This document provides an overview of accounting procedures for non-profit organizations. It discusses the key financial statements prepared by non-profits, including the receipts and payments account, income and expenditure account, and balance sheet. It describes how items like donations, subscriptions, and assets are treated in each statement. Examples of each type of financial statement are also provided.

1. NON- PROFIT ORGANIZATION
Presented By : Archana Sabat
SKCG COLLEGE
PARALAKHEMUNDI
Gajapati, Odisha
Accounts For

2. ACKNOWLEDGEMENT
❑ ARCHANA SABAT OF SKCG COLLEGE,
PARALAKHEMUNDI, Dist:- GAJAPATI,
ODISHA IS DECLARING THAT THIS
PRESENTATION ON NON- PROFIT
ORGANIZATION IS ENTIRELY MADE BY ME I
WOULD LIKE TO THANK MY SUBJECT
TEACHER MR.DHRUBA CHARAN SHETTY SIR
FOR GUIDING ME.

3. INTRODUCTION / MEANING
⮚A NOT-FOR-PROFIT ORGANIZATION IS ALSO KNOWN
AS NON PROFIT ORGANIZATION IS AN ORGANIZATION
SETUP TO RENDER SERVICES TO THE SOCIETY NOT
WITH THE AIM OF EARNING PROFIT.
⮚ IT IS A SEPARATE LEGAL ENTITY NOT OWNED BY AN
INDIVIDUAL OR AN ENTERPRISE .
⮚ THOUGH THE MAIN SOURCE OF INCOME OF SUCH
ORGANIZATIONS IS MEMBERSHIP, DONATIONS, AND
GRANTS ETC.
⮚AS THE MAIN AIM OF THESE ORGANIZATION IS NOT TO
EARN PROFIT, THEY DO NOT PREPARE TRADING AND
PROFIT AND LOSS ACCOUNT.

4. CONTD…
❖BUT STILL THEY HAVE TO MAINTAIN PROPER ACCOUNTS .
THIS IS ALSO A LEGAL REQUIREMENTS AND THEY WOULD
ALSO LIKE TO KNOW WHETHER THERE CURRENT
INCOMES ARE SUFFICIENT TO MEET THEIR CURRENT
INCOMES ARE SUFFICIENT TO MEET THEIR CURRENT
EXPENSES .
❖FOR THIS PURPOSE THEY PREPARE AN INCOME AND
EXPENDITURE ACCOUNT WHICH IS SIMILAR TO PROFIT
AND LOSS ACCOUNT OF PROFIT SEEKING ENTITY.
❖A BALANCE SHEET IS ALSO PREPARED IN ORDER TO
SHOW THE FINANCIAL POSITIONS OF THE ORGANIZATION
ON THE LAST DATE OF THE ACCOUNTING YEAR .

5. ACCOUNTING PROCEDURE OF
NOT-FOR-PROFIT ORGANIZATION
✔THE FINAL ACCOUNTS OF NOT FOR
PROFIT ORGANIZATION COMPRISE
OF:-
✔RECEIPTS AND PAYMENT ACCOUNT
✔INCOME AND EXPENDITURE
ACCOUNT
✔ BALANCE SHEET

6. RECEIPTS AND PAYMENT
ACCOUNT
⮚IT IS CLASSIFIED SUMMARY OF CASH BOOK CLASSIFYING
RECEIPT AND PAYMENT UNDER APPROPRIATE HEADS OF
ACCOUNT ALONG WITH CASH AND BANK BALANCES IN THE
BEGINNING AND AT THE END OF THE ACCOUNTING PERIOD .
⮚A FAIR IDEA CAN BE FORMED FROM THIS ACCOUNT ABOUT
THE CASH POSITION OF AN ORGANIZATION. IT IS MAINTAIN
ON CASH SYSTEM OF ACCOUNTING .
⮚IT DOES NOT SHOW EXPENSES AND INCOMES ON ACCRUAL
BASIS.
⮚IT IS A REAL ACCOUNT.

