Chapter1-Npo Revision Notes

CHAPTER1: ACCOUNTING FOR NOT FOR PROFIT ORGANISATION
 Weightage: 10 Marks
 Contents:
a) Receipts and Payment A/c
b) Fund based Accounting
c) Material consumed
d) Subscriptions
e) Income and Expenditure A/c
f) Balance Sheet
 Receipts and Payment A/c  Receipts and Payment A/c is basically a summary of Cash Book.
 It is prepared at the end of the year.
Cash in hand / Bank Cash out / Bank  Provides information about the opening and closing balance of
Cash and Bank.
 Format of Receipts and Payment A/c
Name of NPO
Receipts and Payments Account of …….. for the year ended 31st March ………..
Dr. Cr.
Receipts Amount ₹ Payments Amount ₹
To………… XXX By………….. XXX
 Important Points about Receipts and Payment A/c:

1. It is the summary of Cash and Bank A/c prepared at the end of the year.
2. All Receipts (Revenue and Capital Nature) and all Payments (Revenue and Capital Nature) are recorded in Receipts and
Payments A/c.
3. All Receipts are recorded on the Debit side.
All Payments are recorded on the Credit side.
4. It is Real A/c in nature.
5. Records information irrespective of the periods (i.e. Current Year; Previous Year; Next Year and Next to Next Year).
6. It doesn’t include Non-Cash expenses / income
Eg. Depreciation; Discount allowed; Discount received; outstanding expenses and Accrued income.
Note:
1. Never to transfer the closing balance to “Bank A/c” if the question doesn’t provide any information with respect to
Bank.
2. In such situations transfer the amount of closing balance towards “Cash A/c”.
3. Always remember a newly started / opened / inaugurated NPO will never have any opening balance of Cash /
Bank, however it will have the closing balance of Cash / Bank.
 Fund Based Accounting:
Donation
General Donation Specific Donation
Income Specific Funds
Income and Expenditure A/c – Cr Eg. Building Fund

Sports Fund
Match Fund
Prize Fund
Tournament Fund
Pavilion Fund
Library Fund
(All the above 👆funds will
be shown on the Liability
side of Balance Sheet)
 Importance / Significance of Various Funds
Name of the Fund Purpose / Significance
1. Building Fund To Construct Building / Repairs on Building
2. Sports Fund To conduct Sports Events
3. Library Fund To Construct Library / To purchase Books for Library
4. Match Fund To conduct Matches / Meet Match related expenses
5. Prize Fund To distribute Prizes (Cash / Medals / Trophies)
6. Tournament Fund To conduct Tournaments
7. Pavilion Fund To Construct Pavilion
 Accounting Treatment of Funds which do not create Assets

1. Treatment of Specific fund, Specific Donation and Expenses incurred.
Eg. Match Fund - ₹ 10,00,000; Donation for Matches - ₹ 5,00,000; Match Expenses - ₹ 8,00,000
Sol: Balance Sheet (An Extract)
Liabilities Amount ₹ Assets Amount ₹
Match Fund : 10,00,000
Add: Donation for matches 5,00,000
15,00,000
Less: Match Expenses 8,00,000 7,00,000
Eg. Match Fund - ₹ 7,00,000; Donation for Matches - ₹ 1,00,000; Match Expenses - ₹ 8,50,000
Match Fund : 7,00,000
8,00,000
Less: Match Expenses 8,00,000 -
Income and Expenditure Account (An Extract)
Dr. Cr.
Expenditure Amount ₹ Income Amount ₹
To Match Expenses 50,000
2. Treatment of Specific fund, Specific Donation; Specific fund Investment; Interest on Specific fund
investment and Expenses incurred. [If Date of Investment & Rate of Interest is available]
Eg. Match Fund - ₹ 10,00,000; Donation for Matches - ₹ 5,00,000; 10% Match fund investment (01.04.2021) -
₹10,00,000; Interest on Match fund investment - ₹ 1,00,000; Match Expenses - ₹ 8,00,000.
Match Fund : 10,00,000 10% Match fund investment 10,00,000
Add: Donation for matches 5,00,000 (01.04.2021)
15,00,000
Interest on Match fund investment 1,00,000
16,00,000
(10,00,000 X 10/100 = ₹ 1,00,000)
₹5,00,000; Interest on Match fund investment - ₹ 50,000; Match Expenses - ₹ 11,00,000.
10,00,000
Interest on Match fund investment 50,000
10,50,000

