Non Profit Organisations

Many organisations are formed not to make a profit, but to provide a needed service to society.
However, it must be noted that they may engage in activities that produce income for the
organisation.

Examples of Non Profit Organisations are Sports Clubs and Charitable Groups

Accounting Records of Non Trading Organisations

Whether it is a small club with a treasurer or a larger organisation, financial records must be
maintained and reported to interested parties.
The terms used for the accounting records prepared for Non- Trading Organisations differ from
profit making organisations

Differences in terminologies of Non Trading Organisations

Profit Making Organisation Non Trading Organisation

Profit and Loss A/c Income & Expenditure A/c
Profit Surplus/Excess of Income over Expenditure
Loss Deficit/Excess of Expenditure over Income
Capital Accumulated Fund (AF=A-L)

NB: Non Trading Organisations prepare Receipts and Payments A/c. This is similar to a Cash/
Bank A/c and records all Receipts and Payments of cash/ cheques

Sources of Revenues of Non Trading Organisations

For clubs and other similar entities, the main sources of revenue are subscriptions paid by
members, donations and possible trading activities in order to raise funds, eg, operate a bar, hold
a dance, bingo, barbeque and other such activities.

NB. A subscription is an agreed compulsory amount paid to an organization in order to be a part

of and participate in its activities
 A subscription account is maintained to keep track of member’s payments.

Subscription A/c
Jan 1 Owing b/d xxxx Dec 31 Prepaid b/d xxxx
Dec 31 Income & Expenditure xxxx Dec 31 Receipts & Payments xxxx
Dec 31 Prepaid c/d xxxx Dec 31 Owing b/d xxxx
xxxx Xxxx
Jan 1 Owing b/d xxxx Jan 1 Prepaid b/d xxxx
Current Asset Current Liability
Example 1. 33.2 Fifth Edition and Fourth Edition (TEXT)
Solution

(a) Receipts and Payments A/c

Receipts and Payments A/c

Dec 31 Bar Takings Jan 1 Bal b/d 1,650
8,960
Subscription received 30,100 Dec 31 Bar Purchases 6,150
Donations received 4,240 Rent 5,000
Bar Staff Wages 1,880
Equipment 8,900
Insurance 1,570
Affiliation fees 360
Transport 7,140
Ground staff wages 9,370
Bal c/d 1,280
43,300 43,300
Jan1 Bal b/d 1,280

(b) Refreshment Bar Trading A/c

East Point Social Club

Refreshment Bar Trading A/c for the year ended Dec 31, 2008

Bar Sales 8,960

Less Cost of Goods Sold:
Opening Stock 550
Purchase 6,150
Cost of goods available 6,700
Less Closing Stock (940) (5760)
Gross Proceeds from the Bar 3,200
Less Bar Expenses: Bar Staff Wages (1,880)
Net Proceeds from the Bar 1,320
 (c) Income and Expenditure Account

The East Point Social Club

Income and Expenditure A/c for the year ended Dec 31, 2008

Income:

Net Proceeds from the Bar 1320

Subscriptions (50 x 600) 30,000
Donations Received 4240
35,560
Expenditure:
Rent (5000 +1000) 6,000
Insurance (1,570 – 210) 1,360
Affiliation fees 360
Transport 7,140
Ground Staff Wages 9,370
Depreciation: Equipment (16,100+ 8,900x .2) 5,000 (29,230)
Surplus/ Excess of Income over Expenditure 6,330

(d) Calculation of Accumulated Fund

East Point Social Club

Statement of Affairs as at Dec 31, 2007/Jan 1, 2008

Assets:
Equipment 16,100
Fixtures 2,100
Stock 550
Subscriptions Owing (24 x 50) 1,200
Total Assets 19,950
Liabilities:
Bank Overdraft (1,650)
Accumulated Fund 18,300
Subscription A/c

Subscription A/c

Jan 1 Owing b/d 1,200 Jan 1 Prepaid b/d -

Dec 31 Income and Expenditure 30,000 Dec 31 Receipts and Payments 30,100
Dec 31 Prepaid c/d - Dec 31 Owing c/d 1,100
31,200 31,200
Jan 1 Owing b/d 1,100

Balance Sheet

East Point Social Club

Balance Sheet as at December 31, 2008
Cost Depn. Net Book Value
Fixed Assets:
Equipment 25,000 (5000) 20,000
Fixtures 2,100 - 2,100
27,100 5,000 22,100
Current Assets:
Stock 940
Bank 1,280
Subscriptions Owing 1,100
Insurance Prepaid 210
3,530
Current Liabilities:
Rent Owing (1000)
Working Capital 2,530
24,630
Financed By:
Accumulated Fund 18,300
+Surplus 6,330
24,630