old fr,r t :s 000. ~ .::n 000 \\ ill be dt:'dt:1.:tt'd
fwm \ i l1t1 l)Ot) ,md. \ 5 l)dL) \~-lin, •... profit
o • :,,aJe w1ll be ,lmw n ,1, in1..1..1l1k' in Ult'
t'lt'...i1t ,hfr 01 hKt'111t' ,111.d b,pt'n ditun .' \tCt)Unt. lt
be ,h\'" n ,ls lo:-:- in tlw debit
the rnmiture- 1:> ,old f\,. f =-HOO·\ 5 000 (Io:-, ,.,n S.1it.') \\ ,ll
,;dt:' of Income c1nd E,p~ nd1ture \c\:ount.
nm the P.1, men ts Skit' ,.)f
If ;1 ne,, a,~t i, rurr:hc1,t d H1e p,n nwnt "oul d h.n l' bt>en :-ht1,,
1

..;h,.1 uld r-1.' ..:crutini-;ed ,md tlw

the Re(\">'L'!, .md Pa, ments A\count. TI1is .11.rount tht'rt'fore
J:c.,t:-:~ aprt1c1rm£. the.rem h' slit)wn m the .1t-,l't:-. :-idt.' of tlw
B.1L1111..v Slwt.'t .

., J 1: Loan taken if an) is ,hlm n in tlw Rece

ipb Side of tht' Rt'ct'ipts .md Pavnwnts \n.'1.lunt
llw Pa~ me11ts Side}, i~ ~ho,, n
and the amc-.unt ft"-=~ .m~ rep,n ments (" hich \\ ill ,1ppt.>.u 111
in the li.1bilitie~ :-ide of the BaLmce Sheet.
Sidt:- and rew, erv of lo,m on the
3 4. r:mr Ad, an-:e gi, t'n if am 1, shown in tht' Pa, men ts
~

Balanl"L' Sh~t't.
RE'Ct'.ipts Side. 1'\et amount is shown in the as,cts ~idc ot the
1.1 2 . ·

· ... m~.:: Ll.abiliti~ .-ro:~arin~

• ~
in me pre,'iou~ Years B.u.:i.""'C't' She('t "hL1uld \... ·c,., ~- .
• . ,It:'' •U1..1.IU.·
as K"'\ w+-eth?.r .:..- , ? .:.vn-ent h.1, ~n made .1f.1k, t t!1e'l.1. T" , ., tonnation •. ..:n :-e a,ai] ~
k the :'-1· -•.e:n:.s 5:~e of the R~--,e1pt, and Payme:-,:- -\.:co-....7.,. :\et amount .. ,.,._,wn ht-Ji:
6ala.7.:e 5."~. t

Rt?\.:t'l~:::: ror ~ r ::-u.r.x-Sc ::-...n ..;onation::- 'o-'l:-'Jildin.z: or Annual Dinner, etc. are n .,.,
.. .L ... • ~ \,. 4- ~-' ( ' ' "!'I

ir. ln:rure a....,d E..,~...Liit,1;e .-\.:-coant but a· c ::- 10wn in the liabilitie~ ~de of the BaJa......e Srl~•
- C ·-::- un-= &l k 5 · ~... · Cash and Bark B.:LJ.."1Ce .:it the enci of the year in the Rece p~s o...':~
Pa)"IDei".tsA.c.:0$~~ ='-: -own in the \ !s.--e., S ..~e of the Balanc-e Sheet. B.mk O, erdpt+ ~... ... . ~ho, "
..... . \1"
in the lial:ilities s•.:ie a.! th~ Balan.:e S~"~:.
, _ Su'""P-• .:: ix.f...~ · 5...-olus or .:iefiat JS determined tram the Income ai1d E,pen..iitt... e .-\ccoum
is .::ramrem:-d :o ...i-ie Cacital
:.
fund.
format of Balance Sheet of a Not-for-Profit Organisation
Name of the Organisation
S!\U.NG SHE.ET as at_
~bcties As:;ets

Cqi:a HI dotGenertt -u .a orCCKp!}s Fu d: ~D.c G i\ssets:

Opening Balance Sui aing.
Add. Surprus or _ess·Oe.;ICit} Ooening Balance
Building~: Aao: Addifons
Openmg Saia.nee
4J:id· Donation for B •ng ~ess: Deprec·ation
Income from Bu· ng Fund furniture·
Investments
Sports Funcr':
Opening Balance
- Opening Balance
Aad. Aoa"tions

Md: Donation for Sports fund Less. Sale

Interest on Sports fund Depreciation
Investments Current 4ssets:
Subscriptions in Arrear
less: Sports Prizes Awarded Accrued Interest
Current Liabilities: Investments:
Outstanding Expenses: Building Fund Investments
Rent Sports Fund Investments
Salaries Prepaid Expenses:
Electricity/Water Charges Insurance
Subscriptions Received in Advance Rent
Cash in Hand
Cash at Bank

*Building Fund and Sports Fund are examples of Specific Funds.

