FINANCIAL STATEMENTS OF NON PROFIT ORGANISATION Chapter 9. Not for profit organisation

Transcription

1 IPCC CHAPTER 11 FINANCIAL STATEMENTS OF NON PROFIT ORGANISATION Chapter 9 PROF. RAHUL J. MALKAN Not for profit organisation

2 INTRODUCTION 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. In every society, some organisation or organisation are found which do not have profit making as their as objective The main objective may be social, educational, religious or charitable and they take the form of clubs, societies or charitable bodies and so on.

3 CHARACTERISTICS Entity Financing Funds Service Form No Profit Motive

4 FINANCIAL STATEMENTS These organisations, prepare, at the year end, the following three financial statements Receipts and Payments Account Income and Expenditure Account Balance sheet

5 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 shownontheleft handsidei.e.debitsideandall payments (cash and cheque) are written on right hand side i.e. credit side.

6 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

7 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.

8 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 31 st March, 2011 Dr 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 xxx By Purchase of Investment xxx xxx By Repairs on machinery xxx 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 Cr

9 R & P - Illustration S-M Illustration 1 page 9.2 Thereceiptandpaymentsfortheswarajclubfortheyearended December 31 st, 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 1 st 200, Dec 31 st 350 Cash in Bank Jan 1 st 400, Dec 31 st 590

10 R & P - Solution Dr Swaraj Club Receipt and Payment Account for the year ended 31 st Dec, 2010 Receipts Payments Cr 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 ,100

11 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.

12 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

13 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.

14 INCOME AND EXPENDITURE A/C A specimen of Income and Expenditure A/c Name of the Institution / Club Income and Expenditure Account for the year ended 31 st March, 2011 Dr 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 Cr

15 Distinguish between R & P and I & E Receipts and Payment It is a Real Account Income and Expenditure It is a Nominal 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 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.

16 BALANCE SHEET 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.

17 BALANCE SHEET A specimen of Balance Sheet Name of the Institution / Club Balance Sheet as on 31 st 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

18 TERMINOLOGY USED IN ACCOUNTS OF NPO Subscription It is the major source of revenue income of a non profit organisation. It is paid periodically by the member of the club. 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 In statement form In Account form In equation form

19 TERMINOLOGY USED IN ACCOUNTS OF NPO Subscription In Statement Form Receipts and Payments Receipts Payments Sub xx Income and Expenditure Expenses Incomes 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 sub xx

20 TERMINOLOGY USED IN ACCOUNTS OF NPO Subscription In Account Form Receipts and Payments Receipts Payments Sub xx Income and Expenditure Expenses Incomes Dr Subscriptipn A/c Cr Particulars Particulars To Outstanding Subscription xxx By Advance Subscription xxx ( At the Beginning) ( At the Beginning) sub xx 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

21 TERMINOLOGY USED IN ACCOUNTS OF NPO Subscription In Equation Form Receipts and Payments Receipts Payments Sub xx 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 Income and Expenditure Expenses Incomes sub xx

22 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/ /12/2012 Outstanding 9,000 7,000 Advance 4,000 6,000 Solution Subscription (From Receipts) Add : Outstanding at End 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

23 TERMINOLOGY USED IN ACCOUNTS OF NPO Subscription Illustration - 2 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 ,000, ,000 and The club had 100 members, each paying an annual subscription of Rs. 50. Subscription outstanding as on 31 st December, 2011 were Rs Solution Subscription (From Receipts) Add : Outstanding at End Less : Outstanding at Beginning Less : Advance at End Add : Advance at Beginning Subscription (To Income) 5,800 1,200 1, ,

24 TERMINOLOGY USED IN ACCOUNTS OF NPO Subscription Illustration - 3 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 ,000, ,000 and , Subscription received in advance as at 31/12/ , Subscription outstanding as at 31/12/ , Subscription outstanding for the year 2012 is 8,000 Solution Subscription (From Receipts) Add : Outstanding at End Less : Outstanding at Beginning Less : Advance at End Add : Advance at Beginning Subscription (To Income) 82,000 10,000 12,000 12,000 11,000 79,000 8, ,000

25 TERMINOLOGY USED IN ACCOUNTS OF NPO Entrance Fees / Admission Fees 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. 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.

