NAME:- KESHAV AGRAWAL

FORM:- S’COMMERCE’
FOLI0 NO. :- 2372
ACADEMIC YEAR:- 2019-2020
SUBMITTED TO:- A.K.S.
SIR
I WOULD LIKE TO EXPRESS MY SPECIAL THANKS OF
GRATITUDE TO MY TEACHER ‘MR A.K.S SIR’ WHO GAVE THE
GOLDEN OPPORTUNITY TO DO THIS WONDERFUL
ASSIGNMENT ON THE TOPIC (NON PROFIT ORGANIZATION),
WHICH ALSO HELPED ME IN DOING A LOT OF RESEARCH
AND I CAME TO KNOW ABOUT SO MANY NEW THINGS I AM
REALLY THANKFUL TO THEM.
SECONDLY, I WOULD ALSO LIKE TO THANK MY
PARENTS AND FRIENDS WHO HELPED ME A LOT IN
FINALIZING THIS ASSIGNMENT WITHIN THE LIMITED TIME
FRAME.

KESHAV AGRAWAL
S ‘COMMERCE’
This is to certify that Keshav Agrawal of ‘S’ form has
successfully completed this accountancy assignment on
the topic “Non-Profit Organisation” prescribed by (Mr.
A.K.S sir),during academic session 2019-2020 as per the
guidelines issues by Indian School Certificate.

Mr. Awadesh Soni

• Meaning
• Characteristics
• Objectives
• Financial statement
• Receipt & Payment Account
• Income & Expenditure Account
• Balance Sheet
• Some important items
• Formation sheet of Non- Profit Organisations
 A Non-Profit Organization(NPO)is one which is not
driven by dedication to a given cause that is the target
of all income beyond what it takes to run the organization.
Non –Profit Organization are often used for trusts,

Meaning
Cooperatives , Advocacy, Charity ,Environmental and
Religious groups.
1. Main Aim is Service:
The basic aim of non-profit organizations is to serve the
society. They are working for the benefit of the society as a
whole.
2. Profit is not the Criterion:
Non-profit organizations are formed for some idealistic

Characteristics
purposes such as religious, charitable or providing
education etc. Earning of profits can never be their aim.
3. Surplus not Distributed among its Members:
Though earning profit is not the criterion for non-profit
organizations, yet there may be excess of income over
expenditure or excess of expenditure over income. The
former is known as ‘surplus’ and latter is known as
‘deficit’. Unlike other business, surplus or deficit of non-
profit organizations is not distributed among its members.
They are adjusted in the capital fund of such organizations.
4. Separate Entity:
The separate entity concept is equally applicable to non-profit organizations. Such
organizations are treated as a separate entity distinct from its members.
5. Unique Names Connoting their Working:
The names of non-profit organizations denote the nature and style of their functioning.

Characteristics
For example, JMD Educational Society, Shri Sai Keertan Mandli,
Shri Sunder Dev Sports Club and Shri Sanatan Dharam Ramlila Committee etc.
6. Management by Elected Persons:
These organizations are run and managed by elected members.
7. Major Funds from Contributions and Donations etc.
Usually, non-profit organizations are not self sufficient to run their activities with the
revenue generated from their own sources, so they depend upon the subscriptions,
donations and grants received from various government departments.
1. To evaluate the performance of organizations in terms of achieving their goals for
which they were created.

2. To judge whether those organizations are appropriating the funds with three E’s viz.
economically, effectively and efficiently.

3. To examine the compliance of rules, regulations, bye-laws in the organizations.

4. For obtaining grants from government departments.

Objectives
5. To submit annual accounts to the Registrar with whom they are registered.
Financial Statements of Not-for-Profit Organisations

Not-for-Profit Organisations also prepare their financial statements more or

less on the Lines of the profit seeking organisations. The financial statements
of Not-for-Profit Organisations include the following statements:
• The Receipts and Payments Account.
• The Income and Expenditure Account
• The Balance Sheet
1 Receipts and Payments Account

Receipts and Payments Account is nothing more than a summary of the Cash book
over a certain period, analysed and classified under suitable headings. It is the form
of account most commonly adopted by the treasures of societies, clubs, associations
etc. when preparing the results of the year’s working.
-William Pickles
2 The Income and Expenditure Account.