 Chapter 1 · Financial Statements of Not-for-Profit Organisations 1.13

FUND BASED ACCOUNTING . . •,

- · .,
I
.· .. :

Fund means amount received or set aside by a Not-for-Profit Organisation for a specific
purpose. Fund amount a1ong with the income earned on the fund cannot be used for purposes
other than thoc;e for which it 1s received or set aside.
Donabons received or funds set aside for specific purposes are credited to a separate Fund
Account and are shown m the liabilities side of the Balance Sheet. Incomes from these funds are
cred ted to the respective Fund Account and expenses or payments out of these funds are debited.
Accountir1g when done on this basis is known as Fund Based Accounting.
Not-for-Profit Organisation, thus, maintains a separate Bank Account for each fund, dona hons
recen ed tO\, ards that fund are credited to the Fund Account along with the income
e.g., interest) while expenses are debited to it.
Fund Based Accounting means the accounting whereby receipts of donations and incomes relating to a
parltcular fund are credited to that fund and payments and expenses are debited to it. Examples of such
funds are: Buildmg Fund, Library Fund, Sports Fund, Prize Fund, etc.
Credit balance in the Fund Account is shown in the liabilities side of the Balance Sheet. In
case, the balance in the Fund Account is debit, it is transferred (debited) to the Income and
E;;-pend.iture Account.
Let us take an example to understand the concept of Fund Based Accounting better. Prize
Fund has a balance of t 1,00,000 which is invested as fixed deposit in a bank earning
8% interest. Further donation of z 10,000 is received towards it. Expenses incurred towards
prizes are~ 7,000; t 3,000 towards trophies and t 4,000 towards distribution of cash prizes.
In the Balance Sheet, it is shown as follows:
Prize Fund 1,00,000
Opening Balance 10,000
Add: Donation 8,000
Interest earned on deposit 1,18,000

Less: Expenses incurred towards prizes for the year

Shown in the liabilities side of the Balance Sheet
If after adding incomes to fund, further donatio~ received~~ deducting expenses, the ~d
shows ,debit' balance, it is transferred, i.e., shown m the Debit Side of Income and Expenditure
Account. Let us take an example for more clarity.
z
Prize Fund 10,000
Opening Balance 5,000
Add; Donation 1,500
Interest earned on deposit 16,500
20,000
Less: Expenses incurred towards prizes for the year (3,500)
Shown in debit side of Income and Expenditure Account as expense
 XII
1.1 4 Double Entry Book Keeping - CBSE

t of Specific Fund
Accounting of Asset Created Ou
d on the as
d (say Bui ldin g Fun d), am oun t incurre
1f an ass et is cre ated out of Specifi c Fun ay
red to Cap it~I Fun d. As a resu lt, a~se_t cre ated ~ut of Specific Fund is:~s
~ui ldin g) is transfer For e WJJ
sid e of the Bal anc e She et and the am oun t is inc lud ed m Capital Fun d · xam ple
m the Ass ets · BUI·1 dmg Fun d of i J0,001 000. 1t is constnicti '
Org ani sati on has a bal anc e m
a No t-fo r-P rof it as foll:sa
has spe nt { 6 00,000 dur ing the yea r. In the Balance Sheet, it wilI be shown
Bui ldin g and 1

AN EXTRACT OF- BALANCE SHEET as

at...
t Assets
Liabilities
Buil ding (in progress) 6,00,(Xio
Capital Fund
Opening Balance
Add: Transferred from 6,00,000
Building Fund 6,00,000
Building Fund
10,00,000
Opening Balance 4,00,000
6,00,000
Less: Transferred to Capital Fund

ALWAYS REMEMBER
enses, the balance
funds for assets) is less than the ~xp
In case the amount of fund (other than Account.
not covere d by the fun d is debited to the Income and Ex,.Jenditure
of expenses
ed under
t-for-Profit Org ani sati ons , fun ds ma y be classifi
Cat ego ries of Funds: In the case of No
foll ow ing two hea ds:
Fun d me ans the fun d u se of wh ich is not restricted. Stating
(i) Unrestricted Fund: Unrestricted app rop riat e, but for the
ere ntly , ma nag em ent can use the am oun t m the fun d as is con sid ere d
diff al Fun d or Capital
e for whi ch the org aru sati on exis ts. Th.is fun d is kno wn as the Ge ner
pur pos , ded uct ed.
r is add ed and m cas e of deficit
Fun d to which the sur plu s for the yea
CAPJTAl FUND OR GENERAL FUND
commencement
par ties as cor pus don atio ns for
t is made of con trib utio ns by diff ere nt 1 furt her donations
t Organisation. It ma y inc rea se witl
nd exp ans ion of the No t-fo r-P rofi Def1c1t in Income and
by tran sfe r of Sur plu s from Inc om e and Exp end itur e Acc oun t .
or
se it.
Expenditure Acc oun t will decrea
is the fun d, tlw use of \\'h it:h is rest
rictl'd either by the
tric ted Fund: Res tric ted Fun d
(ii) Res suc h funds are: GO\ eminent
em ent or by the don or for a ~pe cific pur pose. Exa mples of
ma nag hm J, ek
rts
Fun d, Loa n Fun d, Pri zt• Fu nd, Spo
Gra nt, End ow me nt Fund, An nui ty ricted
t Gra nt: Gra nt rccP iVl d1
from Go vernment for spe cifi c purpose is rest
(a) Governmen I und
the pur pos e it is gra nte d. It is accoun ll' d in the book-; tollowing
to be use d for tion
. For exa mp le, Gra nt n'cc>iv ed fro m Governmen t for 'Po lio Eradica
Based Acc oun ting st) earned relating
dic atio n Pun d' ,md in cnm e (int ere
Pro gra mm e' is cre dite d lo 'Polio Era .
wh ile related exp ens es are d ebi ted
to the fund is cre dite d to the fund
beque5t or
nd0 Fund: "It is a fun d usu ally of a non -pr ofi t inc;titu tion , aris ing from
(b) E wment - Kohler
inc om e of wh ich is dev ote d to a spe cifi ed pur pos e."
gift, the
n wit h a con diti on by the don or
to use only the in_c~rne
End0wm ent Fun ~, thu s, is a don atio e so tha t the onginal
h fun ds for the spe cifi ed pur pos
ear ned from the mv est me nt of suc
don ate d am oun t rem ain s inta ct.
- - -~---------~-----
Chapter 1 • Financial Statements of Not-for-Profit Organisations 1.15

