Not for Profit Organisation
Organisations which are run without the motives of earning profits are called as Not for Profit Organisation (or Non Profit Organsiation), e.g. Clubs, Charitable Institutions, Schools, Colleges, Chambers of Commerce, Associations of Manufactures of Traders of different lines, Sports Associations, Professional Institutions, Trusts, Trade Unions, etc.
Financial Statements of Non-Profit Organisations consist of-
- Receipts & Payments A/c: Disclosing the Total Receipts / Inflows and Total Payments / Outflows.
- Income & Expenditure A/c: Disclosing the expenditure incurred and income during the period, Surplus, or the Deficit.
- Balance Sheet: Showing the financial position at the end of the period.
Receipts and Payments Account
Receipts & Payments A/c shows Account Head wise summary of Cash Receipts and Payments for a specified period, together with opening & closing Cash Balances of the period.All Receipts and Payments (whether Revenue or Capital in nature), are considered in this report. A typical example of format and account Heads of Receipt and Payment Account (a Sports Club) is shown below:
Receipts and Payments Account for the year ended …..
| Receipts | Rs. | Payments | Rs. |
| To Balance b/d: | By Salaries | ||
| Cash | By Insurance | ||
| Bank | By Rates and taxes | ||
| To Subscription & Membership fee | By Postage and telephone | ||
| To Entrance fee/admission fee | By Printing and Stationery | ||
| To Life membership fee | By Purchase of furniture | ||
| To Interest | By Newspapers and periodicals | ||
| To Donation | By Purchase of food & Beverages | ||
| To Donation for building fund | By General expenses | ||
| To Receipts for prize fund | By Sports material | ||
| To Sale of refreshments | By Prizes awarded | ||
| To Sale of furnitures | By Closing Balance | ||
| To Sale of old & Scrap Items | Cash: | ||
| To Sale of sports material | Bank: |
Income and Expenditure Account
Like P&L A/c of trading / business enterprises, Income & Expenditure A/c of Non-Profit Organisations shows the Surplus or Deficit from their operation during the period.
Income & Expenditure Account is prepared on the principles of (a) Accrual, (b) Matching, (c) Periodicity and (d) Capital Revenue distinction.
The key elements of Income and Expenses of Income & Expenditure Account of such Organizations are described below:
- Income: For a Non-Profit Organisation, Income includes the following-
- Subscriptions (subject to adjustments for Subscriptions Receivable and Subscriptions received in Advance, at the beginning and at the end of the accounting year)
- Donations for meeting revenue expenditure.
- Membership Fees or Entrances Fees (normal periodic fees for meeting regular running expenses).
- Recurring Contribution/Grants from Local Authorities.
- Income from Investments.
- Net Incomes from special activities, (e.g. shows, sports events). Expenses are deducted from the collection of that activity and net amount is shown in the Income and Expenditure A/c.
- Expenses:
- Expenses incurred to meet, its objectives, serve the members like:
- Medicine, Cost of test and investigations etc. (in Hospital)
- Sports materials, tournament expenses, etc. (in Sports Club)
- Award of scholarships, organization of seminars, etc. (Coaching, Training in Educational Societies)
- Any expenditure for acquisition of a fixed asset will be capitalized, and the annual depreciation shall be debited to revenue expenditure.
- Expenses incurred to meet, its objectives, serve the members like:
Income and Expenditure Account for the year ended…..