7. SPECIMEN RECEIPTS AND
PAYMENT ACCOUNT
Receipts Amt.. payments Amt..
To balance b/d :
Cash in hand
Cash in bank
Revenue receipts :
to subscription
To general donations
To sale of grass
Capital receipts :
To legacies
To bank loan
To entrance fee
Revenue payments
By salaries
By audit fee
By charities
Capital payments :
By furniture
By investments
By library books
By balance c/d :
Cash in hand
Cash in bank
Receipt And Payment Account for the year
ending..
Dr. Cr.

8. DISTINCTION BETWEEN RECEIPTS &
PAYMENT A/C AND CASH BOOK
BASIS OF
DIFFERENCE
1.NATURE OF CONCERN
2.CHROKNOLOGICAL
RECORDING
3.SUMMARY OF
TRANSACTIONS
4.HEAD-WISE
RECORDING
CASH BOOK
1.IT IS PREPARED BY
TRADING AND
MANUFACTURING CONCERNS
TO RECORD ALL CASH
TRANSACTION.
2.ALL CASH TRANSACTION
ARE RECORDED IN A DATE-
WISE.
3.ALL TRANSACTION ARE
RECORDED IN A DETAILED
MANNER AND NOT IN A
SUMMARIZED FORM.
4. THE CAPITAL AND REVENUE
ITEMS ARE RECORDED AS
AND WHEN RECEIVED OR
PAID.
RECEIPT &
PAYMENT A/C
1.IT IS PREPARED BY
NON-PROFIT
ORGANIZATION AND
PROFESSIONALS ONLY.
2.TRANSACTIONS ARE
NOT RECORDED DATE-
WISE IN THIS ACCOUNT.
3.IT IS BRIEF SUMMARY
OF CASH TRANSACTIONS
OF THE WHOLE YEAR
4.THE CAPITAL AND
REVENUE ITEMS ARE
RECORDED HEAD-WISE

9. INCOME AND EXPENDITURE ACCOUNT
❑IT IS A NOMINAL ACCOUNT. IT IS EQUIVALENT TO THE
PROFIT AND LOSS ACCOUNT OF A BUSINESS FIRM.
❑INCOMES ARE SHOWN ON THE CREDIT SIDE AND
EXPENSES ARE SHOWN IN DEBIT SIDE .
❑THE DIFFERENCE BETWEEN THE TWO SIDES IS EITHER
SURPLUS OR DEFICIT. THE SURPLUS/DEFICIT AS A CASE
MAY BE, IS ADDED TO /DEDUCTED FROM THE CAPITAL
FUND.
❑IT IS PREPARED ON ACCRUAL BASIS OF ACCOUNTING
AND THUS ALL ADJUSTMENT RELATING TO PREPAID
OUTSTANDING EXPENSES AND INCOMES , PROVISION
FOR DEPRECIATION DEBT ARE MADE.

10. SPECIMEN OF INCOME AND EXPENDITURE
ACCOUNT
Expenditure Amt.. Income Amt..
To Salaries Of Wages
To Prize Awarded
To Postage And
Telegram
To Municipals Taxes
To Surplus (Excess Of
Income Over
Expenditure)
By Donation Received
By Entrance Received
By Rent Received
By Hire Of Ground
By Deficit ( Excess Of
Expenditure Over
Income)
Income And Expenditure Account For The Year
Ending ….
Dr. Cr.

11. DISTINCTION BETWEEN PROFIT & LOSS
A/C AND INCOME AND EXPENDITURE A/C.
BASIS OF
DIFFRENCE
1.NATURE OF CONCERN
2.PURPOSE
3.BASIS OF
PREPARATION
4.SHARING OF SURPLUS
PROFIT
INCOME
&EXPENDITUR
E A/C
1.IT IS PREPARED BY NON
TRADING ORGANIZATION
2.IT IS PREPARED TO
FIND OUT THE SURPLUS
OR DEFICIT
3. IT IS PREPARED FROM
RECEIPT AND PAYMENT
A/C AND ADDITIONAL
INFORMATION
4.SURPLUS IS ADDED TO
CAPITAL ANS NOT
WITHDRAWN FOR
PERSONAL USE.
PROFIT AND
LOSS A/C
1.IT IS PREPARED BY
TRADING OR
MANUFACTURING
CONCERN.
2. IT IS PREPARED TO FIND
OUT THE NET PROFIT OR
LOSS.
3. IT IS PREPARED FROM
TRIAL BALANCE AND
ADDITIONAL INFORMATION
4. PROFIT IS SHARED
AMONG THE OWNERS AND
WITHDRAWN FOR
PERSONAL USE .

