NPO

Chapter 9 Not for profit organisation

IPCC – CHAPTER 9

FINANCIAL STATEMENTS OF NON – PROFIT ORGANISATION

PROF. RAHUL J. MALKAN

© The Institute of Chartered Accountants of India

This e-Lecture was Recorded on: 23 January, 2013

© ICAI, 2013

1 • This lecture has been delivered by faculty members to supplement the Study

Material, Practice Manual and other content

2 • The views expressed in this lecture are of the Faculty Member.

3 • The content of this video lecture has not been specifically discussed by the

Council of the Institute or any of its Committees and the views expressed herein may not be taken to necessarily represent the views of the Council or any of its committees

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The e-Lectures, PPT, Podcasts and Video lectures on ICAI

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Practice Manual and Supplementary Study Material

The lecture recordings are made according to the syllabus and laws existing/ applicable as on

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Due to changes in law, there is likely to be some time gap

between these changes and the recording of updated lectures.

Hence, students are advised to refer to the Study Material

including Supplementary Study Material, if any, and other

relevant legislation for latest provisions/ amendments required for forthcoming

examination.

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Important Note This e-Lecture was Recorded on:

23 January, 2013

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INTRODUCTION

In every society, some organisation or organisation are found which do not have profit making as their as objective

A Non – profit organisation is a legal and accounting entity that is operated for the benefit of the society as a whole, rather than for the benefit of a sole proprietor or a group of partners or shareholders.

The main objective may be social, educational, religious or charitable and they take the form of clubs, societies or charitable bodies and so on.

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CHARACTERISTICS

Entity

Service Form

Funds

Financing

No Profit

Motive

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These organisations, prepare, at the year end, the following three financial statements

Receipts and Payments Account

Income and Expenditure Account

Balance sheet

FINANCIAL STATEMENTS

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RECEIPTS AND PAYMENT A/C

Receipts and payment account is a cash book. It is summary of all cash transactions. It starts with opening cash and bank balance and ends with the closing cash and bank balance. All receipts (Cash and Cheque) are shown on the left – hand side i.e. debit side and all payments (cash and cheque) are written on right hand side – i.e. credit side.

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RECEIPTS AND PAYMENT A/C The features of Receipt and Payment Account are as following.

Its a summary of cash and bank transactions

It starts with opening cash and bank balance and ends with closing cash and bank balance.

All receipts are recorded on the debit side and all payments on the credit side.

It records all receipts irrespective of the period they belong to. Means it records receipts and payments for past, current and future periods

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RECEIPTS AND PAYMENT A/C The features of Receipt and Payment Account are as following.

It records all receipts / payments irrespective of its nature. i.e. it records both revenue and capital receipts and payments

It does not record any non cash transaction.

This account is not an trial balance – but a cash trial.

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RECEIPTS AND PAYMENT A/C A specimen of Receipt and Payment A/c

Name of the Institution / Club Receipt and Payment Account for the year ended 31st March, 2011

Dr Cr Receipt ₹ Payment ₹

To opening Balance By Salaries xxx Cash xxx By Rent xxx Bank xxx xxx By Electricity xxx

To Subscriptions By Purchase of Furniture xxx 09 - 10 xxx By Purchase of Investment xxx 10 - 11 xxx By Repairs on machinery xxx 11- 12 xxx xxx By Sundry Expenses xxx

To Entrance Fees xxx By Cleaning Expenses xxx To Donation xxx By Insurance Expenses xxx To Sale of Furniture xxx By Books xxx To rent received xxx By Closing Balance

Cash xxx Bank xxx xxx

xxx xxx

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R & P - Illustration

S-M Illustration 1 – page 9.2

The receipt and payments for the swaraj club for the year ended December 31st, 2010 were : Entrance fees ₹ 300, Membership Fees ₹ 3,000, Donation for club pavilion ₹ 10,000, Foodstuff sales ₹ 1,200, salaries and wages ₹ 1,200, Purchase of Foodstuff ₹ 800, Construction of Club pavilion ₹ 11,000, General Expenses ₹ 600, Rent and Taxes ₹ 400, Bank charges ₹ 160. Cash in hand – Jan 1st ₹ 200, Dec 31st ₹ 350 Cash in Bank – Jan 1st ₹ 400, Dec 31st ₹ 590

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Swaraj Club Receipt and Payment Account for the year ended 31st Dec, 2010

Dr Cr

Receipts ₹ Payments ₹

To Balance B/d Cash in Hand 200 Cash with Bank 400 To Entrance Fees 300 To Membership Fees 3,000 To Donation on Account of Club Pavilion 10,000 To Sales of Foodstuff 1,200 15,100

By Salaries and Wages 1,200 By Purchase of Foodstuff 800 By Club Pavilion (Expense on construction) 11,000 By General Expenses 600 By Rent and Taxes 400 By Bank Charges 160 By Balance c/d Cash in Hand 350 Cash with Bank 590 15,100

R & P - Solution

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INCOME AND EXPENDITURE A/C

The income and Expenditure Account is equivalent to the Profit and Loss Account of business enterprise. It is prepared by matching revenues against the expenses for a specific period, usually a year. However since this is not an profit making institution, it is known as Income and Expenditure and the balance is not known as profit or loss but is known as deficit or surplus.