| Expenditure | Dr | Income | Cr |
| To Salaries | By Subscription | ||
| To Insurance | By Entrance fee | ||
| To Rates & taxes | By Interest | ||
| To Honorarium | By Donation | ||
| To Postage & telephone | By Profit from sale of food | ||
| To Printing & Stationery | By Sale of old & Scrap Items | ||
| To Newspaper & periodicals | By Sale of sports material | ||
| To General expenses | By Excess of expenditure over income | ||
| To Sport material To Loss on sale of furniture | |||
| To Depreciation | |||
| Excess of income over expenses |
Distinction between Receipts & Payments A/c and Income & Expenditure A/c
| Basis | Receipts & Payments A/c | Income & Expenditure A/c |
| Contents | It is summary of cash receipts and payments during the period. | Similar to Profit and Loss Account. Income & Expenses related to the period. |
| Revenue / Capital Distinction | It shows both revenue and capital items. | It shows only Revenue items. |
| Periodicity | All Receipts and Payments during the relevant period are shown. Accruals & Outstanding are not considered. | All Revenue Expenses and Incomes related to the current year shown (whether expense paid or is outstanding, income received or accrued). |
| Adjustments | Adjustments for accrued or advance are not shown. | All adjustments related to current year are shown. |
| Interlink with Balance Sheet | Closing cash balance is shown under current asset in Balance Sheet. | The Surplus / Deficit is carried to Capital Fund in the Balance Sheet. |
| Cash / Accrual | Only cash transactions are considered. | Both Cash and Credit / Accrual transactions are considered. |
| Carry forward of balance | Closing Balance of Cash & Bank Account are carried forward as Opening Balance of next year. | Closing balance of this account is merged into Capital Fund. |
Balance Sheet
The balance sheet of non-trading concern shows all the assets and liabilities of the entity on a specified date. The excess of assets over liabilities is the Capital Fund or General Fund, which is made up of the excess of income over expenditure and other incomes capitalized from time to time. Sometimes, it may be needed to prepare two balance sheets i.e.:-
- Balance sheet in the beginning of the accounting year (to ascertain the capital fund in the beginning),
- Balance sheet at the end of the accounting year (to ascertain the financial position of the firm as on that date).
Statement of Affairs
Statement of affairs prepared by organization is a statement where assets are recorded at net realisable value and liabilities are valued based on priority of claims.
Statement of Affairs as on…….
| Liabilities | Rs. | Assets | Rs. |
| Creditors | Cash | ||
| Outstanding expenses | Bank | ||
| Advance subscription | Accrued subscription | ||
| Donation for building fund | Prepaid Expenses | ||
| Prize fund: | Fixed assets | ||
| Add: Receipts | Less: Sale | ||
| Add: Interest | Add: Purchase | ||
| Less: Expenses | Less: Depreciation | ||
| Capital Fund | Investments | ||
| Add: Surplus or | Prize fund investment | ||
| Less: Deficit | Stock | ||
| Add: Life membership fees | |||
| Add: Legacies | |||
| Add: Donation |
Difference between Statement of Affairs & Balance Sheet
Statement of affairs is prepared by organization, where assets are recorded at net realisable value and liabilities are valued based on priority of claims.
Balance sheet is a statement which contains assets, liabilities and owners equity prepared in the ordinary course of business where assets and liabilities will be valued / recorded based on respective Accounting Standards.
Treatment of items in Income & Expenditure A/c and Statement of Affairs
- Subscription: It includes periodic fees received by an institution from its members and constitutes revenue receipt. The Receipt & Payments A/c records the amount of actual subscription received whereas the income & expenditure A/c shows only the subscription relating to accounting period whether received or not.
Adjustment for subscription
Subscription received during the current year
| Add: | Accrued subscription of current year. | – |
| Add: | Subscription received during previous year for current year: | – |
| Less: | Subscription received for previous year | – |
| Less: | Subscription received for next | – |
- Donation
- Special purpose Donation: If donation has been received to meet some capital expenditure (e.g. construction of building), it will be capitalized and will be taken in the liability side of Balance Sheet. Even when some donation is received to meet revenue expenses but till the end of the current financial year, such expenses have not been incurred, such donation will also be shown in liability side of Balance Sheet. Otherwise, only the deficit or surplus on the specific account is shown in Income & Expenditure Account.
- General Donation: If donation received is not for any specific purpose, and the amount is small, then it is shown in Income & Expenditure Account. If the amount is substantial, it will be considered as non-recurring nature and will be taken to the liabilities side of the Balance Sheet.
- Entrance or Admission Fee: This fee is usually charged for admitting a person as a member. It is generally considered as item of income. However, in some cases,(clubs) the entrance fees is capitalized as it is of non-recurring nature.