it Organ isatio n receives

(c) Annuity Fund: An annui ty fund is establ ished when a Not-for-Prof
ically to design ated
assets from a donor with a condi tion to pay specified amou nt perfod
paym ent and usually,
beneficiary or beneficiaries. Annu ity is a fixed annua l (normally)
period specified by
continue only durin g the lifetime of the name d beneficiary or for the
of the organisation.
the donor. Annu ity Fund Donat ion, thereafter, becomes the prope rty
ses say loan to pursu e
(d) Loan Fund: Loan Fund is set-up to grant loans for specific purpo
highe r studie s.
ment in fixed assets or
(e) Fixed Assets Fund: Fixed Assets Fund is a fund earma rked for invest
ing Fund' . Amou nt
already invest ed in fixed assets. Example of Fixed Assets Fund is 'Build
invested in fixed assets durin g the year is transferred to Capital Fund.
say for achievements
(f) Prize Fund: Prize Fund is a fund set-up to use for distribution as prizes
or contribution to the welfare of the society.
Illustration 5.
r-Profit Organisation?
How are following items shown in the financial statements of Not-fo
(i) Tourn ament Fund z 2,00,000; Tournament Expenses z 60,000; Receip
ts from Tourn ament
Z 80,000.
(ii) Billiard Match Expenses z 25,000.
a Show Z 15,000.
(iii) Receipts from Cinema Show Tickets Z 50,000; Expenses on Cinem
10,000; Prizes award ed
(iv) Prize Fund z 1,00,000; Interest on Prize Fund Investments '{
z 20,000; Prize Fund Investments '{ 80,000.
{ 80,000; Donat ion
(v) Prize Fund z 80,000; 10% Prize Fund Investments on 1st April, 2019
10% Prize Fund
for Prize Fund z 12,000; Prizes awarded Z 14,000; Interest received on
Investments Z 4,000.
(vi) Expenditure on construction of Pavilion during the year was Z
6,00,000. The construction
31st March, 2019
work is in progress and not yet completed. Pavilion Fund as on
z 8,00,000. Donation for Pavilion received on 15th September, 2019 { 10,00,000; Capital
Fund as at 31st March, 2019 Z 20,00,000.
Solution:
under :
(i) There is a Specific Tournament Fund: The accounting treatment is as
t
Liabilities Side
2,00,000
Tournament Fund
80,000
Add: Receipts from Tournament
2,80,000
60,000
Less: Tournament Expenses
2,20,000
Balance to remain in the Liabilities side of the Balance Sheet
Expenses would be
(ii) There is No Specific Fund: Hence { 25,000 incurred as Billiard Match
shown in the Debit side of the Income and Expenditure Account.
AN EXTRACT OF INCOME AND EXPENDITURE ACCOUNT
for the year ended ... Cr.
Dr.
t Income t
Expenditure
To Billard Match Expenses 25,000
1.16 Douo e Entry Book Keep;ng-CBSE XII

ili) credTher~ ,s_dNo Specific Fund· Receipts from CmemdaExShowdT1cketr:, , .. ould be c,hov.n in
1t s1 e, i e., Income side of the Income an pen 1hue Account and ex
Cinema Show would be shovm in the debit side, 1.e., Expenditure side of the InJ>enses On
ExpendHure Account. come ana

(1v) There rs a Specific Fund. The accounting treatment 1~ ac; under-

Uab1/Jt1es Side
Prize Fund 1,0000c
Add: Interest on Pnze Fund Investments 1o.ooc
1 0 00'.:
Less: Prizes awarded

Note: Interest on Prize Fund Investments is not added to the Prize Fund Investments Account as "'
---
20,0<tl
90~
======::::
amount upon receipts is debited to either Cash or Bank Account The assets s•de of Ba ance 5 ~
stands increased because of its impact on the receipts side of the Receipts and Payments Acco:-
However, if the amount of interest is also invested, Pnze Fund Investments wou d increase by the
amount of interest.
(v) In the given case, total interest due on 10% Prize Fund Investment='{ 80,000 x 10/100: { 8,00J
However interest received is only f 4,000. So, the balance of t 4,000 i, interest accrued.
Such interest accrued ,, ill be added to Prize Fund and it will also be shown in the Assets
side of the Balance Sheet.
AN EXTRACT OF BALANCE SHEET
as at 31st March, 2020
Assets ~
Liabilities
Prize fund 80,000 10% Pnze Fund Investments 8000:
Add: Donation for Prize fund 12,000 Accrued Interest on Prize Fund Investments 400J
Interest Recetved 4,000
Interest Accrued 4,000
1,00,000
:s: Prizes Awarded 14000 86,000

(vi) AN EXTRACT OF BALANCE SHEET

as at 31st March, 2020
~

' Assets
Pavthon In Progress (Note) 600000
20,00,000

26,00,000

8,00,000
10,00.000
18,00,000

6.clOiOOO 1200.000
.
Note: Any expenc11tu,.f of Capital Nature out Of Specific ct1O0
of pavili Fund (e g expenditure on the constru
on out o Pavilion Fund) ·15 5h · ·• 1.1al
amount transferred from own 1n the assets side of the Balance Sheet and an eq
15
that Specific Fund to Capital Fund.
 ,' X'l ,)\\ '1\~ \t\'m~ ,lt\l,t "htk rr.T,Hln~ l\tl.\lh\' ~lwd ,,ft. 'lW\\H,\\ { ·1u1, ,,:-- ,,t
~. ~. ~ .\t\ ~ ~ \:, '

ll) \l\l 1100

P,, ·. f,.'' "--'','-'" ,',~ i,' :ht' Huil-Hn~
F'\."'-' i,i ;, .-.., ,\.·d~. ,' \~ '- ,''\.,tni.ii,'n \\\ ll')
':.'I! f!!l.~ 't''"t Fun,' .'\:- ,"11 :-t \rnl .:lH•l L' \)\ I\ l
).: ',\t.,"' ,,,,:,'\ ,,," l,, 1,,\11'11,Hl','Ht '_, \l\l\)