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INCOME AND EXPENDITURE A/C The features of Income and Expenditure Account are as following.

Its a revenue account prepared at the end of financial period.

It is prepared by matching expenses against revenue of the period concerned.

All expenses are shown on the left hand side – i.e. Debit side

All Income are shown on the right hand side – i.e. Credit side

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INCOME AND EXPENDITURE A/C The features of Income and Expenditure Account are as following.

Both cash and non cash items are considered. For e.g. depreciation

All capital expenditure and incomes are excluded.

Only current year’s incomes and expenses are considered.

If incomes are more than the balance is known as surplus, and if expenses are more than the balance will be known as deficit.

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INCOME AND EXPENDITURE A/C A specimen of Income and Expenditure A/c

Dr Cr Expenses ₹ Incomes ₹

To Salaries xxx By Subscription xxx Add Outstanding xxx xxx Add outstanding xxx To Rent xxx Less Advance xxx xxx To Insurance xxx By donations xxx Less Prepaid xxx xxx By Entrance Fees xxx To Printing and Stationery xxx By Sale of Old newspapers xxx To Repairs of Equipment xxx By sundry receipts xxx To Depreciation By rent received xxx Furniture xxx Equipment xxx Books xxx xxx To sundry Expenses xxx To surplus (Bal. Figure) xxx

xxx xxx

Name of the Institution / Club Income and Expenditure Account for the year ended 31st March, 2011

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Distinguish between R & P and I & E

Receipts and Payment It is a Real Account It is a summary of actual cash receipts and payments of a particular period. It includes both capital and Revenue items It includes all receipts and payments irrespective of the period to which it belongs It does not include non cash transactions It begins with the opening cash/bank balance and ends with the closing cash/bank balance

Income and Expenditure It is a Nominal Account It is a summary of incomes and expenses of a particular period. It incomes only Revenue items It includes only incomes and expenses of a particular period for which the account is prepared. It includes both the cash and non cash transactions. It does not have any opening balance. Closing balance may either represent deficit or surplus.

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The Balance sheet of non profit concern is prepared on the same principles as the balance sheet of a profit – seeking business. Its a statement of all assets and liabilities of the business. It may be prepared either in the order of liquidity or in the order of permanence.

BALANCE SHEET

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A specimen of Balance Sheet

Name of the Institution / Club Balance Sheet as on 31st March, 2011

Liabilities ₹ Assets ₹ Capital Funds xxx Building xxx Add Entrance Fees xxx Less Depreciation xxx xxx

xxx Furniture xxx Add surplus xxx xxx Less Depreciation xxx xxx

Books xxx Subscription received in Less Depreciation xxx xxx Advance xxx Investments xxx Outstanding Wages xxx Outstanding Subscription xxx Prize Fund xxx Prepaid Insurance xxx Building Fund xxx Cash at Bank xxx

Cash in hand xxx xxx xxx

BALANCE SHEET

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It is the major source of revenue income of a non profit organisation. It is paid periodically by the member of the club.

In statement form

In Account form

In equation form

Subscription

It can be computed in any of the following three ways. Receipts and Payments Receipts Payments

Sub xx

Income and Expenditure Expenses Incomes

sub xx

TERMINOLOGY USED IN ACCOUNTS OF NPO

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TERMINOLOGY USED IN ACCOUNTS OF NPO Subscription In Statement Form

Income for the year

Subscription (From Receipts) xxx

Add : Outstanding at End xxx Asset Closing

Less : Outstanding at Beginning xxx Asset Opening

Less : Advance at End xxx Liability Closing

Add : Advance at Beginning xxx Liability Opening

Subscription (To Income) xxx

Receipts and Payments Receipts Payments

Sub xx


sub xx

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TERMINOLOGY USED IN ACCOUNTS OF NPO Subscription In Account Form

Dr Subscriptipn A/c Cr Particulars ₹ Particulars ₹

To Outstanding Subscription xxx By Advance Subscription xxx ( At the Beginning) ( At the Beginning) To Income and Expenditure xxx By Bank A/c xxx (Balancing Figure) (Receipt and Payment A/c) To Adcance Subscription xxx By Outstanding Subscription xxx (At the End) (At the End) xxx xxx


Sub xx


sub xx

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TERMINOLOGY USED IN ACCOUNTS OF NPO Subscription In Equation Form

SI = SR + OS2 + AS1 – OS1 – AS2 SI = Subscription to Income SR = Subscription as per receipts OS2 = Outstanding at the End AS1 = Advance at the Beginning OS1 = Outstanding at the Beginning AS2 = Advance at the End


Sub xx

Income and Expenditure

Expenses Incomes sub xx

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TERMINOLOGY USED IN ACCOUNTS OF NPO Subscription Illustration - 1