12. TREATMENTS OF SOME
IMPORTANT ITEMS
1. SUBSCRIPTION : IT IS THE SOURCE OF INCOME OF NOT-
FOR-PROFIT ORGANIZATION . SUBSCRIPTION RELATED TO
CURRENT YEAR WHETHER OR NOT ARE SHOWN ON THE
CREDIT SIDE OF THE INCOME AND EXPENDITURE A/C.
OUTSTANDING SUBSCRIPTION ARE SHOWN ON THE ASSET
SIDE OF THE BALANCE SHEET. SUBSCRIPTION RECEIVE IN
ADVANCE FOR THE FOLLOWING YEAR ARE SHOWN ON THE
LIABILITIES SIDE OF THE BALANCE SHEET
2. LIFE MEMBERSHIP FEES: IT IS ACCOUNTED AS A CAPITAL
RECEIPT AND ADDED TO CAPITAL FUND ON THE LIABILITIES
SIDE OF THE BALANCE SHEET.

13. CONTD….
3. DONATION: IT IS TWO TYPES:
•GENERAL DONATION: IT IS TAKEN AS AN ITEM OF INCOME AND
IT IS SHOWN ON THE INCOME SIDE OF THE INCOME AND
EXPENDITURE ACCOUNT.
•SPECIFIC DONATION: IT SHOULD BE CAPITALIZED AND IT
SHOWN ON THE LIABILITIES SIDE OF THE BALANCE SHEET.
4. ENDOWMENT FUND RECEIPTS: IT IS A CAPITAL RECEIPT AND
SHOWN ON THE LIABILITIES SIDE OF THE BALANCE SHEET. ANY
INTEREST RECEIVED FROM ENDOWMENT FUND INVESTMENTS
IS CREDITED TO INCOME AND EXPENDITURE ACCOUNT.

14. CONTD…
5.SALE OF OBSOLETE ITEMS AND WASTE PAPERS: NON PROFIT
ORGANIZATION MAY ABANDON SOME OF EQUIPMENT'S , BATS,
CARPET ETC. THE AMOUNT REALIZED FROM THE SALE OF
SUCH OBSOLETE ITEMS MUST BE TREATED AS REVENUE
INCOME , HENCE IT SHOULD BE RECORDED ON THE CREDIT
SIDE OF INCOME AND EXPENDITURE A/C.
6.SALE OF OLD ASSETS : IF ANY ASSET IS SOLD THE AMOUNT
IS DEBITED TO RECEIPT AND PAYMENT A/C. IT IS NOT TAKEN
TO INCOME AND EXPENDITURE A/C. THE PROFIT OR LOSS
MADE ON SALE OF OLD ASSET RECORDED IN INCOME AND
EXPENDITURE A/C.

15. CONTD…
7. PURCHASE OF EQUIPMENT: THE PRICE PAID FOR
ACQUIRING ANY EQUIPMENT IS A CAPITAL EXPENDITURE.
8. SPECIAL FUND: IF THERE IS ANY SPECIFIC FUND, SUCH
AS PRIZE DISTRIBUTION FUND, THE EXPENSES OR INCOME
RELATING TO THE FUND MAY BE ADJUSTED TO THE FUND
ITSELF ( ON THE LIABILITY SIDE OF BALANCE SHEET).
9. LEGACY: IT IS LIKE DONATION. IT IS NON-RECURRING IN
NATURE. IT IS THE AMOUNT GIVEN TO A NON-TRADING
CONCERN AS PER THE WILL OF DECEASED PERSON. IT IS
TAKEN TO RECEIPT AND PAYMENT A/C AS CAPITAL
RECEIPT.