~'"t\rt"'!.,l ..,. t.''' ~ . \...,','"~~'!' 4' 1Hhl

,\• llllll

I\\ {ll)(\

, ~~..-~... ~-th1n r-',.''.."l\ ,',1 t.1r \nrnu l" , w c,ll \1\l\)

'-"'"·· ::: .' .1,iins s~1t-:-mrn,1n tor \ nt\U,' , ), i'1h'l' lt)\1\l\)

\1'til, ~01•) \ ' 1)1) l)\lll

'
~nlutiun:
;\ tht• .i"!x)\ l~ :-t.lh."'\'.i ,,"\' ~..,t~ in tlw \Hll'~li1.,n ,\rt'\){' ('.lpital n.1h1.r~. \ h-n~'\' tlw~\' .m, 1\\\"it,lli~1.•d
J.n; .Ut:' ::h,,,,,11n B:i .':~.."\.' Sh1..•d (1: C\1.'nn,ll Clul, .,~ un~k1 :

''
u.p·tatfund BuildlnQ \WIP\
l ~ ng Satance 25 00 L)OO OuN.mdin~ \UbSCI IptIon fot I
~ -r.msf~ trom
R a "9 fund 22,51.)0(.)0 ,
.\nnu.,t Dinnl'f
I
t_:~e11~~!)er!-h·p Fee 4(),()0() 47 o0t)(IQ

BuUding Fund \
Open ng 5~3nce lQl)0,000
Au± Donafon R~t:ived 2.5 00,000
3500,000
12,50.000
4.'t'SS.: Transfer to Cap tal fund 22 500001
Tournament Fund
Ooe1fng Salam:1? 15000
!.rJa; Donation Recei, ed 25,000
Proceeds from Sale ofTickets 35,QQQ I
I

- 75,QQQ l

~e.ss: Tournament Expenses 42,000 33,000

Subsctlpfon for Annual Dinner
({ 60,000 t "f 10,000) 70,000
 1. 18 Double Entry Book Keeping-CBSE XII I
Illustration 7.
Income and Ex
The inform ation given below relates to a sports club. Show them in the
Penditi.r
Accou nt and the Balance Sheet of the club as at 31st March, 2020.

......... _ • -..- . ?
Sports Fund as at 1st April, 2019 ............................................................................____......- 1O,()J,!Xi
...- ........- .......-.... ... _
Sports Fund Investments .................................._ ....................................................................... 10,(JIJ~
........... . .......... ......... .
Interest on Sports Fund Investments............................................................................................... 1,{)),o:
..........._ .. ..
Donation for Sports Fund ........................................................................................................................ ·---- ....
-
4,0J~
......... ._.......................................... .............. - ...... ·-·--
Subscription ........................................................................... 1.00ro:
.............. .
Donation............................................- .. ~.................................................................................................... 50,(l]
- ...............
Sports Prizes Awarded ............................................................................................._ ............... 3OOltJ.
Expenses on Sports Events ........................................................................................................ lh)~
...................._, .. .
General Fund ....................................................................................................... - ............................ 2000,(Xi
.....- .............
General Fund Investments............................................................................................. ................. 20,00l)J_
_...........
Interest on General Fund Investments ...................................................."'............................................ 2,00oc,:

Solut ion: INCOME AND EXPENDITURE ACCOUNT

Dr. for the year ended 31st March, 2020 CJ

Expenditure Income
i
I

By Subscription 100,000
By Donation 50.(XX)
By Interest on Genera l Fund Investments 2.00000

BALANCE SHEET (Only Relevant Items) as at 31st March, 2020

{
Liabilities t Assets

20,00,000 Sports Fund Investments 1000,ooJ

General Fund
10,00,000 General Fund Investments 200000:
Sports Fund (Opening Balance)
Add: Interest on Sports Fund
Investments 1,00,000
Donations 4,00,000
15,00,000
s: Sports Prizes Awarded 3,00,000
12,00,000
Less: Expenses on Sports Events 1,00,000 11,00,000

Illustration 8.
nts of Match E.xpen. . es an
From the foJlowing inform ation of Indian Sport s Club show the amou
ended on 31st March, 201
Match Fund in the Finan cial Statem ents of the Club for the years
and 31st March , 2020:

$ {paid durlAg the year ended 31st March, 2020)

3t$tMarch, 2019)
~ during the year ended 31st March, 2020)
ofRlltehtfdcers (Received during the year ended 31st March, 2020)
 Chapter 1 · Financial Statements of Not-for-Profit Organisations 1.19

Solution: BALANCE SHEET as at 31st March,2019

L1abilit1es t Assets
Match Fund 1,70,000

BALANCE SHEET as at 31st March, 2020

Liabilities ~ Assets
Match Fund 1,70,000 I
Add: Donation for Match Fund 90,000
Proceeds from Sale of
Match Tickets 30,000
-"
-2,90,00 I
0
Less: Match Expenses (Note) 2,90,00~_ Nil I
INCOME AND EXPENDITURE ACCOUNT
Cr.
Dr. for the year ended 31st March, 2020
Expenditure Income
-- !.---
--" --" ---- ---- +-- ---1 -- - - - - - - - - - - - -
To Match Expenses (Note) 10,000 I

