CBSE Class 12 Accountancy Accounting For Not For Profit Organisations Notes Set 02

UNIT-09

ACCOUNTING FOR NOT FOR PROFIT ORGANISATIONS

1. Meaning of NPO :-

Non profit organizations are those organizations which are established for a Social/Charitable/Cultural purpose & not for earning profit. They render services for the promotion of Art, Culture, Sports, Education & Healthcare etc.

2. Features of NPO :-

a) They are registered distinct entities b) They render services to the society at nominal charges c) Their basic motive is not profit earning but social service.

3. Final Accounts of NPO :-

They prepare the following financial statements at the end of the accounting period:-

1. Receipts & Payments A/c;

2. Income & Expenditure A/c;

3. Balance sheet.

4 Distinction between Receipts & Payments A/c & Income & Expenditure A/c

4. Calculation of Subscription to be credited to Income & Exp. A/c.
Note : - Taking the figure of subscriptions received from the Receipts & Payments a/c as the base, additions for subscription of the current year though outstanding and subtraction of the subscription of the past & future period should be done to arrive at the figure to be credited to Income & Expenditure a/c. It should be clearly kept in mind that only the subscription of the current year should be considered even if it is outstanding and the subscription of the past & future period even if received in the current year should be excluded.

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