Dr. Cr.
15,00,000 Accrued interest on investment 10,000
15,90,000
Accrued interest on investment 10,000
16,00,000
10,40,000
10,50,000

Dr. Cr.
15,00,000
15,50,000
(10,00,000 X 10/100 X 6/12 = ₹ 1,00,000)
10,00,000
10,50,000

Dr. Cr.
15,40,000
15,50,000
10,40,000
10,50,000

Dr. Cr.
3. Treatment of Specific fund, Specific Donation; Specific fund Investment; Interest on Specific
fund investment and Expenses incurred. [If Date of Investment Not given, Rate of Interest is
available]
Eg. Match Fund - ₹ 10,00,000; Donation for Matches - ₹ 5,00,000; 10% Match fund investment - ₹10,00,000;
Interest on Match fund investment - ₹ 1,00,000; Match Expenses - ₹ 8,00,000.
15,00,000
16,00,000
(10,00,000 X 10/100 = ₹ 1,00,000)
Interest on Match fund investment - ₹ 50,000; Match Expenses - ₹ 11,00,000.
10,00,000
10,50,000

Dr. Cr.
Add: Donation for matches 5,00,000 Accrued interest on investment 10,000
15,00,000
15,90,000
16,00,000
Add: Donation for matches 5,00,000 Accrued interest on investment 10,000
10,00,000
10,40,000
10,50,000

Dr. Cr.
fund investment and Expenses incurred. [If Date of Investment available, Rate of Interest Not
available]
Eg. Match Fund - ₹ 10,00,000; Donation for Matches - ₹ 5,00,000; Match fund investment (01.04.2021) -
₹10,00,000; Interest on Match fund investment - ₹ 1,00,000; Match Expenses - ₹ 8,00,000.
Match Fund : 10,00,000 Match fund investment 10,00,000
15,00,000
16,00,000

10,00,000
10,50,000

Dr. Cr.
15,00,000
15,90,000
10,00,000
10,40,000

Dr. Cr.
fund investment and Expenses incurred. [If Date of Investment & Rate of Interest Not
available]
Eg. Match Fund - ₹ 10,00,000; Donation for Matches - ₹ 5,00,000; Match fund investment - ₹10,00,000;
Interest on Match fund investment - ₹ 1,00,000; Match Expenses - ₹ 8,00,000.
15,00,000
16,00,000

10,00,000
10,50,000

Dr. Cr.
15,00,000
15,90,000

10,00,000
10,40,000

Dr. Cr.
fund investment; Receipt from sale of Tickets (Match / Tournament) and Expenses incurred.
[If Date of Investment & Rate of Interest is available]
₹10,00,000; Sale of Match Tickets - ₹ 2,00,000; Interest on Match fund investment - ₹ 1,00,000; Match Expenses
- ₹ 8,00,000.
15,00,000
16,00,000
Sale of Match Tickets 2,00,000
18,00,000
(10,00,000 X 10/100 = ₹ 1,00,000)
₹5,00,000; Sale of Match Tickets - ₹ 1,50,000; Interest on Match fund investment - ₹ 50,000; Match Expenses -
₹ 12,50,000.
10,00,000
10,50,000
12,00,000

Dr. Cr.
₹ 8,00,000.
15,90,000
16,00,000
18,00,000
₹5,00,000; Sale of Match Tickets - ₹50,000; Interest on Match fund investment - ₹ 40,000; Match Expenses - ₹
12,00,000.
10,40,000
10,50,000
Sale of Match Tickets 50,000
11,00,000
Dr. Cr.
To Match Expenses 1,00,000
₹ 8,00,000.
15,00,000
15,50,000
17,50,000
(10,00,000 X 10/100 X 6/12 = ₹ 1,00,000)
₹5,00,000; Sale of Match Tickets - ₹ 50,000; Interest on Match fund investment - ₹ 50,000; Match Expenses - ₹
11,50,000.
10,00,000
10,50,000
11,00,000

Dr. Cr.
₹ 8,00,000.