26 TERMINOLOGY USED IN ACCOUNTS OF NPO Entrance Fees / Admission Fees Illustration Entrance fees received in the year ,00, % of entrance fees is to be capitalised. Solution 40,000 (40%) should be capitalised and Added capital fund 60,000 (60%) should be credited to income and expenditure A/c.

27 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

28 TERMINOLOGY USED IN ACCOUNTS OF NPO Donation Illustration Prize Fund as on 31/3/ ,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

29 TERMINOLOGY USED IN ACCOUNTS OF NPO Legacies 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.

30 TERMINOLOGY USED IN ACCOUNTS OF NPO Government Aid Government may help a NPO by the way of a grant in aid or subsidy. General Aid Specific 1. General Aid : Theses aids are treated as revenue receipts and thus, are transferred to the credit of the income and expenditure. 2. Special Aid : They are to be treated as capital receipts and should be added to capital fund

31 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 fromthesaleshouldberecordedinincomeandexpenditure Account. Receipts and Payment A/c Receipts Payment To Sale of Plant 1200 (B.V 1000) Income and Expenditure A/c Expenses Incomes By Profit on Sale 200 Balance Sheet Liabilities Assets Plant Less Sold xxx 1000

32 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.

33 TERMINOLOGY USED IN ACCOUNTS OF NPO Consumable Items Illustration Calculate the amount of printing and stationery to be debited to income and expenditure a/c from the following information Receipts and Payment A/c Receipts Payments By Printing and Stationery 890 Adjustment : Opening stock of stationery is 125 and closing Stock 87. Solution Opening Stock Add : Purchase Less : Closing Stock Consumed , Opening Balance Sheet Closing Balance Sheet Income and Expenditure Account

34 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.

35 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.

36 FUND BASED ACCOUTING Illustration 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 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 2,000 + Donations Received 5,000 - Prizes Awarded 4,000 3,000

37 FUND BASED ACCOUTING Illustration 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 Capital Fund xxxx + Building Fund (cap) 40,000 Building 40,000 Building Fund (op) 20,000 + Donations Received 50,000 - Capitalised 40,000 30,000

38 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.

39 practice manual Q 5 1. Preparation Income and Expenditure Account and Balance sheet when Receipt and Payment Account and other information are given. MahaveerSportsClubgivesthefollowingreceiptsandpaymentsfortheyearended31 st March, Dr Receipts and Payment A/c Cr Receipts Payments To Opening Outstanding Expenses Op Balance 5,200By Salaries R 15,000 Salaries 1,000 2,000 To Subscription R 34,800By Rent and Taxes R 5,400 Newspapers To Donations CR 10,000By Elect. chargesr 600 Rent and Taxes To Interest R 1,200By Sports Goods C 2,000 Electricity Charges 800 1,000 To Sundry Recpts 300By Library Books C 10,000 Library Books 10, R By Newspapers R 1,080 Sports Goods 8, R By Misc. Expenses 5,400 By Balance c/d 12,020 51,500 Clo 51,500 Furniture 10, Subscription receivable 5,000 12,000 Investment 50, Accrued Interest Provide Depreciation on : 10 % p.a Sports 20 % p.a, Library 10% p.a Donations are to be capitalized. You are required to prepare clubs opening Balance Sheet as on , income and expenditure account for the year ended and the balance sheet as on that date.

40 Mahaveer Sports Club Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Expenditure Income By Sub. (wn. 2) 41,800 Balance Sheet as on 31/3/2010 Liabilities Assets O/s Subscription 5,000 Cash and Bank 5,200 Balance Sheet as on 31/3/2011 Liabilities Assets 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 34,800 12,000 5,000 41,800 Assets Furniture Sports Goods Books Opening Add : Purchase Subscription receivables 12,000 Less : Sale Less : Dep Closing