- Legacy: Such amounts are received on account of a “will” of some person and generally shown in liability side of the Balance Sheet, since it is non-recurring in nature. However, small amounts received may be taken as income.
- Capital Funds: The capital fund (also termed as general fund or accumulated funds), consists of the contributions made by the promoter’s surplus accumulated over the years and the other capitalized items, if any (like membership fees, entrance fees, etc).
- Special Funds: These are created and kept for special purpose (e.g. special funds for sports expenses). Net income after all related expenses relating to such special funds should be added to these funds in the liability side of Balance Sheet.
- Grants: Any financial help received from public funds (e.g. local bodies or Government) for special purpose is treated as Income.
- Endowment Fund: It normally constitutes substantial amount of money advanced to a concern and placed in fixed deposits or invested in securities. It itself is a liability whereas the investment on it is an asset. The income from investment is treated as Income.
- Sale of old Item & Scrap: Such amount received is treated as Income.
- Miscellaneous: Consumption of materials may have to be computed from purchases and adjustments for Opening & Closing stock. Adjustment for outstanding expenses can be shown.
| Expenses paid during the current year | ||
| Add: | Outstanding of current year | – |
| Less: | Paid for previous year | – |
| Less: | Paid for next year | – |
| Add: | Paid in previous year for current year | – |
| – | ||
| Stock Consumed during the year | ||
| Opening stock | ||
| Add: | Purchase | – |
| Payments to creditors during the year | – | |
| Less: | Paid for previous year | – |
| Add: | Unpaid for current year | – |
| – | ||
| Less: | Closing stock | – |
| Cost of stock consumed | – |
Receipts & Expenditure A/c for Professional Firms
In the case of Professionals, Income and Expenditure Account and Balance Sheet are normally prepared to show the performance and financial position. However, Receipts and Expenditure Account are sometimes also prepared to show result of professional activities. Such an account includes all expenses on the basis of mercantile system, i.e. accrual basis, but for income, Cash System is followed.
To compute Profit, all Outstanding Expenses are taken into account, but the Fees and Incomes receivable (or the Work-In-Progress) are not considered on the principle of prudence.
So, a Difference appears between profit as shown by Income and Expenditure A/c and that shown by Receipts and Expenditure A/c is due to non-recognition of Outstanding Fees and Charges and Work-In-Progress, in the Receipts and Expenditure Account.
Fund based Accounting
Fund based accounting refers to preparation of Financial statements on a fund-wise basis. Institutions like, College, Schools, universities etc. maintain separate ledger for each fund.
Fund is applicable to the amounts collected and invested for special purpose. Every fund is aimed at fulfilling some specific purpose and services embodied in the assets are the primary means to achieve. Any expenditure incurred for example, construction of building is made out of this fund. In non-business organization, contribution and donation for such expenses are directly adjusted in specific account instead of recording into Income & Expenditure A/c.
Adjustment of Subscription, Expenses, Depreciation and Preparation of Income & Expenditure A/c
Ex. Mahaveer Sport Club gives the following Receipts & Payments Account for the year ended March 31, 1998:
Receipts and Payments Account
| Receipts | Rs. | Payments | Rs. |
| To Opening Cash & Bank Balance | 5,200 | By Salaries | 15,000 |
| To Subscriptions | 34,800 | By Rent & Taxes | 5,400 |
| To Donations | 10,000 | By Electricity Charges | 600 |
| To Interest on Investments | 1,200 | By Sports Goods | 2,000 |
| To Sundry Receipts | 300 | By Library Books | 10,000 |
| By Newspapers & Periodicals | 1,080 | ||
| By Misc. Expenses | 5,400 | ||
| By Closing Cash & Bank Balances | 12,020 | ||
| 51,500 | 51,500 |
| Liabilities | As on 31.3.97 (Rs.) | As on 31.3.98 (Rs.) |
| Outstanding Expenses: | ||
| Salaries | 1,000 | 2,000 |
| Newspapers & Periodicals | 400 | 500 |
| Rent & Taxes | 600 | 600 |
| Electricity Charges | 800 | 1,000 |
| Assets | As on 31.3.97 (Rs.) | As on 31.3.98 (Rs.) |
| Library Books | 10,000 | |
| Sports Goods | 8,000 | |
| Furniture and Fixtures | 10,000 | |
| Subscriptions Receivable | 5,000 | 12,000 |
| Investment- Govt. Securities | 50,000 | |
| Accrued Interest | 600 | 600 |
| Provided Depreciation on: | ||
| Furniture & Fixture @ 10% p.a. | ||
| Sports Goods @ 20% p.a. | ||
| Library Books @ 10% p.a. | ||
| You are required to prepare Club’s opening Balance Sheet as on 01.04.97, Income and Expenditure Account for the year ended on 31.3.1998 and the Balance Sheet as on that date. |
Solution :Steps involved for solving the above problem-
- Computation of Subscription Income.