15,40,000
15,50,000
17,50,000
₹5,00,000; Sale of Match Tickets - ₹ 50,000; Interest on Match fund investment - ₹ 40,000; Match Expenses - ₹
12,00,000.
10,40,000
10,50,000
11,00,000

Dr. Cr.
To Match Expenses 1,00,000
 Accounting Treatment of Funds which create Fixed Assets.

a) When WIP exists.
b) When WIP doesn’t exists.
a) When WIP exists.

Eg. Capital fund on 1st April 2020 - ₹ 9,50,000; Building fund on 1st April 2020 - ₹ 5,00,000; 6% Building
fund investment on 1st April 2020 - ₹ 5,00,000; Donation received for Building - ₹ 3,00,000; Interest
received on Building fund investment - ₹ 30,000. Expenditure on construction of Building ₹ 6,50,000.
Construction work is in progress and has not been completed.
Capital fund 6% Building fund investment 5,00,000
Opening balance 9,50,000 Capital work in progress 6,50,000
Add: Transfer from Building fund 6,50,000 16,00,000 (Building)
Building fund
Opening balance 5,00,000
Add: Donations 3,00,000
Interest on investment 30,000
Less: Expenditure (6,50,000) 1,80,000 -
Eg. Capital fund on 1st April 2020 - ₹ 7,00,000; Building fund on 1st April 2020 - ₹ 6,00,000; 5% Building
fund investment on 1st April 2020 - ₹ 6,00,000; Donation received for Building - ₹ 2,00,000; Interest
received on Building fund investment - ₹ 30,000. Expenditure on construction of Building ₹ 10,00,000.
Construction work is in progress and has not been completed.

Capital fund 5% Building fund investment 6,00,000
Opening balance 7,00,000 Capital work in progress 10,00,000
Add: Transfer from Building fund 8,30,000 15,30,000 (Building)
Building fund
Interest on investment 30,000
Less: Expenditure (8,30,000) -
b) When WIP doesn’t exists.

Eg. Capital fund on 1st April 2020 - ₹ 4,00,000; Building fund on 1st April 2020 - ₹ 8,00,000; Donation
received for Building - ₹ 5,00,000. Expenditure on construction of Building ₹ 10,00,000. Construction
work was completed in March 2021. No more construction plan in future.
Capital fund Building 10,00,000
Add: Transfer from Building fund 13,00,000 17,00,000
Building fund
Less: Transfer to Capital Fund (13,00,000) -
Note:
1. Always remember to write the word “An Extract” when we don’t prepare a complete Balance sheet as well as
income and expenditure A/c.
2. Accrued interest on any specific fund invested must be shown in two places.
a) On the Asset side of Balance Sheet and
b) Should be added with the respective funds on the liability side of Balance sheet.
3. When any estimated value on construction is provided in the question, kindly ignore them.
Problems for Practice:
 Subscriptions:
Subscriptions (Credited to Income & Expenditure A/c)
Outstanding Subscriptions Advance Subscriptions
Assets Liabilities
(Balance Sheet) (Balance Sheet)

Accounting Period: 01.04.2020 – 31.03.2022
Opening Balance Closing Balance
(31.03.2020)
Format for computing Subscription – (2 Methods)

1. Table Method
2. Accounts Method / Ledger Method
1. Table Method:
Calculation of Subscription Credited to Income & Expenditure A/c.
Particulars Amount ₹
Subscriptions received during the year XXX
Add: Outstanding at the end XXX
Advance at the beginning (01.04.2020 / 31.03.2020) XXX
XXX
Less: Outstanding at the beginning XXX
Advance at the end XXX
Subscription credited to income and expenditure A/c XXX
2. Accounts Method / Ledger Method