41 Mahaveer Sports Club Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Expenditure Income To Salaries (wn.2) 16,000 By Sub. (wn. 2) 41,800 By Interest (wn. 2) 1,200 By Sundry Receipts 300 Balance Sheet as on 31/3/2010 Liabilities Assets O/s Salaries 1,000 O/s Subscription 5,000 Accrued Int. 600 Cash and Bank 5,200 Balance Sheet as on 31/3/2011 Liabilities Assets Exp/ Inc Sub Interest Salary Elect. Rent News R & P 34,800 1,200 15,000 Add O/s E 12, ,000 Less O/s B Less Adv E Add Adv B I & E 5,000 41, ,200 1,000 16,000 Add : Donations 10,000 Outstanding Exp Salaries 2,000 Accrued Interest 600 Subscription receivables 12,000 Assets Furniture Sports Goods Books Opening Add : Purchase Less : Sale Less : Dep Closing

42 Mahaveer Sports Club Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Expenditure Income To Salaries (wn.2) 16,000 To Elec. (wn. 2) 800 To Rent (wn. 2) 5,400 By Sub. (wn. 2) 41,800 By Interest (wn. 2) 1,200 By Sundry Receipts 300 Balance Sheet as on 31/3/2010 Liabilities Assets O/s Salaries 1,000 O/s Elec. 800 O/s Rent 600 O/s Subscription 5,000 Accrued Int. 600 Cash and Bank 5,200 Balance Sheet as on 31/3/2011 Liabilities Assets Exp/ Inc Sub Interest Salary Elect. Rent News R & P 34,800 1,200 15, ,400 Add O/s E 12, ,000 1, Less O/s B Less Adv E Add Adv B I & E 5,000 41, ,200 1,000 16, ,400 Add : Donations 10,000 Outstanding Exp Salaries 2,000 Electricity Char 1,000 Rent and Taxes 600 Accrued Interest 600 Subscription receivables 12,000 Assets Furniture Sports Goods Books Opening Add : Purchase Less : Sale Less : Dep Closing

43 Mahaveer Sports Club Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Expenditure Income To Salaries (wn.2) 16,000 By Sub. (wn. 2) 41,800 To Elec. (wn. 2) 800 By Interest (wn. 2) 1,200 To Rent (wn. 2) 5,400 By Sundry Receipts 300 To News (wn. 2) 1,180 To Misc Exp. 5,400 Balance Sheet as on 31/3/2010 Liabilities Assets O/s Salaries 1,000 O/s Newspapers 400 O/s Elec. 800 O/s Rent 600 O/s Subscription 5,000 Accrued Int. 600 Cash and Bank 5,200 Balance Sheet as on 31/3/2011 Liabilities Assets Exp/ Inc Sub Interest Salary Elect. Rent News R & P 34,800 1,200 15, ,400 1,080 Add O/s E 12, ,000 1, Less O/s B Less Adv E Add Adv B I & E 5,000 41, ,200 1,000 16, , ,180 Add : Donations 10,000 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 Assets Furniture Sports Goods Books Opening Add : Purchase 2,000 10,000 Less : Sale Less : Dep Closing

44 Mahaveer Sports Club Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Expenditure Income To Salaries (wn.2) 16,000 By Sub. (wn. 2) 41,800 To Elec. (wn. 2) 800 By Interest (wn. 2) 1,200 To Rent (wn. 2) 5,400 By Sundry Receipts 300 To News (wn. 2) 1,180 To Misc Exp. 5,400 Balance Sheet as on 31/3/2010 Liabilities Assets O/s Salaries 1,000 O/s Newspapers 400 O/s Elec. 800 O/s Rent 600 O/s Subscription 5,000 Accrued Int. 600 Cash and Bank 5,200 Balance Sheet as on 31/3/2011 Liabilities Assets Exp/ Inc Sub Interest Salary Elect. Rent News R & P 34,800 1,200 15, ,400 1,080 Add O/s E 12, ,000 1, Less O/s B Less Adv E Add Adv B I & E 5,000 41, ,200 1,000 16, , ,180 Add : Donations 10,000 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 Assets Furniture Sports Goods Books Opening Add : Purchase Less : Sale Less : Dep Closing 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