Compute the subscription for the year 2012 from the following particulars of a club Subscription received = 1,50,000 1/1/2012 31/12/2012 Outstanding 9,000 7,000 Advance 4,000 6,000

Solution

Add : Outstanding at End

Subscription (From Receipts)

Less : Outstanding at Beginning Less : Advance at End Add : Advance at Beginning

Subscription (To Income)

1,50,000 7,000 9,000 6,000 4,000 1,46,000

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Calculate the subscription to be credited to income and expenditure A/c for the year ended 31/12/2012 from the following information. Subscription received 2011 - 1,000, 2012 – 4,000 and 2013 - 800. The club had 100 members, each paying an annual subscription of Rs. 50 . Subscription outstanding as on 31st December, 2011 were Rs. 1200

Solution

Add : Outstanding at End Subscription (From Receipts)

Less : Outstanding at Beginning Less : Advance at End Add : Advance at Beginning Subscription (To Income)

1000 + 200 5,800 1,200 1,200 800 ------- 5,000

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Calculate the subscription to be credited to income and expenditure A/c for the year ended 31/12/2012 from the following information. Subscription received 2011 - 10,000, 2012 – 60,000 and 2013 – 12,000. 1. Subscription received in advance as at 31/12/2011 ₹ 11,000 2. Subscription outstanding as at 31/12/2011 ₹ 12,000 3. Subscription outstanding for the year 2012 is ₹ 8,000

Solution

Add : Outstanding at End Subscription (From Receipts)

Less : Outstanding at Beginning Less : Advance at End Add : Advance at Beginning Subscription (To Income)

8,000 + 2,000 82,000 10,000 12,000 12,000 11,000 79,000

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It is the initial amount paid by the members who intends to become the member of the association, it should be treated as capital receipt and credited to Capital Fund Account.

Entrance Fees / Admission Fees

If the amount is small, just to cover the expenses on admission, then it can also be treated as revenue receipt and credited to income and expenditure account.

When the problem provides specific direction, then it should be dealt with in the way specified in the question.

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TERMINOLOGY USED IN ACCOUNTS OF NPO Illustration

Entrance fees received in the year 2011-12 ₹ 1,00,000. 40% of entrance fees is to be capitalised.

Entrance Fees / Admission Fees

Solution ₹ 40,000 (40%) should be capitalised and Added capital fund ₹ 60,000 (60%) should be credited to income and expenditure A/c.

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TERMINOLOGY USED IN ACCOUNTS OF NPO Donation

1. Donation are received from persons, firms, companies in the form of money or in kind.

2. If the amount is small and recurring in nature, then it should be credited to Income and Expenditure A/c.

3. Donation may also be received for specific purpose , then they should be treated accordingly. For eg. Donation of Building or Donation for Prizes

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TERMINOLOGY USED IN ACCOUNTS OF NPO Illustration

Prize Fund as on 31/3/2012 ₹ 24,000. Donation for Prize Fund received ₹5,000 and prizes awarded for the year ₹ 8,000.

Solution Extracts of Balance Sheet as at 31/3/2012

Liabilities ₹ ₹ Assets ₹ Prize Fund Opening Balance 24,000 Add : Donations 5,000 Less : Prizes Awarded 8,000 21,000

Donation

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It is the Amount or any other item received from a deceased person under the terms of the will. If the legacy is received for the specific purpose then it is to treated accordingly. However if the purpose is not specified, then it can be capitalised and directly added to capital fund.

Legacies

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TERMINOLOGY USED IN ACCOUNTS OF NPO Government Aid

Government may help a NPO by the way of a grant in aid or subsidy.

Aid General Specific

2. Special Aid : They are to be treated as capital receipts and should be added to capital fund

1. General Aid : Theses aids are treated as revenue receipts and thus, are transferred to the credit of the income and expenditure.

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TERMINOLOGY USED IN ACCOUNTS OF NPO Sale of Fixed Assets

Sale of Fixed Assets should be treated as capital receipts and should be credited to Assets A/c. However, assets should be credited with book value of Asset and profit or Loss arising from the sale should be recorded in Income and Expenditure Account.

Receipts and Payment A/c

Receipts ₹ Payment ₹

To Sale of Plant 1200

(B.V 1000)

Income and Expenditure A/c Expenses ₹ Incomes ₹

Balance Sheet

Liabilities ₹ Assets ₹ Plant xxx Less Sold

By Profit on Sale 200

1000

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TERMINOLOGY USED IN ACCOUNTS OF NPO Consumable Items

Many non – profit seeking organisations consume some consumables items e.g. Stationery, sports materials, medicines etc. In such cases the amount consumed should be debited to Income and Expenditure Account.

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TERMINOLOGY USED IN ACCOUNTS OF NPO Consumable Items Illustration

Receipts and Payment A/c Receipts ₹ Payments ₹ By Printing and Stationery 890

Solution

Adjustment : Opening stock of stationery is ₹ 125 and closing Stock₹ 87.