Income and expenditure account can be defined as an account that reveals

surplus or deficit of a non-trading concern by matching incomes and expenses of
a specified accounting period.
3 The Balance Sheet

The Balance Sheet is a statement at a particular date showing on one side the
trader’s property and possessions and on the other hand the liabilities.
-A. Palmer
 It prepared from the balances remaining after the transfer of all revenue
Incomes and expenditures to the Income and Expenditure Account.
 Some Important Items
 Subscription:- It is the main source of income of a non-profit entity. It will be appearing on
The debit side of Receipts and Payments A/c and out of it the subscription belonging to the curr-
-ent will be posted to the Cr. side of Income and Expenditure A/c .

 Life- Membership Fees:- In order to become the member of an organisation for the whole of
The life some members pay the fee in lump sum, i.e., once in their life time. It is accounted as a
Capital Receipt and added to Capital Fund on the liability side of the balance sheet.

 Endowment fund:-” It is a fund arising from a bequest or gift,the income of which is devoted for
a specific purpose.”
-Eric L.Kohler
• It should be shown on the liabilities sides as a separate item.
 Some Important Items
 Admission or entrance fee :- The one time fee that a person is required to pay at the time of
becoming a member of the organization. This is usually a small amount and is used to cover
admission related expenses of the organization.
Generally, the admission/entrance fee is considered as revenue receipt and is credited to the
income and expenditure account for the period concerned. But where the amount received as
admission/entrance fee is large, it should be treated as capital receipt and credited to the capital
fund account in the year in which it is received from the member.

 Donation :-The donation is the amount given to the organization by supporters and well
wishers. Sometime members of the organization also provide donation in addition to their
regular subscription. The donation may be general or for a special purpose such as donation
for constructing a building or donation for buying some sports items or other assets etc.
 Some Important Items
• The small and recurring donations should be credited to income and expenditure account for
the relevant period. But if the amount of donation is large and non-recurring in nature, it
should be added to the capital fund of the organization. Any donation received in the form of
a non-cash asset should be credited to the particular fund for which the asset has been
donated. In case of absence of such particular fund, the amount should be credited to the
capital fund account.

If rules and regulations of the organization provide specific directions regarding donation, the
amount of donation should be treated accordingly.

 Legacy:- The cash or another item of value that a deceased person gives to the organization
under the terms of a will. It may be general or for a specific purpose.
 Some Important Items
• If the legacy is for specific purpose it should be transferred to a special fund in the name of
that specific purpose. If the legacy is general, it should be credited to capital fund account.

 Honorarium:- It is a voluntary payment to a person who has provided some service to the
organization voluntarily. Normally, the person providing the service does not demand a fee.
The honorarium is therefore an expression of gratitude rather than payment of
remuneration for the work done.
• Any amount paid to someone as honorarium is treated as revenue expenditure and is debited
to income and expenditure accounting for the period concerned
 Specimen of Non-Profit Organisation

It was experienced by the residents of Green Park, Hyderabad that there is no organisation or club in the
Area which can promote social and cultural activities. Hence some prominent persons of the area
proposed to start a literary society naming it as ‘Natraj Literary Society’ for the promotion of cultural
Activities in the area. For this purpose they approached the C.M. and received a grant of Rs 5,00,000 for
capital expenditure. Life membership fee was fixed at Rs 1,21,000 and 20 persons applied and paid for
the membership. Quarterly membership fee was fixed at Rs 2,500 and they enrolled 80 members on this
account.
Placed in fixed deposit with Axis bank
Furniture purchased 8,00,000
Books purchased
8% Govt. bonds purchase on 1st May, 2017 4,00,000
Payment for rent of the hall
Receipts for rent Lectures 1,50,000
Receipts for entrance fee
Receipts of Quarterly Subscriptions (April-June) 15,00,000
Expenses on Refreshment
Expenses on Charity Show 2,45,000
Receipt of Quarterly Subscriptions (July- Sept.)
Payments made for news papers 10,000
Printing & stationery
General expenses 20,000
Wages of Caretaker (for 11 Months)
Lighting Charges
Receipt of Quarterly Subscriptions(Oct.-Dec.) 1,62,000
Receipt of interest on Govt. Bonds
Receipt from sale of old newspaper 1,80,000
Postage
Donation Received For Giving Prizes 60,000
Prizes Awarded
Receipt of Quarterly Subscriptions ( Jan.- 400
March,2017)
1,200

