ABM::M1::U18::ACCOUNTS OF NON-TRADING ORGANISATIONS

ACCOUNTS OF NON-TRADING ORGANISATIONS

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Introduction:

1.               Non Trading organisations:

"Educational institutions, sports clubs, public hospitals, charitable trusts etc." i.e engaged in rendering certain services to the people.

2.        Non-trading concerns maintain following books of account:

(a)     Cash book,

(b)     General ledger,

(c)     Journal,

(d)     Membership register,

(e)     Donation register,

(f)      Property register,

(g)     Subsidiary registers, depending upon special features, e.g. students register, patients registers.
etc.

3.        Final accounts

a.      Receipts and payment account

b.      Income and expenditure account

c.      Balance sheet

4.        Distinction between receipts and payments account and income and expenditure account:

	RECEIPTS AND PAYMENTS ACCOUNT	INCOME AND EXPENDITURE ACCOUNT
1.	Classification
	It is a real account.	It is a nominal account
2.	Contents
	It contains summary of actual expenses receipts and payments of a particular period.	It contains incomes and expenditures of a particular period.
3.	Items included
	It includes capital as well as revenue items.	It includes only revenue items.
4.	Opening and Closing balance
	It starts with opening cash and bank balances and ends with closing cash and bank balances.	There is no opening balance but ends with surplus or deficit for the Year.
5	Period
	It shows all the receipts and payments during the year, irrespective of whether these pertain to the previous years, current year or the subsequent years.	It shows incomes and expenditure of only the current year.

HOME

Introduction:

1.               Non Trading organisations:

"Educational institutions, sports clubs, public hospitals, charitable trusts etc." i.e engaged in rendering certain services to the people.

2.        Non-trading concerns maintain following books of account:

(a)     Cash book,

(b)     General ledger,

(c)     Journal,

(d)     Membership register,

(e)     Donation register,

(f)      Property register,

(g)     Subsidiary registers, depending upon special features, e.g. students register, patients registers.
etc.

3.        Final accounts

a.      Receipts and payment account

b.      Income and expenditure account

c.      Balance sheet

4.        Distinction between receipts and payments account and income and expenditure account:

	RECEIPTS AND PAYMENTS ACCOUNT	INCOME AND EXPENDITURE ACCOUNT
1.	Classification
	It is a real account.	It is a nominal account
2.	Contents
	It contains summary of actual expenses receipts and payments of a particular period.	It contains incomes and expenditures of a particular period.
3.	Items included
	It includes capital as well as revenue items.	It includes only revenue items.
4.	Opening and Closing balance
	It starts with opening cash and bank balances and ends with closing cash and bank balances.	There is no opening balance but ends with surplus or deficit for the Year.
5	Period
	It shows all the receipts and payments during the year, irrespective of whether these pertain to the previous years, current year or the subsequent years.	It shows incomes and expenditure of only the current year.

Treatment of some special items

     1.  Donations

Credited to that fund account and shown in the balance sheet on the liabilities side, e.g. donations for building fund, donations for endowment fund and so on. Donations received as routine revenue items like donations for annual meet, donations for charity show etc. are shown on income side of Income and Expenditure account.

     2.  Entrance Fees

Entrance fees are collected at the time of admission of new members to a club. These are collected only once in the life time and hence are treated as non-recurring (capital receipts) and taken to balance sheet. Every year, new members are admitted to the club and hence some feel that entrance fee is a recurring receipt and it should be taken to income side. Therefore, we must treat this item as per the instruction given in the problem.

     3.  Life Membership Fees

These fees are received in lump sum on one occasion only and hence, treated as non-recurring receipt. These are taken to balance sheet as a separate fund or added to capital fund.

     4.  Legacies

As per the will of the deceased person, his legal representative gives the gifts to the association. These are normally treated as non-recurring receipts and are taken to the liabilities side of the balance sheet.

     5.  Government Grants

If grant is received for maintenance, then it is taken as an income of the association but if it is received for a specific purpose, say, building construction, then it is credited to the particular fund and shown in liabilities side of the balance sheet.

     6.  Special Fund

If any special fund is created like building fund, endowment fund, charity fund and so on, all income and expenses pertaining to that fund should be adjusted against the fund.

     7.  Opening and Closing Stock of Stationery

When opening and closing stocks of stationery are given, these will appear in opening and closing balance sheets respectively and the stationery consumed during the year will appear as an item of expense in income and expenditure account.