45 Mahaveer Sports Club Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Expenditure Income To Salaries (wn.2) 16,000 By Sub. (wn. 2) 41,800 To Elec. (wn. 2) 800 By Interest (wn. 2) 1,200 To Rent (wn. 2) 5,400 By Sundry Receipts 300 To News (wn. 2) 1,180 To Misc Exp. 5,400 To Dep. (wn. 3 ) 5,000 Balance Sheet as on 31/3/2010 Liabilities Assets Library Books 10,000 O/s Salaries 1,000 Sports Goods 8,000 O/s Newspapers 400 Furniture 10,000 O/s Elec. 800 O/s Subscription 5,000 O/s Rent 600 Investment 50,000 Accrued Int. 600 Cash and Bank 5,200 Balance Sheet as on 31/3/2011 Liabilities Assets Add : Donations 10,000 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 Accrued Interest 600 Subscription receivables 12,000 Cash and Bank 12,020 Exp/ Inc Sub Interest Salary Elect. Rent News R & P 34,800 1,200 15, ,400 1,080 Add O/s E 12, ,000 1, Less O/s B Less Adv E Add Adv B I & E 5,000 41, ,200 1,000 16, , ,180 Assets Furniture Sports Goods Books Opening Add : Purchase Less : Sale Less : Dep Closing 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

46 Mahaveer Sports Club Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Expenditure Income To Salaries (wn.2) 16,000 By Sub. (wn. 2) 41,800 To Elec. (wn. 2) 800 By Interest (wn. 2) 1,200 To Rent (wn. 2) 5,400 By Sundry Receipts 300 To News (wn. 2) 1,180 To Misc Exp. 5,400 To Dep. (wn. 3 ) 5,000 To Surplus 9,520 Balance Sheet as on 31/3/2011 Liabilities Assets 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 ,300 43,300 Fixed Assets Furniture 9,000 Sports Good 8,000 Library Books 18,000 Investment 50,000 Accrued Interest 600 Subscription receivables 12,000 Cash and Bank 12,020 1,09,620 1,09,620 Balance Sheet as on 31/3/2010 Liabilities Assets Capital Fund 86,000 Library Books 10,000 O/s Salaries 1,000 Sports Goods 8,000 O/s Newspapers 400 Furniture 10,000 O/s Elec. 800 O/s Subscription 5,000 O/s Rent 600 Investment 50,000 Accrued Int. 600 Cash and Bank 5,200 88,800 88,800 Exp/ Inc Sub Interest Salary Elect. Rent News R & P 34,800 1,200 15, ,400 1,080 Add O/s E 12, ,000 1, Less O/s B Less Adv E Add Adv B I & E 5,000 41, ,200 1,000 16, , ,180 Assets Furniture Sports Goods Books Opening Add : Purchase Less : Sale Less : Dep Closing 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

47 practice manual Q 7 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 31 st March, 2010 Balance Sheet as on 31/3/2010 Liabilities Assets Electrical Capital Fund 7,93,000Fittings 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 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 Receipts and Payment A/c for the year 31/3/2011 Receipts Payments To Balance b/d Cash at Bank 25,000By Electricity R 7,200 Op Cash in Hand 25,000By Postage R 5,000 To Entrance By Telephone R 5,000 Fees C 30,000By Books C 60,000 To SubscriptionR By O/s Exp R 7,000 To Sale of old By Rent R 88,000 Newspaper R 1,500By Investment C 40,000 To Hire of By Salaries R 66,000 Lecture Hall R 20,000 By Balance c/d To Interest on Cash at Bank 20,000 R Investments 8,000Cash in Hand clo 11,300 3,09,500 3,09, Membership subscription included 10,000 received in advance. 2. Provide for outstanding rent 4,000 and salaries 3, % 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 5% p.a including purchases made on for 40,000.