Calculate the amount of printing and stationery to be debited to income and expenditure a/c from the following information

Opening Stock

Add : Purchase

Less : Closing Stock

Consumed

125 890 1,015 87 928

Opening Balance Sheet

Closing Balance Sheet

Income and Expenditure Account

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TERMINOLOGY USED IN ACCOUNTS OF NPO Honorarium

A token payment made to a person who has voluntarily undertaken a service which would normally command a fee. It is thus an expression of gratitude rather than a payment for the work done.

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FUND BASED ACCOUNTING Funds are cash or its equivalent. Under fund based accounting, in order to keep a record for the funds received or raised for a particular purpose, a Capital Fund Account is opened.

Non – profit organisations may also set up fund for a special purpose. For example, a club may wish to acquire building and may set up special fund for this purpose. It should be noted that the amount received through donation for a particular purpose should be transferred to the fund and not to the credit of income and expenditure account. Similarly, all expenses should be charged to the fund and not income and expenditure account. Incase if the fund is for the creation of Asset, then once the asset is created the fund should be dissolved and transferred to Capital.

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FUND BASED ACCOUTING

Following is the extract of receipt and payment Account for Gotham Club. Show how would you deal with the items in the account and the information following.

Illustration

Receipts and Payment A/c Receipts ₹ Payments ₹ To Donations for Prize Fund 5,000 By Prizes Awarded 4,000

The opening Balance of the Prize fund was ₹ 2,000 Solution

Balance Sheet Liabilities ₹ Assets ₹

Prize Fund Opening + Donations Received - Prizes Awarded 3,000

2,000 5,000 4,000

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Illustration

FUND BASED ACCOUTING

Following is the extract of receipt and payment Account for Gotham Club. Show how would you deal with the items in the account and the information following.

Receipts and Payment A/c Receipts ₹ Payments ₹ To Donations for Building 50,000 By Construction of Building 40,000

The opening Balance of the Building fund was ₹ 20,000 Solution Balance Sheet

Liabilities ₹ Assets ₹

Building Fund (op) + Donations Received - Capitalised 30,000

Building 40,000

Capital Fund xxxx + Building Fund (cap)

20,000 50,000 40,000

40,000

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TYPES OF PROBLEMS 1. Preparation Income and Expenditure Account and Balance sheet when Receipt and Payment Account and other information are given. 2. Preparing Income and Expenditure Account and Balance Sheet from Receipt and Payment Account and Opening Balance Sheet and Other information. 3. Preparing Receipts and Payment Account from Income and Expenditure Account and Closing Balance Sheet. 4. Preparing Opening and Closing Balance Sheet from Receipt and Payment Account and Income and Expenditure Account 5. Preparing Receipt and Payment Account from Opening and Closing Balance Sheet and Additional Information.

6. Preparing Income and Expenditure Account and Balance Sheet from Trial Balance.

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Mahaveer Sports Club gives the following receipts and payments for the year ended 31st March, 2011.

Dr Receipts and Payment A/c Cr Receipts ₹ Payments ₹ To Opening Balance 5,200 By Salaries 15,000 To Subscription 34,800 By Rent and Taxes 5,400 To Donations 10,000 By Elect. charges 600 To Interest 1,200 By Sports Goods 2,000 To Sundry Recpts 300 By Library Books 10,000 By Newspapers 1,080 By Misc. Expenses 5,400 By Balance c/d 12,020 51,500 51,500

31-03-2010 31-03-11 Outstanding Expenses Salaries 1,000 2,000 Newspapers 400 500 Rent and Taxes 600 600 Electricity Charges 800 1,000 Library Books 10,000 -- Sports Goods 8,000 -- Furniture 10,000 -- Subscription receivable 5,000 12,000 Investment 50,000 -- Accrued Interest 600 600 Provide Depreciation on :

Furniture @ 10 % p.a Sports Goods @ 20 % p.a , Library Books @ 10% p.a Donations are to be capitalized. You are required to prepare clubs opening Balance Sheet as on 1.4.2010, income and expenditure account for

the year ended 31.3.2011 and the balance sheet as on that date.

1. Preparation Income and Expenditure Account and Balance sheet when Receipt and Payment Account and other information are given.

practice manual Q - 5

R R

R

R

R R

R

R R

C C

Op

Clo

C

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Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Expenditure ₹ Income ₹

Balance Sheet as on 31/3/2011 Liabilities ₹ Assets ₹

Mahaveer Sports Club Balance Sheet as on 31/3/2010


Exp/ Inc Sub Interest Salary Elect. Rent News R & P Add O/s E Less O/s B Less Adv E Add Adv B I & E

Assets Furniture Sports Goods Books Opening Add : Purchase Less : Sale Less : Dep Closing

Subscription receivables 12,000

O/s Subscription 5,000

Cash and Bank 5,200

34,800 12,000

--------- 5,000

-------- 41,800

By Sub. (wn. 2) 41,800

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By Sub. (wn. 2) 41,800 By Interest (wn. 2) 1,200 By Sundry Receipts 300