- Calculation of Expenses.
- Calculation of Depreciation.
- Computation of Opening Balance of Capital Fund.
- Preparing Income and Expenditure Account.
- Preparing Balance Sheet.
Workings Details:
- Computation of Subscription Income for the year ended 31.3.98
| Rs. | |
| Subscription received during the year | 34,800 |
| Add: subscription receivable on 31.3.98 | 12,000 |
| 46,800 | |
| Less: Subscription receivable on 31.3.97 | 5,000 |
| 41,800 |
- Calculation of Expenses for the year ended 31.3.98
| Expenses | Salaries Rs. | Electricity Charges Rs. | Rent and taxes Rs. | Newspapers and Periodicals Rs. |
| Paid during the year | 15,000 | 600 | 5,400 | 1,080 |
| Add: Outstanding (as on 31.3.98) | 2,000 | 1,000 | 600 | 500 |
| 17,000 | 1,600 | 6,000 | 1,580 | |
| Less: Outstanding (as on 31.3.97) | 1,000 | 800 | 600 | 400 |
| Expenses for the year | 16,000 | 800 | 5,400 | 1,180 |
- Calculation of Depreciation
| Particulars | Furniture & Fixture Rs. | Sports Goods Rs. | Library Books Rs. |
| Book value of assets on 31.3.97 | 10,000 | 8,000 | 10,000 |
| Add: additions during the year | – | 2,000 | 10,000 |
| 10,000 | 10,000 | 20,000 | |
| Less: Depreciation: | |||
| – Furniture @ 10% p.a. | 1,000 | ||
| – Sports goods @ 20% p.a. | 2,000 | ||
| – Library books @ 10% p.a. | 2,000 | ||
| W.D.V. as on 31.3.98 | 9,000 | 8,000 | 18,000 |
- Balance Sheet(opening) of Mahaveer Sports Club as on 1st April, 1997
| Liabilities | Rs. | Assets | Rs. | |
| Capital Fund (Balancing Figure) | 86,000 | Library Books | 10,000 | |
| Outstanding Expenses: | Sports Goods | 8,000 | ||
| Salaries | 1,000 | Furniture and Fixture | 10,000 | |
| Newspapers and Periodicals | 400 | Subscriptions Receivable | 5,000 | |
| Electricity Charges | 800 | Investments- Govt. Securities | 50,000 | |
| Rent and Taxes | 600 | 2,800 | Accrued Interest | 600 |
| Cash and Bank Balance | 5,200 | |||
| 88,800 | 88,800 |
- Income and Expenditure Account for the year ended on 31st March 1998
| Expenditures | Dr | Income | Cr. |
| To Salaries (W.N.2) | 16,000 | By Subscription(W.N.1) | 41,800 |
| To Electricity Charges (W.N.2) | 800 | By Interest on Investment | 1,200 |
| To Rent and Taxes (W.N.2) | 5,400 | By Sundry Receipts | 300 |
| To Newspapers and Periodicals (W.N.2) | 1,180 | ||
| To Misc. Expenses | 5,400 | ||
| To Depreciation on Fixed assets (W.N.3) | 5,000 | ||
| To Excess of income over Expenditure (Bal. Fig.) | 9,520 | ||
| 43,300 | 43,300 |
- Balance Sheet of Mahaveer Sports Club as on 31st March, 1998
| Liabilities | Rs. | Assets | Rs. | ||
| Capital Fund | Fixed Assets: | ||||
| Opening Balance (W.N.4) | 86,000 | Furniture and Fixture (W.N.3) | 9,000 | ||
| Add: Excess of Income over Exp. (W.N.5) | 9,520 | Sports Goods (W.N.3) | 8,000 | ||
| Add: Donations | 10,000 | 1,05,520 | Library Books (W.N.3) | 18,000 | 35,000 |
| Outstanding Expenses | Investment: | ||||
| Salaries | 2,000 | Govt. Securities | 50,000 | ||
| Newspapers and Periodicals | 500 | Accrued Interest | 600 | ||
| Electricity Charges | 1,000 | Subscriptions Receivable | 12,000 | ||
| Rent and Taxes | 600 | 4,100 | Cash and Bank Balance | 12,020 | |
| 1,09,620 | 1,09,620 |
Note: In this solution, donations have been capitalized. Alternatively, donation may be credited to the Income and Expenditure Account assuming that the donations have been raised for meeting some Revenue Expenditure.