16. CONTD…
10.ENTRANCE FEE: THESE ARE THE FEE COLLECTED FROM EVERY
MEMBER AT THE TIME OF HIS / HER ADMISSION INTO
MEMBERSHIP.
11.HONARAIUM PAID: IT IS A REVENUE EXPENDITURE. IT IS A
PAYMENT OF REMUNERATION TO A PERSON WHO IS NOT AN
EMPLOYEE OF THE ORGANIZATION. SUCH AS ANY SPECIAL
PERFORMANCE IS DONE, BY AN OUTSIDER , AT THE
ORGANIZATION, THEN THE PAYMENT IS HONORARIUM.
12.SALE OF OLD SPORTS MATERIALS AND OLD NEWSPAPERS: THE
AMOUNT RECEIVED ON ACCOUNT OF SALE OF OLD SPORTS
MATERIAL AND OLD NEWSPAPERS ARE RECURRING INCOMES TO
A CONCERN AND THEREFORE , TREATED AS REVENUE INCOME.

17. BALANCE SHEET
❑ IT IS A STATEMENT THAT SHOWS THE FINANCIAL POSITION
OF AN ORGANIZATION.
❑ THE METHOD OF PREPARING THE BALANCE SHEET FOR
NOT-FOR- PROFIT ORGANIZATION IS SIMILAR TO THAT OF A
BUSINESS FIRM .
❑ IT IS PREPARED AT THE END OF THE ACCOUNTING PERIOD
AFTER PREPARING THE INCOME AND EXPENDITURE.
❑THE BALANCE SHEET SHOWS ASSETS AND LIABILITIES ,
CAPITAL FUND.

18. VIVEKANANDA CHARITABLE HOSPITAL HAS FURNISHED THE
FOLLOWING PARTICULARS, PREPARE INCOME AND
EXPENDITURE ACCOUNT FOR THE YEAR ENDING 31.12.2016
AND BALANCE SHEET ON THAT DATE:
Receipts Amount
.
Payment Amount
.
To cash in hand (1.1.16)
To subscription
To donation
To interest on investment
(7% for full year )
To proceeds from charity
shows
7150
47,996
14,500
7000
10,450
By medicine
By doctor’s honorarium
By salaries
By petty expenses
By equipments
By expension charity
shows
By cash In hand
(31.12.16)
30,590
9000
27,500
461
15,000
750
3795
Receipts & payment account for the year ended
31.12.16
Dr. Cr.
1.1.2016 31.12.16
a)Subscription due 240 280
b) Subscription received in advance 64 100
c)Stock of medicine 8810 9740
d)Estimated value of equipments 21200 31600
e)Building (cost less depreciation) 40,000 38000
Problem:

19. Expenditure Amoun
t.
Income Amoun
t.
To medicine
To doctor’s honorarium
To salaries
To petty expenses
To depreciation on
equipment
To depreciation on
building
To surplus
29600
9000
27,500
461
4600
2000
5979
79200
By subscription
47996
Add :outstanding(clsing)
280
Add: subscription received in
advance (opening)
64
48340
Less: outstanding 240
48100
less: received in adv. 100
By proceeds in charity
10,450
Less: expense on charity
750
By donation
48000
9500
14500
7000
79200
Solutio
n:
Income & expenditure account
for the year ended 31.12.2016
Dr
.
Cr.

20. Liabilities Amount. Assets Amount.
Capital fund 177336
Add: surplus
5979
Subscription received in
advance
183315
100
1,83,415
Cash in hand
Stock of medicine
Subscription due
Investment
Equipment
Building
3795
9740
280
1,00,000
31,600
38,000
1,83,415
Balance sheet
As on 31.12.2016
Solution
contd…

21. CONCLUSION
❑NONPROFIT ORGANIZATION SERVE THE
PUBLIC, PROVIDING A WIDE RANGE OF
SERVICES TO IMPROVE THE QUALITY OF
LIFE OF INDIVIDUALS OR COMMUNITIES.
THEY ARE OFTEN HEAVILY STAFFED
WITH VOLUNTEERS OR TEMPORAY
WORKERS WITH DIVERSE SKILL SETS,
WHO ARE STRONGLY MOTIVATED BY
ALTRUISM.