To Salaries (wn.2) 16,000

Add : Donations 10,000

Outstanding Exp Salaries 2,000

Accrued Interest 600 Subscription receivables 12,000

O/s Salaries 1,000


Accrued Int. 600 Cash and Bank 5,200

34,800 12,000

--------- 5,000

-------- 41,800

1,200 600 600

1,200

--------- --------

15,000 2,000

-------

16,000

1,000

--------

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By Sub. (wn. 2) 41,800 By Interest (wn. 2) 1,200 By Sundry Receipts 300

To Salaries (wn.2) 16,000 To Elec. (wn. 2) 800 To Rent (wn. 2) 5,400


Salaries 2,000

Electricity Char 1,000 Rent and Taxes 600

Accrued Interest 600 Subscription receivables 12,000

O/s Salaries 1,000

O/s Elec. 800 O/s Rent 600



34,800 12,000

--------- 5,000

-------- 41,800

1,200 600 600

1,200

--------- --------

15,000 2,000

-------

16,000

1,000

--------

600 1,000

--------

800

800

--------

5,400 600

--------

5,400

600

--------

Outstanding Exp

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By Interest (wn. 2) 1,200 By Sundry Receipts 300

To Salaries (wn.2) 16,000 To Elec. (wn. 2) 800 To Rent (wn. 2) 5,400 To News (wn. 2) 1,180 To Misc Exp. 5,400


Outstanding Exp Salaries 2,000 Newspapers 500 Electricity Char 1,000 Rent and Taxes 600

Accrued Interest 600 Subscription receivables 12,000 Cash and Bank 12,020

O/s Salaries 1,000 O/s Newspapers 400 O/s Elec. 800 O/s Rent 600



34,800 12,000

--------- 5,000

-------- 41,800

1,200 600 600

1,200

--------- --------

2,000

10,000

15,000 2,000

-------

16,000

1,000

--------

600 1,000

--------

800

800

--------

5,400 600

--------

5,400

600

--------

1,080 500

--------

1,180

400

--------

By Sub. (wn. 2) 41,800

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To Salaries (wn.2) 16,000 To Elec. (wn. 2) 800 To Rent (wn. 2) 5,400 To News (wn. 2) 1,180 To Misc Exp. 5,400







34,800 12,000

--------- 5,000

-------- 41,800

1,200 600 600

1,200

--------- --------

10,000 -------- 10,000 -------- 10,000 1,000 9,000

8,000 2,000 10,000 ---------- 10,000 2,000 8,000

10,000 10,000 20,000 ---------- 20,000 2,000 18,000

15,000 2,000

-------

16,000

1,000

--------

600 1,000

--------

800

800

--------

5,400 600

--------

5,400

600

--------

1,080 500

--------

1,180

400

--------

By Sub. (wn. 2) 41,800

© ICAI, 2013








To Salaries (wn.2) 16,000 To Elec. (wn. 2) 800 To Rent (wn. 2) 5,400 To News (wn. 2) 1,180 To Misc Exp. 5,400 To Dep. (wn. 3 ) 5,000



Fixed Assets Furniture 9,000 Sports Good 8,000 Library Books 18,000

Investment 50,000



Library Books 10,000 Sports Goods 8,000 Furniture 10,000 O/s Subscription 5,000 Investment 50,000 Accrued Int. 600 Cash and Bank 5,200

34,800 12,000

--------- 5,000

-------- 41,800

1,200 600 600

1,200

--------- --------

10,000 -------- 10,000 -------- 10,000 1,000 9,000

8,000 2,000 10,000 ---------- 10,000 2,000 8,000

10,000 10,000 20,000 ---------- 20,000 2,000 18,000

15,000 2,000

-------

16,000

1,000

--------

600 1,000

--------

800

800

--------

5,400 600

--------

5,400

600

--------

1,080 500

--------

1,180

400

--------

By Sub. (wn. 2) 41,800

© ICAI, 2013








To Salaries (wn.2) 16,000 To Elec. (wn. 2) 800 To Rent (wn. 2) 5,400 To News (wn. 2) 1,180 To Misc Exp. 5,400 To Dep. (wn. 3 ) 5,000

To Surplus 9,520

Capital Fund Opening 86,000 Add : Surplus 9,520 Add : Donations 10,000 1,05,520 Outstanding Exp Salaries 2,000 Newspapers 500 Electricity Char 1,000 Rent and Taxes 600

Fixed Assets Furniture 9,000 Sports Good 8,000 Library Books 18,000

Investment 50,000


43,300 43,300

Capital Fund 86,000 O/s Salaries 1,000 O/s Newspapers 400 O/s Elec. 800 O/s Rent 600

Library Books 10,000 Sports Goods 8,000 Furniture 10,000 O/s Subscription 5,000 Investment 50,000 Accrued Int. 600 Cash and Bank 5,200

1,09,620 1,09,620

88,800 88,800

34,800 12,000

--------- 5,000

-------- 41,800

1,200 600 600

1,200

--------- --------

10,000 -------- 10,000 -------- 10,000 1,000 9,000

8,000 2,000 10,000 ---------- 10,000 2,000 8,000

10,000 10,000 20,000 ---------- 20,000 2,000 18,000

15,000 2,000

-------

16,000

1,000

--------

600 1,000

--------

800

800

--------

5,400 600

--------

5,400

600

--------

1,080 500

--------

1,180

400

--------

By Sub. (wn. 2) 41,800

© ICAI, 2013

2. Preparation Income and Expenditure Account and Balance sheet when Opening Balance Sheet, Receipt and Payment Account and other information are given.