2,00,000

1,20,000

1,75,000
i. Stationery Stock on 31st March, 2018 was Rs 4,000.
ii. Rent of hall outstanding on 31st march , 2018 was Rs 15,000.
iii. Furniture is to be depreciated @10% and Books @20%.
iv. 75% of entrance fees is to be capitalized.
v. Wages of Caretaker is due for the month of march,2018 and electricity bill is due for Rs 5,000.
vi. Interest Accrued on Fixed deposit with Axis bank Rs 75,000.
 Books of Natraj Literary Society
Receipts & Payments A/c
For the year ended 31st March ,2018
Receipts Amount Payments Amounts
To Grant Received 5,00,000 By fixed deposit in Axis bank 8,00,000
To Life Membership fee 24,20,000 By Furniture Purchased 4,00,000
(rs 1,21,000*20) By books Purchased 1,50,000
To receipt from entrance fee 20,000 By 8% Govt. bond 15,00,000
To Receipts From Lectures 10,000 By Rent of hall 2,45,000
To Quarterly Subscriptions 7,45,000 By Expenses on refreshment 1,20,000
(rs By Expenses on Charity Show 1,50,000
2,00,000+1,90,000+1,80,000+1,75,0 By Newspapers 18,000
00) By Printing & Stationery 32,000
To proceeds of Charity Show 2,40,000 By General Expenses 36,000
To Interest on Govt. Bonds 60,000 By wages of caretaker
To sale of old newspapers 400 (11 months) 1,65,000
To Donations For Prizes 2,00,000 By Lighting Charges 1,62,000
By Postage 1,200
By Prizes Awarded 1,20,000
By Balance c/d (on 31-3-2018) 2,96,200

41,95,400 41,95,400
 Expenditure Amount Income Amount
To Rent For The Hall By Subscriptions
2,45,000 2,60,000 7,45,000 8,00,000
Add: Outstanding 1,20,000 Add: Outstanding 10,000
15,000 1,50,000 55,000 5,000
To Expenses on refreshment 18,000 By Receipts from Lectures 2,40,000
To Expenses on Charity Show By Entrance Fee (25% of 20,000)
To Newspapers 28,000 By Proceeds of Charity Show 1,10,000
To Printing & Stationery 36000 By interest on Govt. bonds 400
32,000 60,000 75,000
Less: Stock of Stationery Add: Accrued
4,000 1,80,000 50,000
To general expenses By Sale of old Newspaapers
To Wages of caretaker 1,67,000 By Interest Accrued on Bank Deposit
1,65,000 1,200
Add : Outstanding(1,65,000/11)

15,000 70,000
To Lighting Charges 2,10,200
1,62,000
Add: Outstanding 12,40,400 12,40,400
 Liabilities Amount Assets Amount
Rent outstanding 15,000 Cash Balance 2,96,200
Wages outstanding 15,000 Fixed Deposit with Axis Bank 8,00,000
Electricity Bill Outstanding 5,000 Interest Accrued on Bank deposit 75,000
Prize fund Outstanding Subscriptions 55,000
2,00,000 80,000 8% Govt. Bonds I 15,00,000
Less: prizes Awarded 24,20,000 Interest Accrued On Govt. loan 50,000
1,20,000 Stock of Stationery 4,000
Life membership Fees Furniture
Capital Fund: 7,25,200 4,00,000 3,60,000
5,00,000 Less: Depreciation
Add:75% of entrance 40,000 1,20,000
15,000 Books
Add: Surplus 32,60,200 1,50,000 32,60,200
2,10,200 Less: Depreciation
30,000
 https://nposindia.com/what-is-npo/
 https://whatis.techtarget.com/definition/non-profit-organization-NPO
 http://www.ngopulse.org/article/2017/11/09/13-things-your-board-must-know-about-your-npo
 http://www.genron-npo.net/en/aboutus/
 http://www.genron-npo.net/en/publications/archives/5501.html
 https://www.westerncape.gov.za/service/non-profit-organisations-registration-and-funding