48 Smita Library Society Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Expenditure Income By Entrance Fees 7,500 By Subscription 1,90,000 Exp/ Inc Sub Interest Rent Salary R & P Add O/s E Less O/s B Less Adv E Add Adv B I & E , ,000 Assets Electrical Furniture Books Opening 1,50,000 50,000 4,00,000 Add : Purch Balance Sheet as on 31/3/2011 Liabilities Assets Capital Fund Opening 7,93,000 Add : Entrance 22,500 Less : Sale Less : Dep Closing Investments (150,000 Advance Subscription 10,000

49 Smita Library Society Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Expenditure Income To Elec. Charges 7,200 To Postage 5,000 To Telephone 5,000 To Rent 92,000 To Salaries 69,000 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 Balance Sheet as on 31/3/2011 Liabilities Assets Capital Fund Opening 7,93,000 Add : Entrance 22,500 Exp/ Inc Sub Interest Rent Salary R & P ,000 88,000 66,000 Add O/s E ,000 3,000 Less O/s B Less Adv E Add Adv B I & E , , , , ,000 Assets Electrical Furniture Books Opening 1,50,000 50,000 Add : Purch Less : Sale Less : Dep Closing 1,50, ,000 4,00,000 60,000 4,60,000 Outstanding Exp Rent 4,000 Salaries 3,000 7,000 Advance Subscription 10,000 Investments (150, ,000) 1,90,000 Outstanding Interest 500

50 Smita Library Society Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr Income Expenditure 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 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 Balance Sheet as on 31/3/2011 8,15,800 By Deficit 16,700 2,44,200 Liabilities Assets 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) 1,90,000 Outstanding Interest 500 8,15,800 Exp/ Inc Sub Interest Rent Salary R & P ,500 88,000 66,000 Add O/s E ,000 3,000 Less O/s B Less Adv E Add Adv B I & E , , , , ,000 Assets Electrical Furniture Books Opening 1,50,000 50,000 Add : Purch Less : Sale Less : Dep Closing 1,50, ,000 15,000 1,35,000 50, ,000 5,000 45,000 4,00,000 60,000 4,60, ,000 46,000 4,14,000

51 practice manual Q Preparation Receipt and Payment Account from Income and Expenditure and Other information given. Income and Expenditure Account for the year ended 31 st March, 2012 of South Asia Club is given below. Expenditure Income Additional Information To Salaries and Wages 47,500By Subscription 75,000 To Miscellaneous Exp 5,000By Entrance Fees 2,500 To Audit Fees 2,500By Contribution for To Honorarium 10,000 Annual Day 7,500 To Sports Day Expenses 5,000(After deducting Exp To Printing and Stationery 4,5007,500) To Interest on Loan 1,500 To Depreciation on Sports Equipment 3,000 To Surplus 6,000 85,000 85,000 Additional Information Subscription received in Advance 4,500 2, Subscription outstanding 6,000 7, Salaries Outstanding 4,000 4, Sports Equipment 26,000 27, Cash in hand as on was 16, The club took a 5% loan of 30,000 from a bank during for which interest was not paid in the financial year Prepare Receipts and payment account of south Asia club for the year ending 31 st March 2012.

52 South Asia Club Receipt and Payment Account for the year ended 31 st March, 2012 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, Asset Opening Add : Purchase Less : Sold Less : Dep. Closing Sports Equipment 26,000 4,000 30,000 30,000 3,000 27, 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

53 South Asia Club Receipt and Payment Account for the year ended 31 st March, 2012 Receipt Payment To Balance b/d 12,300 To Subscription 71,700 To Entrance Fees 2,500 To Contribution to Annual Day (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 1,01,500 By Balance c/d 16,000 1,01, Asset Opening Add : Purchase Less : Sold Less : Dep. Closing Sports Equipment 26,000 4,000 30,000 30,000 3,000 27, 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 71,700 7,500 6,000 2,700 4,500 75, 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

54 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 Expenditure Income To Salaries 1,00,000By Subscription 1,88,000 To Rent 22,000By Entrance Fees 12,000 To Travelling Exp 1,000By Donations 20,000 To Printing 2,000By Interest 10,000 To dep (furniture) 3,000 To Periodicals 1,000 To Surplus 1,01,000 2,30,000 2,30,000 Balance Sheet as on 31/12/2011 Liabilities Assets Capital Fund 3,45,000 Furniture 80,000 O/s Expenses Sports Equp 40,000 Rent 2,000Investments 2,00,000 Salaries 13,000o/s. Subscription 10,000 Interest Rec. 2,000 Bank Balance 28,000 3,60,000 3,60,000 Other Details as on 31/12/ Subscription Receivable 16, Salaries Outstanding 8, Rent Outstanding 2,000