Smith Library Society showed the following position on 31st March, 2010


Capital Fund 7,93,000 Electrical Fittings 1,50,000

Expenses Furniture 50,000 payable 7,000 Books 4,00,000 Investments 1,50,000 Cash at Bank 25,000 Cash in Hand 25,000 8,00,000 8,00,000

Receipts and Payment A/c for the year 31/3/2011 Receipts ₹ Payments ₹

To Balance b/d Cash at Bank 25,000 By Electricity 7,200 Cash in Hand 25,000 By Postage 5,000 To Entrance By Telephone 5,000 Fees 30,000 By Books 60,000 To Subscription 200000 By O/s Exp 7,000 To Sale of old By Rent 88,000 Newspaper 1,500 By Investment 40,000 To Hire of By Salaries 66,000 Lecture Hall 20,000 By Balance c/d To Interest on Cash at Bank 20,000 Investments 8,000 Cash in Hand 11,300 3,09,500 3,09,500

You are required to prepare income and expenditure account for the year ended 31/3/2011 and the balance sheet as at that day after making following adjustments 1. Membership subscription included ₹ 10,000 received in advance. 2. Provide for outstanding

rent ₹ 4,000 and salaries ₹ 3,000. 3. 75 % of entrance fees is to be capitalized. 4. Books, Electrical fittings and furniture are also to be depreciated at 10% rate. 5. Interest on securities is to calculated @ 5% p.a including purchases made on 1.10.2010 for ₹ 40,000.

R

C

Op

R

R

R

R R

R

R R

R

C

C

clo

© ICAI, 2013



Smita Library Society

By Entrance Fees 7,500 By Subscription 1,90,000

Capital Fund Opening 7,93,000 Add : Entrance 22,500 Advance Subscription 10,000

Exp/ Inc Sub Interest Rent Salary R & P Add O/s E Less O/s B Less Adv E Add Adv B I & E

Assets Electrical Furniture Books Opening Add : Purch Less : Sale Less : Dep Closing

200000 --------- --------- 10,000 --------- 190,000

1,50,000

50,000

4,00,000

Investments (150,000

© ICAI, 2013




By Entrance Fees 7,500 By Subscription 1,90,000 By Sale of Old Newspapers 1,500 By Hire of Lecture hall 20,000 By Interest on securities 8,500

To Elec. Charges 7,200 To Postage 5,000 To Telephone 5,000 To Rent 92,000 To Salaries 69,000

Capital Fund Opening 7,93,000 Add : Entrance 22,500 Outstanding Exp Rent 4,000 Salaries 3,000 7,000 Advance Subscription 10,000



200000 --------- --------- 10,000 --------- 190,000

8,000 500 ------- ------- ------- 8,500

88,000 4,000 ------- ------- ------- 92,000

66,000 3,000 ------- ------- ------- 69,000

1,50,000 1,50,000 --------

50,000 50,000

4,00,000 60,000 4,60,000

Investments (150,000 + 40,000) 1,90,000 Outstanding Interest 500

© ICAI, 2013

Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Income ₹ Expenditure ₹



By Entrance Fees 7,500 By Subscription 1,90,000 By Sale of Old Newspapers 1,500 By Hire of Lecture hall 20,000 By Interest on securities 8,500 By Deficit 16,700 2,44,200

To Elec. Charges 7,200 To Postage 5,000 To Telephone 5,000 To Rent 92,000 To Salaries 69,000 To Depreciation Electrical Fitting 15,000 Furniture 5,000 Books 46,000 2,44,200

Capital Fund Opening 7,93,000 Add : Entrance 22,500 Less : Deficit 16,700 7,98,800 Outstanding Exp Rent 4,000 Salaries 3,000 7,000 Advance Subscription 10,000

8,15,800



200000 --------- --------- 10,000 --------- 190,000

8,500 500 ------- ------- ------- 9,000

88,000 4,000 ------- ------- ------- 92,000

66,000 3,000 ------- ------- ------- 69,000

1,50,000 1,50,000 -------- 150,000 15,000 1,35,000

50,000 50,000 -------- 50,000 5,000 45,000

4,00,000 60,000 4,60,000 -------- 460,000 46,000 4,14,000

Cash in hand 11,300 Cash at Bank 20,000 Fixed Assets Electrical Fittings 1,35,000 Furniture 45,000 Books 4,14,000 Investments (150,000 + 40,000) 1,90,000 Outstanding Interest 500

8,15,800

© ICAI, 2013

3. Preparation Receipt and Payment Account from Income and Expenditure and Other information given .


Income and Expenditure Account for the year ended 31st March, 2012 of South Asia Club is given below.