Adjustments of Income & Expenses
Ex. Summary of Receipts and Payments of Bombay Medical Aid Society for the year ended 31.12.2000 are as follows:
Opening Cash balance in hand Rs.8,000, Subscription Rs.50,000, Donation Rs.15,000, Interest on Investments @ 9% p.a. Rs.9,000, Payments for medicine supply Rs.30,000, Honorarium to Doctors Rs.10,000, Salaries Rs.28,000, Sundry Expenses Rs.1,000, Equipment Purchase Rs.15,000, Charity show expenses Rs.1,500, Charity show collection Rs.12,500.
Additional information’s:
| 1.1.2000 | 31.12.2000 | |
| Rs. | Rs. | |
| Subscription due | 1,500 | 2,200 |
| Subscription received in advance | 1,200 | 700 |
| Stock of medicine | 10,000 | 15,000 |
| Amount due for medicine supply | 9,000 | 13,000 |
| Value of equipment | 21,000 | 30,000 |
| Value of building | 50,000 | 48,000 |
| You are required to prepare Receipts and Payments Account and Income and Expenditure Account for the year ended 31.12.2000 and Balance Sheet as on 31.12.2000 |
Solution: Steps involved for solving the above problem-
- Computation of Subscription Income.
- Computation of Purchase of Medicine.
- Computation of Medicine Consumption.
- Computation of Depreciation on Equipment.
- Computation of Depreciation on Building.
- Computation of Opening Balance of Capital Fund.
- Preparation of Receipt and Payment Account.
- Preparation of Income and Expenditure Account.
- Preparation of Balance Sheet.
Working Details:
| Subscription for the year ended 31st December 2000 : | Rs. | |
| Subscription receivable during the year | 50,000 | |
| Less: Subscription receivable on 1.1.2000 | 1,500 | |
| Less: Subscription received in advance on 31.12.2000 | 700 | 2,200 |
| 47,800 | ||
| Add: Subscription receivable on 31.12.2000 | 2,200 | |
| Add: Subscription received in advance on 1.1.2000 | 1,200 | 3,400 |
| 51,200 |
| Computation of Purchase of Medicine : | Rs. |
| Payment of Medicine Supply | 30,000 |
| Less: Amount due for medicine supply on 1.1.2000 | 9,000 |
| 21,000 | |
| Add: Amount due for medicine supply on 31.12.2000 | 13,000 |
| 34,000 |
| Computation of Medicine Consumed : | Rs. |
| Stock of Medicine on 1.1.2000 | 10,000 |
| Add: Purchase of medicine during the year (W.N.2) | 34,000 |
| 44,000 | |
| Less: Stock of Medicine on 31.12.2000 | 15,000 |
| 29,000 |
| Computation of Depreciation on Equipment : | Rs. |
| Value of equipment on 1.1.2000 | 21,000 |
| Add: Purchase of equipment during the year | 15,000 |
| 36,000 | |
| Less: Value of equipment on 31.12.2000 | 30,000 |
| Depreciation on equipment for the year | 6,000 |
| Computation of Depreciation on Building: | Rs. |
| Opening W.D.V | 50,000 |
| Less: Closing W.D.V | 48,000 |
| Depreciation on Building for the year | 2,000 |
- Balance Sheet of Bombay Medical Aid Society
As on 31st December, 1999
| Liabilities | Rs. | Assets | Rs. |
| Capital Fund (balance figure) | 1,80,300 | Building | 50,000 |
| Subscription received in advance | 1,200 | Equipment | 21,000 |
| Amount due for medicine supply | 9,000 | Stock of medicine | 10,000 |
| Investments (9% on Rs.9,000) | 1,00,000 | ||
| Subscription receivable | 1,500 | ||
| Cash in hand | 8,000 | ||
| 1,90,500 | 1,90,500 |
Receipt and Payment Account for the year ended 31st December, 2000