55 Victoria Club Dr Receipts and Payment A/c for the year ended 31/12/2012 Cr Receipts Payments By Salaries 1,05,000 By Rent 20,000 By Travelling expenses 1,000 By Printing and Stationery 2,000 By Periodicals 1,000 Exp/ Inc Sub Salary Rent R & P ,000 Add O/s E 8,000 4,000 Less O/s B 13,000 2,000 Less Adv E Add Adv B I & E 100,000 22,000 Balance Sheet as on 31/12/2012 Liabilities Assets Furniture 77,000 Add Surplus 1,01,000 Assets Opening Add : Purch Less : Sale Less : Dep Closing Furniture 80, , ,000 3,000 77,000 Outstanding Exp Salaries 8,000 Rent 4,000

56 Victoria Club Dr Receipts and Payment A/c for the year ended 31/12/2012 Cr Receipts Payments 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) By Salaries 1,05,000 By Rent 20,000 By Travelling expenses 1,000 By Printing and Stationery 2,000 By Periodicals 1,000 Exp/ Inc Sub Salary Rent R & P ,000 Add O/s E 16,000 8,000 4,000 Less O/s B 10,000 13,000 2,000 Less Adv E Add Adv B I & E 188, ,000 22,000 2,54,000 By Balance c/d 1,25,000 2,54,000 Balance Sheet as on 31/12/2012 Liabilities Assets Capital Fund Opening 3,45,000 Add Surplus 1,01,000 4,46,000 Outstanding Exp Salaries 8,000 Rent 4,000 Furniture 77,000 Sports Equipment 40,000 Investments 2,00,000 Subscription Due 16,000 Bank Balance 1,25,000 Assets Opening Add : Purch Less : Sale Less : Dep Closing Furniture 80, , ,000 3,000 77,000 4,58,000 4,58,000

57 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 Receipts and Payment A/c for the year ended 31/3/2012 Receipts Payments To Balance b/d 900 To Interest By Printing By Advertisement By Salary 2,600 To Tuition Fees By Rent 1, ,000By Miscellaneous expenses 220 To Entrance Fees 840By Furniture 1,340 To Membership , 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 160By Tuition Fees 2,200 To Advertisement 300 By Membership To Rent 1,200Fees 2,300 To Salary 2,400By 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.

58 Young Generation Society Balance sheet as ob 31/3/2011 Liabilities Assets Membership Fees Receivable 600 Interest Receivable 200 Bank 900 Balance Sheet as on 31/3/2012 Liabilities Assets Expense Salary Printing Advt. Rent R & P Add O/s E Less O/s B Less Adv E Add Adv B I & E Income Tuition Fees Membership Fees R & P 2,200 3,680 Add O/s E Less O/s B Less Adv E Add Adv B I & E , ,300 Add : Entrance 840 Advance Tuition Fees 200 Membership 780 Tuition Fees Receivable 200 Interest receivable 20 Assets Opening Purchase Sale Furniture Dep Closing

59 Young Generation Society Balance sheet as ob 31/3/2011 Liabilities Assets Capital Fund 16,500 (Balancing Fig) Outstanding Salaries ,700 Furniture 4,000 Investments 8,000 Library Books 3,000 Membership Fees Receivable 600 Interest Receivable 200 Bank 900 Balance Sheet as on 31/3/ ,700 Liabilities Assets Capital Fund Opening Balance 16,500 Add : Surplus 800 Add : Entrance ,140 Advance Tuition Fees 200 Membership 780 Outstanding Printing 10 Advertisement 18 Rent 160 Furniture 5,340 Investment 8,000 Library Books 3,000 Tuition Fees Receivable 200 Interest receivable 20 Bank 2,748 Expense Salary Printing Advt. Rent R & P 2, ,040 Add O/s E Less O/s B Less Adv E Add Adv B I & E , ,200 Income Tuition Fees Membership Fees R & P 2,200 3,680 Add O/s E Less O/s B Less Adv E Add Adv B I & E , ,300 Assets Opening Purchase Sale Dep Closing Furniture 4,000 1,340 5, , ,340 19,308 19,308

60 THANK YOU