Expenditure ₹ Income ₹ To Salaries and Wages 47,500 By Subscription 75,000 To Miscellaneous Exp 5,000 By Entrance Fees 2,500 To Audit Fees 2,500 By Contribution for To Honorarium 10,000 Annual Day 7,500 To Sports Day Expenses 5,000 (After deducting Exp ₹ To Printing and Stationery 4,500 7,500) To Interest on Loan 1,500 To Depreciation on Sports Equipment 3,000 To Surplus 6,000 85,000 85,000

31.3.2011 31.3.2012 1. Subscription received in Advance 4,500 2,700 2. Subscription outstanding 6,000 7,500 3. Salaries Outstanding 4,000 4,500 4. Sports Equipment 26,000 27,000

Additional Information 5. Cash in hand as on 31.3.12 was

₹ 16,000 6. The club took a 5% loan of ₹

30,000 from a bank during 2010 – 11 for which interest was not paid in the financial year 2011 – 12.

Prepare Receipts and payment

account of south Asia club for the year ending 31st March 2012.

Additional Information

© ICAI, 2013

3. Asset

Sports Equipment

Receipt ₹ Payment ₹ By Salaries and Wages 47,000 By Miscellaneous Exp 5,000 By Audit Fees 2,500 By Honorarium 10,000 By Sports Day Exp. 5,000 By Printing and Stationery 4,500 By Sports Equipment 4,000

South Asia Club Receipt and Payment Account for the year ended 31st March, 2012

1. Subscription As Per Receipt and Payment Add : Outstanding at End Less : Outstanding at Beg Less : Advance at End Add : Advance at Beg As Per Income and Expenditure

2. Salaries and Wages As Per Receipt and Payment Add : Outstanding at End Less : Outstanding at Beg Less : Advance at End Add : Advance at Beg As Per Income and Expenditure

47,000 4,500 4,000 ------- ------- 47,500

Opening Add : Purchase Less : Sold Less : Dep. Closing

26,000 4,000 30,000 -------- 30,000 3,000 27,000

© ICAI, 2013

3. Asset

Sports Equipment

Receipt ₹ Payment ₹ To Balance b/d 12,300 To Subscription 71,700 To Entrance Fees 2,500 To Contribution to Annual Day (7,500 + 7,500) 15,000

By Salaries and Wages 47,000 By Miscellaneous Exp 5,000 By Audit Fees 2,500 By Honorarium 10,000 By Sports Day Exp. 5,000 By Printing and Stationery 4,500 By Annual Day Exp. 7,500 By Sports Equipment 4,000 By Balance c/d 16,000 1,01,500 1,01,500

South Asia Club Receipt and Payment Account for the year ended 31st March, 2012

1. Subscription As Per Receipt and Payment Add : Outstanding at End Less : Outstanding at Beg Less : Advance at End Add : Advance at Beg As Per Income and Expenditure

2. Salaries and Wages As Per Receipt and Payment Add : Outstanding at End Less : Outstanding at Beg Less : Advance at End Add : Advance at Beg As Per Income and Expenditure

71,700 7,500 6,000 2,700 4,500 75,000

47,000 4,500 4,000 ------- ------- 47,500

Opening Add : Purchase Less : Sold Less : Dep. Closing

26,000 4,000 30,000 -------- 30,000 3,000 27,000

© ICAI, 2013

4. Preparation Receipt and Payment Account and Balance Sheet from Income and Expenditure and opening Balance Sheet other information given .

From the following Income and Expenditure Account of Victoria Club for the year ended 31/12/2012 and the balance sheet as on 31/12/2011 and other information, prepare Receipts and Payments Account for the year ended 31/12/2012 and the balance sheet as on that date.

Income and Expenditure A/c for the year ended 31.12.2012 Expenditure ₹ Income ₹

To Salaries 1,00,000 By Subscription 1,88,000 To Rent 22,000 By Entrance Fees 12,000 To Travelling Exp 1,000 By Donations 20,000 To Printing 2,000 By Interest 10,000 To dep (furniture) 3,000 To Periodicals 1,000 To Surplus 1,01,000 2,30,000 2,30,000


Capital Fund 3,45,000 Furniture 80,000 O/s Expenses Sports Equp 40,000 Rent 2,000 Investments 2,00,000 Salaries 13,000 o/s. Subscription 10,000 Interest Rec. 2,000 Bank Balance 28,000 3,60,000 3,60,000

Other Details as on 31/12/2012 1. Subscription Receivable ₹ 16,000 2. Salaries Outstanding ₹ 8,000 3. Rent Outstanding ₹ 2,000

© ICAI, 2013

Dr Receipts and Payment A/c for the year ended 31/12/2012 Cr Receipts ₹ Payments ₹


Victoria Club

By Salaries 1,05,000 By Rent 20,000 By Travelling expenses 1,000 By Printing and Stationery 2,000 By Periodicals 1,000