Dr. Subscription A/c Cr.
Particulars Amount ₹ Particulars Amount ₹
To outstanding at the beginning XXX By advance at the beginning XXX
To income and expenditure A/c (Bal Fig) XXX By cash / bank XXX
To Advance at the end XXX By Outstanding at the end XXX
XXX XXX
Previous Year Current Year Next Year

01.04.2019 – 31.03.2020 01.04.2020 – 31.03.2021 01.04.2021 – 31.03.2022
Outstanding at the end: Add (+)

Advance at the beginning: Add (+)
Outstanding at the beginning: Less (-)
Advance at the end: Less (-)
Outstanding As at / on the date: Total outstanding (Outstanding on 31.03.2022)
[Outstanding on/at 31.03.2021 = Outstanding for 31.03.2021 + subscriptions still outstanding for Previous year)
Outstanding for the year: Amount outstanding only for that particular year only.
Note: if any amount of previous year subscription is still in arrears (i.e. Outstanding) add the amount with the
outstanding amount of subscription for the year which will be the amount of subscription arrears on the date
(31.03.2022).
If nothing is mentioned in the question with respect to outstanding subscription (i.e. Outstanding at the beginning
/ outstanding at the end) then in such cases we assume it as subscription outstanding at the end of the year.
To derive the amount of subscription outstanding at the beginning of the year:
Eg: Current Year – 01.04.2020 – 31.03.2021
Previous year – 01.04.2019 – 31.03.2020
Subscription O/s on 31.03.2020 – Subscription O/s at the beginning of 01.04.2020.
Subscription outstanding at the beginning of the year = (Previous year subscription received during the year +
Subscription still outstanding for the previous year)
 Treatment of Bad debts (or) Subscriptions written off:
a) Table Method
Calculation of Subscription Credited to Income & Expenditure A/c.
Subscriptions received during the year XXX
Add: Outstanding at the end XXX
Advance at the beginning (01.04.2020 / 31.03.2020) XXX
Bad debts XXX
XXX
Less: Outstanding at the beginning XXX
Advance at the end XXX
Subscription credited to income and expenditure A/c XXX
b) Accounts Method / Ledger Method

(-) Dr. Subscription A/c Cr. (+)
To outstanding at the beginning XXX By advance at the beginning XXX
To income and expenditure A/c (Bal Fig) XXX By cash / bank XXX
To Advance at the end XXX By Outstanding at the end XXX
By income and expenditure A/c XXX
XXX (Bad Debts) XXX
(-) Dr. Income and Expenditure A/c Cr. (+)

To Subscriptions (Bad debts) XXX
Additional Problems for Practice:
Subscription – ₹ 2,00,000
Subscriptions - ₹ 2,00,000
Subscription – ₹ 20,000
Material Consumed / Consumable Items
 Material Consumed: Will be shown on the debit side of income and expenditure A/c – (Expenditure)
Eg. For Materials are as follows:

a) Stationeries
b) Sports Materials
c) Medicines
Formula to compute Material Consumed:

Material Consumed = Opening Stock + Purchases – Closing Stock
(Total Purchases)
(Total Purchases = Cash Purchases + Credit Purchases)

Note: At times materials can be sold out in such cases the amount of material consumed is derived as
follows.
Eg. Opening Stock - ₹ 50; Purchases - ₹ 60; Closing Stock - ₹ 10; Sales - ₹ 30
Material Consumed = Opening Stock + Purchases – Sales (Book Value) – Closing Stock
= ₹ 50 + ₹ 60 - ₹ 30 - ₹ 10
= ₹ 110 - ₹ 40 = ₹ 70
If Total Purchases / credit purchase are given:

Purchases
(Total Purchases)
Need not prepare creditors A/c
If Total Purchases / credit purchase is not given:

Purchases
(Total Purchases)
Need to prepare Creditors A/c
Format of Creditors A/c