| Receipts | Rs. | Payments | Rs. |
| To Cash Balance b/d | 8,000 | By Purchase of Equipment | 15,000 |
| To Subscription | 50,000 | By Charity show expenses | 1,500 |
| To Donation | 15,000 | By Medical supply | 30,000 |
| To Interest | 9,000 | By Honorarium | 10,000 |
| To Charity show collections | 12,500 | By Salaries | 28,000 |
| By Sundry Expenses | 1,000 | ||
| By Cash in hand b/ f (Bal. fig.) | 9,000 | ||
| 94,500 | 94,500 |
- Income and Expenditure Account of for the year ended 31st December, 2000
| Expenditure | Dr | Income | Cr | |
| To Medical consumed (W.N.3) | 29,000 | By Subscription (W.N.1) | 51,200 | |
| To Honorarium to doctor | 10,000 | By Donation | 15,000 | |
| To Salaries | 28,000 | By Interest on Investments | 9,000 | |
| To Sundry expenses | 1,000 | By Profit on charity show: | ||
| To Depreciation on Equipment (W.N.4) | 6,000 | Show collection | 12,500 | |
| To Depreciation on Building (W.N.5) | 2,000 | Show expenses | -1,500 | 11,000 |
| To Surplus (Balancing Figure) | 10,200 | |||
| 86,200 | 86,200 |
- Balance Sheet of Bombay Medical Aid Society as on 31st December, 2000
| Liabilities | Rs. | Assets | Rs. | ||
| Capital Fund | Building | 50,000 | |||
| Opening Balance (Wn..6) | 1,80,300 | Less: Depreciation (W.N.5) | 2,000 | 48,000 | |
| Add: Surplus (Wn.8) | 10,200 | 1,90,500 | Equipment | 21,000 | |
| Subscription received in advance | 700 | Add: Purchase | 15,000 | ||
| Amount due for medicine supply | 13,000 | 36,000 | |||
| Less: Depreciation (W.N.4) | 6,000 | 30,000 | |||
| Stock of medicine | 15,000 | ||||
| Investment | 1,00,000 | ||||
| Subscription receivable | 2,200 | ||||
| Cash in hand (Wn.7) | 9,000 | ||||
| 2,04,200 | 2,04,200 |
Interest on Securities, Income & Expenditure A/c
Ex. Smith Library Society showed the following position on 31st March, 2001:
Balance Sheet as on 31st March, 2001
| Liabilities | Rs. | Assets | Rs. |
| Capital Fund | 7,93,000 | Electrical Fittings | 1,50,000 |
| Expenses Payable | 7,000 | Furniture | 50,000 |
| Books | 4,00,000 | ||
| Investment in Securities | 1,50,000 | ||
| Cash at Bank | 25,000 | ||
| Cash in Hand | 25,000 | ||
| 8,00,000 | 8,00,000 |
The receipt and payment account for the year ended on 31st March, 2002 is given below:
| Receipts | Rs. | Payments | Rs. | ||
| To Balance b/f | By Electric Charges | 7,200 | |||
| Cash at Bank | 25,000 | By Postage and Stationary | 5,000 | ||
| Cash in Hand | 25,000 | 50,000 | By Telephone Charges | 5,000 | |
| To Entrance Fees | 30,000 | By Books Purchased | 60,000 | ||
| To Membership Subscription | 2,00,000 | By Outstanding Expenses Paid | 7,000 | ||
| To Sale proceeds of Old papers | 1,500 | By Rent | 88,000 | ||
| To Hire of Lecture Hall | 20,000 | By Investment in Securities | 40,000 | ||
| To Interest on Securities | 8,000 | By Salaries | 66,000 | ||
| By Balance C/f | |||||
| Cash at Bank | 20,000 | ||||
| Cash in Hand | 11,300 | ||||
| 3,09,500 | 3,09,500 | ||||
You are required to prepare an Income and Expenditure Account for the year ended 31st March, 2002 and a Balance Sheet as at 31st March, 2002 after making the following adjustments:
- Membership Subscription included Rs.10,000 received in advance.