Add Surplus 1,01,000 Outstanding Exp Salaries 8,000 Rent 4,000

Furniture 77,000

Exp/ Inc Sub Salary Rent R & P Add O/s E Less O/s B Less Adv E Add Adv B I & E

Assets Furniture Opening Add : Purch Less : Sale Less : Dep Closing

105000 8,000 13,000 -------- -------- 100,000

20,000 4,000 2,000 --------- --------- 22,000

80,000 ------- 80,000 -------- 80,000 3,000 77,000

© ICAI, 2013

Dr Receipts and Payment A/c for the year ended 31/12/2012 Cr Receipts ₹ Payments ₹


Victoria Club

By Salaries 1,05,000 By Rent 20,000 By Travelling expenses 1,000 By Printing and Stationery 2,000 By Periodicals 1,000 By Balance c/d 1,25,000 2,54,000

To Balance b/d 28,000 To Subscription 1,82,000 To Entrance Fees 12,000 To Donations 20,000 To Interest 12,000 (10,000 + 2,000) 2,54,000

Capital Fund Opening 3,45,000 Add Surplus 1,01,000 4,46,000 Outstanding Exp Salaries 8,000 Rent 4,000

4,58,000 4,58,000

Furniture 77,000 Sports Equipment 40,000 Investments 2,00,000 Subscription Due 16,000 Bank Balance 1,25,000

Exp/ Inc Sub Salary Rent R & P Add O/s E Less O/s B Less Adv E Add Adv B I & E

Assets Furniture Opening Add : Purch Less : Sale Less : Dep Closing

105000 8,000 13,000 -------- -------- 100,000

80,000 ------- 80,000 -------- 80,000 3,000 77,000

182000 16,000 10,000 -------- -------- 188,000

20,000 4,000 2,000 --------- --------- 22,000

© ICAI, 2013

5. Preparation of opening and closing balance sheet from Receipt and Payment A/c and Income and Expenditure A/c

Young Generation Society submits the following Receipts and Payment Account and Income and Expenditure Account for the year ended 31.3.2012

Receipts and Payment A/c for the year ended 31/3/2012

Receipts ₹ Payments ₹ To Balance b/d 900 To Interest By Printing 150

10-11 200 By Advertisement 282 11-12 300 By Salary 2,600

To Tuition Fees By Rent 1,040 11-12 2,000 By Miscellaneous 12-13 200 expenses 220

To Entrance Fees 840 By Furniture 1,340 To Membership

10-11 600 11-12 2,300 12-13 780 By Balance c/d 2,748

8,380 8,380

Income and Expenditure A/c for the year ended 31/3/2012

Expenditure ₹ Income ₹ To Printing 160 By Tuition Fees 2,200 To Advertisement 300 By Membership To Rent 1,200 Fees 2,300 To Salary 2,400 By Miscellaneous To Miscellaneous Income 260 expenses 220 By Interest 320 To Surplus 800 5,080 5,080

The society had the following assets as 31/3/2011 : Investments ₹ 8,000, Furniture ₹ 4,000, Library books ₹ 3,000. You are asked to prepare the balance sheet of the society as on 31/3/2011 and 31/3/2012.

© ICAI, 2013

Balance sheet as ob 31/3/2011 Liabilities ₹ Assets ₹


Young Generation Society

Membership Fees Receivable 600 Interest Receivable 200

Add : Entrance 840 Advance Tuition Fees 200 Membership 780

Tuition Fees Receivable 200 Interest receivable 20

Income Tuition Fees Membership Fees R & P Add O/s E Less O/s B Less Adv E Add Adv B I & E

2,200 200 ----- 200 ------- 2,200

Assets Furniture Opening Purchase Sale Dep Closing

Expense Salary Printing Advt. Rent R & P Add O/s E Less O/s B Less Adv E Add Adv B I & E

3,680 ------ 600 780 ------- 2,300

Bank 900

© ICAI, 2013

Balance sheet as ob 31/3/2011 Liabilities ₹ Assets ₹


Young Generation Society

Furniture 4,000 Investments 8,000 Library Books 3,000 Membership Fees Receivable 600 Interest Receivable 200 Bank 900 16,700

Capital Fund 16,500 (Balancing Fig) Outstanding Salaries 200 16,700

Capital Fund Opening Balance 16,500 Add : Surplus 800 Add : Entrance 840 18,140 Advance Tuition Fees 200 Membership 780 Outstanding Printing 10 Advertisement 18 Rent 160

19,308 19,308

Furniture 5,340 Investment 8,000 Library Books 3,000 Tuition Fees Receivable 200 Interest receivable 20 Bank 2,748

Income Tuition Fees Membership Fees R & P Add O/s E Less O/s B Less Adv E Add Adv B I & E

2,200 ------ 200 200 ------- 2,200

Assets Furniture Opening Purchase Sale Dep Closing

4,000 1,340 5,340 ------- 5,340 ------ 5,340

Expense Salary Printing Advt. Rent R & P Add O/s E Less O/s B Less Adv E Add Adv B I & E

2,600 ------ 200 ------ ------ 2,400

150 10 ----- ------ ------ 160

282 18 ----- ------ ------ 300

1,040 160 ----- ------ ------ 1,200

3,680 ------ 600 780 ------- 2,300

NPO

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