Dr. Creditors A/c Cr.
To Advance (beginning) XXX By balance b/d (opening Cr) XXX
To Bank (Payment made) XXX By Purchases (Bal fig – Credit Purchases) XXX
To balance c/d (closing Cr) XXX By advance (closing / end) XXX
Calculation of cost of Material consumed.
If Total Purchases is given If Total Purchases is not given
Opening Stock + Purchases – Sales (Book Value) – Closing Stock a) Long Formula Method
b) Preparing Creditors A/c
a) Long Formula Method:
Amount Paid to Creditors / Materials XXX
Add: Opening Stock XXX
Cash Purchases XXX
Creditors at the end (Closing) XXX
Advance at the beginning (opening) XXX
XXX
Less: Advance at the end (closing) XXX
Closing Stock XXX
Sales (if any at Book value) XXX
Creditors at the beginning (opening) XXX
Material Consumed XXX

 Income and Expenditure A/c
1. It is prepared on Accrual basis Expenditure (Debit Side)

2. it is Nominal A/c in nature
Incomes (Credit Side)
3. Only Revenue nature transactions are recorded.
4. Non-cash items are also recorded.
5. Only Current Year transactions are recorded.
6. Never to record any sale of fixed assets / loan borrowed in income and expenditure A/c, however any profit / loss
on sale of such fixed assets can be recorded in income and expenditure A/c and interest on loan borrowed will be
shown in income and expenditure A/c.
7. Purchase of books are treated as capital expenditure so don’t record in income and expenditure A/c.
8. Any Specific donations / Specific Legacies are not to be recorded in income and expenditure A/c; however it will
be shown on the liability side of the Balance Sheet.
9. Usually Entrance Fees is considered as a Revenue receipt (income); however if the question says Entrance Fees
has to be capitalized then it must be treated as a specific receipt and must appear on the Liability side of the
Balance Sheet. Similarly Life membership fee should be added to the capital fund in the closing Balance sheet.
Computation of Profit / Loss on sale of Fixed Assets.

a) Profit on Sale: If selling price of the fixed asset is more than its book value it is Profit, Profit on sale of Fixed
Assets will be shown on the credit side of income and expenditure A/c
b) Loss on Sale: If selling price of the fixed asset is less than its book value it is Loss, Loss on sale of Fixed
Assets will be shown on the Debit side of income and expenditure A/c.
 Format of Income and Expenditure A/c (Surplus)