0 are met from Match Fund up to available fund and

Note: Match expenses are~ 3,00,000 out of which~ 2,90,00
diture Account. Thus, balance of Match
balance expenses of~ 10,000 are debited to Income and Expen
Fund is nil in the Balance Sheet.

nditure Account
Accounting Treatment of Important Items of Income and Expe
1. Entrance Fee/Adm ission Fee
n at the time of becoming a
Entrance Fee or Admission Fee is the amou nt paid by a perso
ssion Fee is a reven ue receipt
mem ber of a Not-for-Profit Organisation. Entrance Fee or Admi
e and Expenditure Account.
and therefore, is accow,ted as an income and credited to Incom
2. Life Membership Fee
to Capital Fund in the
Life Mem bersh ip Fee is accounted as a Capital Receipt and added
e because a bfe mem ber pays
liabilities side of the Balance Sheet. It is not accounted as incom
memb ershi p fee once and avails services all through his life.
3. Special Receipts
For example, contributions
Special Receipts mean s receipts of amou nt for special occasions.
te account (Annual Dinner
received for annu al dinner. Su ch contributions are credited to separa
Account in this case) and expenses against these receipts are debited
to it. The balance is transferred
to the Income and Expenditure Account.
4. Donations
received may be a gener al
A charitable instit ution often receives donations. Donation
donat ion or a specific donation.
(i) General Donation: General Dona tion is the donation in
which the dono r does not specify
accounted as an income
any condi tion for its use. The amou nt of general donat ion is
and credited to Income and Expenditure Account.
 1.20 Doubit' Entry Book Kt>t>ping CBSE XII

,ticm: ln• r,1s(' till' dornir sJWlll il'S tlw purpo sl' for wh1d1 thL' ll(>JI ,I 1ll)J\
(ii) Sped ffr 1>011, ~.

hir 1•x,1mpll', ,1 donor do11,1t1•s ~ I0,00,000 for n lihi 1an

• , .
Notes:
bl' us1•d, 11 1s ,1 Sl'c, 1/rcDt>1111/1<111.
1 Thl' amoun t of donati on rec
, i.1•., ti is ;i &pl·nfit: don,i 'ry
It nwan s tlw d 1m,1 tl(ln n'et'i' ed l'<lll be used nnly for ltbr;iry p,wilion F-und .ind shown m
lil's silk of thl' B,,1,111u.• Slhnri.
Spi.'rifil· don,1li(1t1 1s c,1pit,1lised ,rnd is sl1t1wn in the liabili ll'rt ntribut ions to (,over nor'c;
d.11
l Co
to Incom e and tXpC'n ure
IMPORT ANT NOTE be 11 c1ddc ti to this amoun t
are shown as revenu e receip ts. Hence, they nre Pavilion Fund Is a Specific.
Entran ce/adm ission fees and general donati ons i
is shown c1s an asset 111 the
credited to Incom e and Expen diture Accou nt. account of Spcc1f1c Fund (e
in the assets side of the B
lllust r,,tion 9. the capital Fund /I should
Accou nt of a sports club. You are required fund ,s t,ansferred to Capita
Folkm ing ,s the l'Xtract trom the Receipts and Paym ents
Accou nt and Balance Sheet of the club lo
to sho\\ different items in the Income and Expen diture 5. I cgacy
onal informc1tion giYen below: r
the year ended 31st March, 2020 giving effect to additi 1 cg,1 cy 1& the ,unou nl r

RECEIPTS AND PAYMENTS ACCOUNT of " dccc.>a'-l'd perso n

for the year ended 31st March, 2020 Cr. cond1t10n J!; ..,peofied, i
Dr. 1t is ,1l colmt ed M, 'Spec
f Payments ~
Receipts (i) Gc11eml 1)011a tio11:
10,00,000 By Governor's Party Expenses I 2.40,000
To Donation for Pavilion I· xpt•nd 1tu re Ac.co
2,00,000
To Contribution for Governor's Party (ii) S11ecific Dona tion
5,000
To Donations Acco unt' m,11nt<111
of the Balanc<.> Sh
Additional l11for111atio11:
t 20,00,000. The const ructio n work 1s in progr ess and ht1s not i.e., mcom c relati
(i) Amo unt sp<mt on Pavilion
yet comp leted. 6. Gran t
~ 30,000. (,r,1n t receh cd l& cl Cc
(ii) Outst andin g subsc riptio ns for Gove rnor's Party
r parlic ul.:ir purpo se Sc
(iii) Capit al Fund as at 31st March , 2019 10,00,000. of iund, l•und l3ased
(iv) Pavil ion Fund as at 31st March , 2019 ~ 40,00,000.
7. Sale of Used Spor ts
INCOME AND EXPENDITURE ACCOUNT Stock of Sport s M,1
Solut ion: Cr
for the year ended 31st March, 2020
Or. consu med durin g t
_ _ _ _ _ _ _ _ ~- ~ - amou nt is carrie d f
,___1tu_re__ __ __ __ __-+__t__+-1_n_co_m_e_ _
___

By Donations 5,000 In case, old sport s

Governor~ Party Expenses 2,40,000
Less: Contribution for Party sale proce eds are c
including Outstanding 2,30,000 10,000
In case, old sport s
sale of old :;ports
BALANCE SHEET as at 31st March, 2020
Acco unt, 1.r., is :;h
f Assets •
Uabilitie:s
+-
=~ :-- :-- -- -- -- +- --Outsta -- -- -- -- -l- --30,000-
nding Subscriptions
If the sale of old s
~Al ncf to Income and Ex
10,00,000 (For Governor's Party) I
Opening Balance 20,00,000 S. Sale of Old Asse
,W li'ansfenedfrom Pavilion-in-Progress (Cost incurred)