- Provide for Outstanding rent Rs. 4,000 and salaries Rs. 3,000.
- Books to be depreciated @ 10% including additions. Electrical Fittings and Furnitures are also to be depreciated at the same rate.
- 75% of the Entrance Fees is to be capitalized.
- Interest on securities is to be calculated @ 5% p.a. including purchase made on 1.10.2001 for Rs. 40,000.
Solution: Steps involved for solving the above problem-
- Computation of Interest on securities.
- Preparation of Income and Expenditure Account.
- Preparation of Balance Sheet.
Workings Details:
- Computation of Interest on securities
| Interest on securities: | Rs. |
| (5% on Rs.1, 50, 000) | 7,500 |
| (5% on Rs.40,000 for 6 months) | 1,000 |
| 8,500 | |
| Less: Interest received | 8,000 |
| Outstanding | 500 |
Income and Expenditure Account for the year ended on 31st March 2002
| Expenditure | Dr | Income | Cr | ||
| To Electric charges | 7,200 | By Entrance fees | 30,000 | ||
| To Postage & Stationary | 5,000 | Less: Capitalised (75%) | 22,500 | 7,500 | |
| To Telephone Charges | 5,000 | ||||
| To Rent | 88,000 | ||||
| Add: Outstanding | 4,000 | 92,000 | By Membership Fee | 2,00,000 | |
| To Salaries | 66,000 | Less: Advance | 10,000 | 1,90,000 | |
| Add: Outstanding | 3,000 | 69,000 | By Sale of Old Newspapers | 1,500 | |
| To Depreciation on : | By Hire of lecture Hall | 20,000 | |||
| Books (10% on 4,60,000) | 46,000 | By Interest on Securities | 8,000 | ||
| Electric fitting (10% on 1,50,000) | 15,000 | Add: Accrued (Wn.1) | 500 | 8,500 | |
| Furniture (10% on 50,000) | 5,000 | 66,000 | By Deficit (Balancing Figure) | 16,700 | |
| 2,44,200 | 2,44,200 |
- Balance Sheet as on 31st March 2002
| Liabilities | Rs. | Assets | Rs. | |||
| Capital Fund | 7,93,000 | Electric fitting | 1,50,000 | |||
| Add: Ent. Fee(75%) | 22,500 | Less: Depreciation | 15,000 | 1,35,000 | ||
| 8,15,500 | Furniture | 50,000 | ||||
| Less: Deficit (W.N.2) | 16,700 | 7,98,800 | Less: Depreciation | 5,000 | 45,000 | |
| Advance Membership fees | 10,000 | Books | 4,00,000 | |||
| Outstanding Expenses: | Add: Additions | 60,000 | ||||
| Rent | 4,000 | 4,60,000 | ||||
| Salaries | 3,000 | 7,000 | Less: Depreciation | 46,000 | 4,14,000 | |
| Investment in securities | 1,90,000 | |||||
| Accrued interest on Securities (Wn.1) | 500 | |||||
| Cash in Hand | 20,000 | |||||
| Cash at Bank | 11,300 | |||||
| 8,15,800 | 8,15,800 | |||||
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