Dr. Income and Expenditure A/c For the year ended 31st March …….. Cr.
To Salaries XXX By Subscriptions received XXX
(+) XXX (+) XXX
(+) XXX (+) XXX
(-) XXX (-) XXX
(-) XXX (-) XXX
To Honorarium XXX By Entrance fees XXX
To Rent & insurance XXX By Admission fees XXX
To Repairs XXX By General donation / Donation XXX
To Depreciation XXX By Legacy (General) XXX
To loss on sale of Fixed Assets XXX By Sale of old newspaper XXX
To loss on sale of investments XXX By gain on sale of Fixed Assets XXX
To Audit fees XXX By gain on sale of Investments XXX
To Telephone expenses XXX By Rent received / income received XXX
To Sports Material used XXX By interest on investments XXX
To Transportation expenses XXX By other incomes XXX
To Charity given XXX By Charity shows (Cr) XXX
To Printing & Stationery XXX
To Surplus (Bal fig.) XXX ____
[Added to Capital Fund in B/S] XXX XXX
(+) Outstanding at the end - Liability (+) Outstanding at the end - Asset
(+) Advance at the beginning - Asset (+) Advance at the beginning - Liability
(-) Outstanding at the beginning - Liability (-) Outstanding at the beginning - Asset
(-) Advance at the end - Asset (-) Advance at the end – Liability
Note: Outstanding / Advance at the beginning – Asset / Liability will be shown in opening Balance Sheet
Outstanding / Advance at the end – Asset / Liability will be shown in closing Balance Sheet
 Format of Income and Expenditure A/c (Deficit)
Dr. Income and Expenditure A/c For the year ended 31st March …….. Cr.
To Salaries XXX By Subscriptions received XXX
(+) XXX (+) XXX
(+) XXX (+) XXX
(-) XXX (-) XXX
(-) XXX (-) XXX
To Honorarium XXX By Entrance fees XXX
To Rent & insurance XXX By Admission fees XXX
To Repairs XXX By General donation / Donation XXX
To Depreciation XXX By Legacy (General) XXX
To loss on sale of Fixed Assets XXX By Sale of old newspaper XXX
To loss on sale of investments XXX By gain on sale of Fixed Assets XXX
To Audit fees XXX By gain on sale of Investments XXX
To Telephone expenses XXX By Rent received / income received XXX
To Sports Material used XXX By interest on investments XXX
To Transportation expenses XXX By other incomes XXX
To Charity given XXX By Charity shows (Cr) XXX
To Printing & Stationery XXX By Deficit XXX
XXX [Deducted from Capital Fund in B/S] XXX
(+) Outstanding at the end - Liability (+) Outstanding at the end - Asset
(+) Advance at the beginning - Asset (+) Advance at the beginning - Liability
(-) Outstanding at the beginning - Liability (-) Outstanding at the beginning - Asset
(-) Advance at the end - Asset (-) Advance at the end – Liability
Note: Outstanding / Advance at the beginning – Asset / Liability will be shown in opening Balance Sheet
Outstanding / Advance at the end – Asset / Liability will be shown in closing Balance Sheet
Balance Sheet:
 Balance Sheet
IMPORTANT THEORY CONCEPTS – TERM: 2
ONE SHORT REVISION:
Receipts & Payments A/c:
Fund Based Accounting:
Subscriptions:
Material Consumed / Amount of Consumable items:
Income & Expenditure A/c:
6 MOST EXPECTED QUESTIONS
Total Weightage: 10 Marks
1. Fund Based Accounting

2. Material Consumed 5 Marks
3. Subscriptions
15600 Surplus / 304200 I&E Total
Surplus – 29000 / 2,90,000 I&E Total
Surplus – 6850
Capital fund – 61550
Closing B/s – 70700
T.S.GREWAL’S IMPORTANT BOARD QUESTIONS
1. Illustration 1 (2021 Edition Pg#1.5)

8. Exercise Problem # 12 (2021 Edition Pg#1.62)
IMPORTANT POINTS TO REMEMBER

1. Capital fund is otherwise known as General fund (or) Corpus fund.
2. Any interest received out of General fund investment should be shown on the Credit side of Income and
Expenditure A/c and never should it be added to Capital fund / Corpus fund / General fund on the liability
side of Balance Sheet.
3. Any interest Accrued on such General fund investment should be shown in two places.
a) On the Credit side of Income and Expenditure A/c – Added with the interest received during the year.
b) On the Asset side of Closing Balance Sheet.
4. The amount of Capital fund need not be positive always, at times it can also show a Negative balance.
Eg. Cash in hand (opening balance) ₹ 20,000; Subscriptions in Arrears (31.03.2020) ₹ 2,500; Land and
Building (31.03.2020) ₹ 2,20,000; Subscription received in advance (31.03.2020) ₹ 40,000; Bank Loan
(31.03.2020) ₹ 1,50,000; Salaries outstanding (31.03.2020) ₹ 60,000. Find out the amount of Capital fund in
the beginning: (₹ 7,500 Negative Balance).
5. If the question is silent with respect to the date on which subscriptions / salaries are outstanding then in such
cases assume it as “Outstanding for the Current Year”. (CY)
6. Purchase of Machines, Furniture, Building, Bicycle, Billiards Table, Sports Equipment, Loans, Bonds,
Fixed Deposits (FD) and Investments are not recorded in Income and Expenditure A/c; however any
depreciation or interest thereon from the above can be shown in Income and Expenditure A/c.
Depreciation – Debit Side and
Interest – Credit side
7. Given in the Receipts and Payment A/c – 9% Investments / Bonds without any information with respect to
their interest, in such cases compute the amount of interest on such investments / Bonds and show them as
Accrued interest on the credit side of Income and Expenditure A/c also on the Asset side of closing Balance
Sheet.
8. If any amount of donation (General / Specific) is included in the amount of subscription received during the
year, then in such cases deduct the amount of donation so received from the subscription and add the same
amount with the respective donation as follows.
Eg. Subscription received during the year (2020 – 2021) - ₹ 2,60,000 which includes an amount of ₹ 10,0000
received towards donation. Donation ₹ 40,000.
Dr. Income and Expenditure A/c Cr.
By Subscriptions 2,60,000 2,50,000
Less: Donations 10,000
By Donation 40,000 50,000