,..und
,....F 20,00,000 30,00,000

40,00,000
Sale of an a:;set
if sale value is I
the book value .
10,00,000 depre ciatio n up
50,0Q (prof it), if any, is
20,00 30,00,000
 Chaptrr 1 · Financial Statements of Not-for-Profit Organisatior s 1.21

Notei·
I. I h(I '.mwunl of don.ilion r£•n•ived for Pavilion is a specific donation and, therefore, it has been added to
P,w1llon I urnl ,rnd ,,hown in I iabilities Side of the Balance Sheet.
2. Contrlbuliom to Govf:'rnor's Party is a specific receipt and also spent for the purpose. The deficit 1s debited
to Im cmw <1nd I x~enditure Account. The amount of outstanding subscriptions for Governor's party has also
LH'C' 11 ,Hided to Hw, amount anJ has been shown as receivable in the Assets Side of ~he Balance S'1eet.

t 11.wilion hind 1s cl Specific Fund. rhe expenditure of t 20,00,000 incurred on constructior of Pa 1ilioo
ts ,hown n'i an a~set in the Balance Sheet. It 1s a Capital expenditure. Any expenditure of Capitaf na~ure on
..in ount of Sprc1fic Fund (e.g., expenditure on the construction of Pavilion out of Pav1tlon Fund) is shown
in the assets side of the Balance Sheet and an equal amount is transferred from that Specific Fund to
the Capital Fund. it should be noted that after the purpose of a Specific Fund ts fulfilled, balance tying '1 that
fund is transferred to Capital Fund.

5. Legacy
Legdcy is the nmount received as donation by a Not-for-Profit Organisation under 1.A 1fl~L
of a deceased person. The donor may or may not specify conditions for its use. In case, no
condition is specified, it is accounted as 'General Donation'. And if a condition is specified,
it is accounted as 'Specific Donation'. It is accounted form the books of account as follows:
(i) General Donation: It is accounted as revenue receipt and thus, is credited to Income and
Expenditure Account.
(ii) Specific Donation: It is accounted as capital receipt and is credited to a specific 'Fund
Account' maintained for the purpose (e.g. Prize Fund). It is shown in the liabilities side
of Lhe Balance Sheet. It being a fund, principles of Fund Based Accounting are applied,
i.e., income relating to such fund is credited to the fund while expenses are debited.
6. Grant
Grant received is a capital receipt and is shown in the Balance Sheet since it is received for a
particular purpose say to buy assets or to meet expenses say saJaries. In the event of receipt
of fund, Fund Based Accounting is applied.
7. Sale of Used Sports Materials
Stock of Sports Material is shown in the assets side of the Balance Sheet. Sports material
consumed during the year is debited to Income and Expenditure Account and balance
amount is carried forward in the Balance Sheet.
In case, old sports material that was debited to Income and Expenditure Account is sold, the
sale proceeds are credited to Income and Expenditure Account, i.e., is shown as income.
In case, old sports material appears in the Balance Sheet and is sold, gain (profit) if any on
sale of old sports material (Sale Proceeds- Book Value) is credited to Income and Expenditure
Account, i.e., is shown as income.
• If the sale of old sports ma'terial results in a loss (Book Value - Sale Proceeds), it is debited
to Income and Expenditure Account.
8. Sale of Old Assets
Sale of an asset may result in gain (profit), if sale value is more than the book value; or loss,
if sale value is less than the book value; or neither profit nor loss, if sale value is equal to
the book value. Book Value of an asset as on the date of sale is determined after charging
depreciation up to the date of sale. Sale Value is credited to the Asset Account while gain
(profit), if any, is credited or loss, if any, is debited to the Income and Expenditure Account.
1.22 Double Entry Book Keeping-CBSE XII
I
Illustration 10.
Prepare Furniture Account for the year ended 31st March, 2020 in the books of a social cl
under the following alternative cases: lib
Case 1. Furniture as on 1st April, 2019-~ 2,20,000; Furniture (having book value as
1st April, 2019-~ 20,000) sold at a gain (profit) of 20% on 31st December, 20 ~;
Furniture purchased on 1st October, 2019 for ~ 1,00,000; charge depreciati ·
0
@ 10% p.a. on furniture. 1\

Case 2. Furniture as on 31st March, 2019-~ 4,40,000; Furniture (havmg book value a 01\
s
1st April, 2019-~ 40,000) sold at a loss of 20% on 31st December, 2019. Funutur
is to be depreciated @ 10% p.a. Furniture costing ~ 3,00,000 was also purchased ~
on
1st October, 2019.
Solution:
Case 1.
Dr. FURNITURE ACCOUNT
- - - . - - - - - - - - - - - - - , - - - - - r - - - - , - - - - - - - - - - - - - Cr
Date Particulars Date Particulars

2019 2019
April To Balance bid 2,20,000 Dec. 31 By Depreciation A/c 1,500
Oct. 1 To Bank A/c (Purchase) 1,00,000 ({ 20,000 X 10/100 X 9/12)
Dec. 31 To Income and Expenditure A/c 3,700 Dec. 31 By Bank A/c (Sale) 22,200
(Gain on Sale 20% on t 18,500) I~ 20,000 - t 1,soo) +
20% oft 18,500]
2020
March 31 By Depreciation A/c:
On { 2,00!000 for 1 year 20,000l
On{ l,00,000for6 months 5,000 25,000
March 31 By Balance c/d 2.75,000
1-----1