Add: Donations 10,000
9. Similarly if any amount collected from the life member is included in the amount of Subscription then it has
to be deducted from the amount of subscription since it is a life membership fee and should be added with
the amount of capital fund in the closing Balance sheet.
10. Given in the question Tournament Fund ₹ 5,00,000; Tournament prizes awarded ₹ 1,50,000, In such
scenario we can use the amount of Tournament Fund to distribute Tournament Prizes. However if it is
mentioned only as Prizes awarded then in such scenario Tournament fund amount should not be used
against prizes awarded.
11. If the amount of Capital fund is not provided in the question then we need to derive the amount of Capital
fund by preparing opening Balance Sheet.
12. If the question has mentioned to show the treatment of Subscription / any other item in the Final Accounts
of the NPO then we need to prepare Income and Expenditure A/c and Balance Sheet (Closing).

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CHAPTER1: ACCOUNTING FOR NOT FOR PROFIT ORGANISATION

 Format of Receipts and Payment A/c

 Important Points about Receipts and Payment A/c:

General Donation Specific Donation

Income Specific Funds

Income and Expenditure A/c – Cr Eg. Building Fund

 Accounting Treatment of Funds which do not create Assets

Income and Expenditure Account (An Extract)

Income and Expenditure Account (An Extract)

Income and Expenditure Account (An Extract)

Income and Expenditure Account (An Extract)

Income and Expenditure Account (An Extract)

Income and Expenditure Account (An Extract)

Sol: Balance Sheet (An Extract)

Income and Expenditure Account (An Extract)

Income and Expenditure Account (An Extract)

Sol: Balance Sheet (An Extract)

Income and Expenditure Account (An Extract)

Sol: Balance Sheet (An Extract)

Income and Expenditure Account (An Extract)

Income and Expenditure Account (An Extract)

Income and Expenditure Account (An Extract)

Sol: Balance Sheet (An Extract)

Income and Expenditure Account (An Extract)

 Accounting Treatment of Funds which create Fixed Assets.

a) When WIP exists.

Sol: Balance Sheet (An Extract)

b) When WIP doesn’t exists.

Outstanding Subscriptions Advance Subscriptions

(Balance Sheet) (Balance Sheet)

Format for computing Subscription – (2 Methods)

2. Accounts Method / Ledger Method

Previous Year Current Year Next Year

Outstanding at the end: Add (+)

b) Accounts Method / Ledger Method

(-) Dr. Income and Expenditure A/c Cr. (+)

Additional Problems for Practice:

Eg. For Materials are as follows:

Formula to compute Material Consumed:

(Total Purchases = Cash Purchases + Credit Purchases)

If Total Purchases / credit purchase are given:

Need not prepare creditors A/c

If Total Purchases / credit purchase is not given:

Need to prepare Creditors A/c

Format of Creditors A/c

If Total Purchases is given If Total Purchases is not given

Problems for Practice:

1. It is prepared on Accrual basis Expenditure (Debit Side)

Computation of Profit / Loss on sale of Fixed Assets.

 Format of Income and Expenditure A/c (Surplus)

 Format of Income and Expenditure A/c (Deficit)

Fund Based Accounting:

Total Weightage: 10 Marks

1. Fund Based Accounting

1. Illustration 1 (2021 Edition Pg#1.5)

IMPORTANT POINTS TO REMEMBER

By Donation 40,000 50,000

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