3,23,700 3,23,700

Case 2.
Dr. FURNITURE ACCOUNT Cr.
Date Particulars { Date Particulars 't
--
2019 2019
1 To Balance bid 4,40,000 Dec. 31 By Depreciation A/c 3,000
April
Oct. l To Bank A/c (Purchase) 3,00,000
Dec. 31
({ 40,000 X 10/100 X 9/12)
By Bank A/c (Sale Proceeds)
I 29,600
[({ 40,000 - { 3,000) -
20% of~ 37,000]
Dec. 31 By Income and Expenditure A/c 7,400
(Loss on Sale) '
(20% of r 37,000)
2020
March 31 By Depreciation A/c:
On r 4,00,000 for
I
1 year 40,000 \
On { 3,00,000 for I

6 months 15,000 ss,oo

6,45,00
March 31 By Balance c!d ~

7,40,000
7,40,oc~

,,,,,,,
 Chapter 1 • Financial Statements of Not for Profit Organisations 1.23
9. Sale of Old Newspapers
Amount paid for newspapers, maga1mE>s, periodicals, c•tc., is deb1tc>d lo Income and
Expenditure Account, it being a revenue expense. Thus, amount realised from sale of
old newspapers, magazines, periodicals, etc., is credited to Income and bxpenditurP Account.
10. Subscriptions
It is the amount paid by the members periodically (quarterly or half yearly or yenrly) so that
their membership remains alive. It is a source of income of Not for Profit Organjsation.
Subscription received whether they relate to current, previous or next period, is shown in the
debit side of the Receipts and Payments Account
Subscriptions relating to the current year whether received or not, are shown in the credit ,ide of the
Income and Expenditure Account.
Subscriptions not received, i.e., outstanding are shown in the assets side ofthe Balance Sheet. Subscriptions
received in advance for the following years are shown in the liabilities side of the Balance Sheet. Amount
of subscriptions to be shown in the Income and Expenditure Account is calculated as follows:
TABLE SHOWING CALCULATION OF SUBSCRIPTIONS FOR THE CURRENT YEAR
Particulars
Subscriptions received during the year (whether in respect of previous,
current or future period) as shown in Receipts and Payments Ale
Add: Subscriptions outstanding at the end of the year
Subscriptions received in advance in the beginning of the year

Less: Subscriptions outstanding in the beginning of the year

Subscriptions received in advance at the end of the year
Subscriptions to be shown in the Income and Expenditure A/c

In Account Form:
Dr. SUBSCRIPTIONS ACCOUNT Cr.

Particulars Particulars

To Outstanding Subscriptions Ale By Advance Subscriptions Ale

(Outstanding subscriptions in the beginning) (Advance subscriptions in the beginning)
To Income and Expenditure Ale By Bank Ale (Subscriptions received
(Balancing Figure) during the current year)
To Advance Subscriptions Ale By Outstanding Subscriptions Ale
(Advance subscriptions at the end) (Outstanding subscriptions at the end)

Illustration 11.
From the following extract of Receipts and Payments Account and additional information,
compute income from subscriptions for the year ended 31st March, 2020 and show it in the
Final Accounts of the Heritage Club:
RECEIPTS AND PAYMENTS ACCOUNT
Dr. for the year ended 31st March, 2020 . Cr.

Receipts Payments

To Subscriptions 1,00,000
 \ ld1t1tl//il l11f11111111/1, 111
ul I I I \1111,/1
'//l'l (< J
II I I I ,~,,,
A

//•1,,,) ,,,
1() (1()()
Ill 11011
',11hs, 1q1l11111 1 l1tl· l.1 111l11 1~ l(J ()()()
111 0110
,11! 1 •l11pl11111·, l,1•1,,,, l d Ill \,h .llll I'
llotlt,1111• < luh
Solution:
P1
11=1=
IN< ()~11 /\Nil I Xl'I NPll 111!1 /\I ( I IIIN I 1,-=,1=1/=" ....r_,•r...... '"=/,•=,/==- ----- --
1111 llllll
I llp1•111l1t111c
lly uh II lp11011 I oo Ooo
/\r/,/ ~llll 111pll1111 IJ11I I 1111l111<1
"' 1 11 ;o n '10 ooo
~1111 r tlpllo11 II ·1 •Iv d 111
AdV,111(( (lfl 31 U019 0000
110000
I H ~111> ,( dpl/011 II< f IVU I 111
Adv,111rc <m 11 l 202U }000()
0,000
l f'~S '!111> , 11p11rn1~Out ,tt111d111rJ
011 JI l ) 0l'l 0,000

HAI ANCI SI111 I II\ ot J /\I M/// r /r. 1010

' /\~~11 I~
20,000 Sub~cilpllom Otrl slr111rl11HJ
~ub~rnpt1ons f!t>C1'1verl 111 Adv,111Cr
+
\lit nralil•t': C.11, ul,tlion nl ,11111 n111 t ol .. u!i-.1, iplio11 lo Iii• 11l'dtti•d lo 1111 <lllH' ,111d I ·,q w 11d11t11p i\irouni

=-- --- --- --- -,~

o,
Part,cul.m
SlJll<i( HIPI ION'! /\( COUN I
{ P.irt1cult1r~
---------.,.__ ?
Cr

20,000 Oy Adv,mce Sul.mi 1pllom Ale 130,000

To Subsrnpt1ons Ou1~1a11d1119 Ale
(Adv,mce SulHnip11011 tn 1he begrnnlnq)
(In the beg,nnmg)
1,30,000 By B,mk Ale 1,00,000
-----Income and Expend1tu1e Ale
afancrng Figure) By Subsrnµ11011s OutstilmJ,ng Ale (at th nd) / 40,000
dvance Subscriptions Ale 20,000
(Advance subsrnpt,on al the end)
1,70,000

and
Explanation: The amount of subscriptions ~ 1,00,00 0 given rn the Receipts
It
Payments Account means total amount of subscrip tions received during the year.
must
includes subscriptions oft 20,000 outstanding as on 3 1st March, 2019 as they
have been received during the year. Similarly, it also includes subscriptions received
111
g
advance as at 31st March, 2020 { 20,000 which relates to the next year. For calculatin
of the
correct income from subscriptions both these amounts have been deducted out
yeur for which
total subscriptions received, since they are not related to tile current
d to
the Income and Expenditure Account is being prepared . Subscriptions amounte
f 40,000 are outstanding on 31st March, 2020. It is the income of the current year,
as
and therefore, it has been added. Subscriptions off 30,000 w ere received in advance
in the
at 31st March, 2019. It is the income of the current year which was received
previous year. It is not included ,n the subscriptions received amount ed to f 1,00,00 0,
tions.
It has also, therefore, been added for determining the correct income from subscrip
 Lli,q,1,,, 1 11 11,1111 I,1 I' 11,,1, 1111 1,1, of I f,,t f11t l'rr1hl ()r•J,1ttl',,11ltm•, 1.25
lllu ta,1lio11 I'>
I h111111 1,llll'y,·.111•111ll'd ' IIHI Mi1rd, ?lWl, 1I•1 11 11111 th I 11
1111 111111· I 10,(IIHl 1 11 , yi• ' ' '' ,( 1' H dwd w, '71,0IJ,{)()(J I h,•<.1• •:111fi K:I 1p1H1111
111 11
20' I ( )11 \lc,l M,11\ Ii }()){) ' I 1
' 11 (Ill('( 1 \hi M ' 111 ·11 201') I' A( {( 11 , 1 1
' ,lllf ,, l, l )() 11 ''"' yt•,IJ l.'11rlt11) , ,l1ol MMr.h,
7 1111~1111pl11111•1 <1111· IHII I I
,11111111111 (lll hi t\p1tlI l()l'JI I Ill) rl'll'IV!'( Wl'll' { r,o,(JC)(). ( l)lfl:~p,mdllli'
W.lh <,(),()(}() I )1'11'1 I ' • ti ' I I IOU Itl ~II' ( ft'rlll<'d
llll\11111' ,11111 1111){ I
111111111 /\ 111111 )( .IIIIIJIIIII I 1,il f.;
I
1{1
, I' ( ('I lt 111 I 'p.,, •, I II ,t., I ' 11p
' I 1011 1·, (()j I I 11 YP,il ('l1tl1•d ' \ ht M,.HI 1,, 2020

Solut111n:
',/11/1·111,•11/ ,,Jww1111,;
' /Jtr/1•,i'IIJJ/WI/'
' ' 111 III'' 1'1'11Iii•(/
• lo 1/11' !111111111· 11111/ /, Xf/f'lltlt/11r1 1 A(( 1111n/·
11,111 le ul,11 •,
"iltlm. /'llptlon\ durltHJ th,· yr•.ir l'tJdPd ll it Mrlr( 1I, )0)0
1 / l ,(10,00'J
I I tClPIVPd
I I I
w, ,11 J'il r pl on d11P H1•lc1t i11y to thP (P1 r•vlw1•,) yrw PndHI l 1•t Mwit )019 10.rioo
1\0,(J()()I
I /0,000
HPc l'IVPcl In ,,<lv,m< r· for thl' (NC'x1) yt M <>ndin<J '½1st M,m I:, JO~ 1 '
)0,;0,()()()
20,000
Add; ~ubsr rlptio11~ due for tlw ye<Jr Pndr<l 31 ~, Mt1rct1, JOJO (I .xp1rJni.ll1on)
lO,'JO,OOrJ
Subscriptions for. tile year ended
· 31st March, 2020 to be credited to the Income and Expenditure Ale

l:xpl,mation Subscriptions duo but not recr1ived as at 31st March, 2020 amounted to
{ b0,000. 11, therefore, 111c.ludes subsr,npt1ons due but not received tor tho year ended
31st March, 2019 amounted lo { 30,000 1,.e., {60,000 (Due) ~ 30,000 (received
during the year ended 31st March, 2020) I. 1he subc,criptions due for the year ended
31st March, 2020 amounted to only { 20,000 (I.e., t ':>0,000 { 30,000).
In case the question had stated 'subscriptions due but not received for the year ended
31st March, 2020 are {50,000'. Thts would have meant that subscnptions amounted
to { 50,000 are due only for the year ended 31st March, 2020. In the Income and
Expenditure Account, the subscriptions due would have been taken as i 50,000 and

not as Z 20,000.

ltlustration 13
Subscriptions received during lhc year ended 31st March, 2020 are:
~ ~

For the year ended 31st March, 2019 4,000

For the year ended 31st March, 2020 2, 11,000
For the year ended 31st March, 2021 8,000 2,23,000
There are 450 me rnhers, each paying an an nu al subscription on 500. ~ 4,500 were in arrears f
the year ended 31 st March, 2019 in the beginning of the year ended 31st March, 2020. Calcul a
subscriptions to be shown in Income and Expenditure Account for the year ended 31st Marc
2020 and also show treatment of subscriptions in the Income and Expenditure Account a

Balance Sheet.
Solution:
Subscriptions Receivable for the year ended 31st March, 2020
= Number of Members x Annual Subscription

=450 X ~ 500 =t 2,25,000

Subscriptions Outstanding= Total Subscriptions - Subscriptions received for the year end
31st March, 2020
=~ 2,25,000 - ~ 2,11,000 =~ 14,000.