Non Profit Organisation Or Non Trading Organisation now a days are popular among peoples and organisation. People want to do social services and helps the government to uplift the lower sections of society and make available resources to whom who are deprived from. There is no doubt that they do not have motive, they also doing work with objectives and mission but their motive is not to earn profit. with the help of this ppt reader can understand characteristics and importance of NPO's as well as their accounting techniques and different types of account. This is only for educational purpose.

1. TOPIC: ACCOUNTING FOR NON TRADING
ORGANISATION
• PREPARED BY-
RISHAV KUMAR
SRM-IST RAMAPURAM, CHENNAI
ASSISTANT PROFESSOR
DEPARTMENT OF COMMERCE

2. Non-Trading Organisation
• A non-trading organization, also known as a non-trading
company or a non-trading entity, is a type of organization that
does not engage in commercial activities for profit.
• Unlike businesses that are set up to buy and sell goods or
provide services for financial gain, non-trading organizations
are typically established to serve a specific purpose, often for
social, charitable, educational, or religious objectives.

3. Characteristics of Non-Trading Organisation.
• Non-profit Purpose: The primary objective of non-trading organizations is to
serve a specific social, charitable, educational, religious, or other socially
beneficial purpose. Their main focus is on advancing their mission and providing
public benefits, rather than generating profits for shareholders or owners.
• No Distribution of Profits: Unlike for-profit businesses, non-trading organizations
do not distribute profits or surpluses to individuals or stakeholders. Any surplus
funds generated from their activities are reinvested into furthering their mission
and objectives.
• Tax-Exempt Status: Many non-trading organizations enjoy tax-exempt status
granted by governments. This status provides certain tax benefits, such as
exemption from income tax, enabling them to direct more resources toward their
missions.
• Governance: Non-trading organizations typically have a board of directors or
trustees responsible for overseeing the organization's activities and ensuring it
operates in accordance with its mission and legal requirements.

4. • Maintenance of Accounts:- Typically, the accounts of a non-
trading concern are maintained using the double entry book
keeping system. At the end of the year, a summary is
created, which is known as the income and expenditure
summary and balance sheet. These institutions and
societies do not maintain a full set of books. Only a cash
book is maintained in which all receipts and payments are
entered.

5. Final Accounts of Non-Profit Organisation
1. Income and Expenditure Account (or Statement of Activities): The Income and
Expenditure Account is similar to the income statement or profit and loss
statement of a for-profit business. It records all the incomes received and
expenses incurred by the non-trading organization during a specific accounting
period, usually one year. The purpose of this account is to determine the
surplus (income exceeding expenses) or deficit (expenses exceeding income)
for that period.
2. Receipt and Payment Account : While not always required, some non-trading
organizations may prepare a cash flow statement to provide information about
the cash inflows and outflows during the accounting period. This statement
helps in assessing the organization's ability to generate and manage cash.
3. Balance Sheet (or Statement of Financial Position): The Balance Sheet
provides a snapshot of the non-trading organization's financial position on a
specific date, usually the end of the accounting period. It lists the organization's
assets, liabilities, and net assets (or equity).

9. Q1. Prepare Receipt and Payment account of a club for the year ended
31st Dec,1999 from the following particulars:
Opening balance of cash 40000 Rent paid 1200
Receipt of entrance fees 8000 Payment of purchase of cricket ball 500
Subscription received for 1999 16000 Payment of purchase of cricket bat 1600
Previous year’s subscription
received
1600 Payment of Stationary in cash 100
Paid Salaries 2000
Paid for Miscellaneous expenses 200

10. Receipts Rs Payments Rs
To balance b/d 40000 By Rent 1200
To Entrance fees 8000 By Cricket ball 500
To Subscription: By Cricket bats 1600
For 1999 16000 By Stationary 100
For 1998 1600 17600 By Salaries 2000
By Miscellaneous expenses 200
By Balance c/d 60000
65600 65600
Solution: Receipt and Payment Account for the Year ended 31st Dec. 1999

11. Q. The following is the Receipt and Payment account of Kanan
Recreation club for the year ended 31st March,2002.
Receipts Rs Payment Rs
To Balance b/d 7,000 By Salaries 28,000
To Subscriptions: By General Expenses 6,000
2000-2001 5,000 By Electricity 4,000
2001-2002 20,000 By Book Purchased 10,000
2002-2003 4,000 29,000 By Periodicals Purchased 8,000
To Rent for use of conference room 14,000 By Loan Repaid 20,000
To Receipt from entertainment facilities 28,000 By Balance c/d 4,000
To sale of old magazines 2,000
80,000 80,000

12. Additional Data:
• The club has 50 members each paying Rs 500 PA as subscription.
• Subscription outstanding on 31-03-2002 Rs 6,000
• Salaries outstanding Rs 2,000. Salaries paid include Rs 6,000 for
2000-01.
• On 01-04-2001, the club properties were:- Building Rs-2,00,000,
Furniture & Fittings- Rs 20,000 and Books- Rs 20,000.
• Provide Depreciation @10% on Building and Furniture.
Prepare Income and Expenditure A/c for year ending 31-03-2002 and a
balance sheet on that date.

13. Solution-
Income and Expenditure Account of Kanan recreation club
For the year ending 31st March, 2002
Expenditure Rs Income Rs
To salaries 28,000 By Subscription received for
Add- Outstanding 2,000 2001-02 20,000
Less- Salary of previous year
paid
6,000 24000 Add- Outstanding for 2001-02
(500*50-20000)
5,000 25,000
To general expenses 6,000 By rent of conference room 14,000
To Electricity 4,000 By income from
To periodicals 8,000 Entertainment facilities 28,000
To Depreciation- on building 20,000 By Sale of old 2,000
on Furniture 2,000
To Surplus –Excess of income
Over expenditure 5,000
69,000 69,000

14. Balance sheet of Kanan recreation club
As on 31st March, 2002
Liabilities Rs Assets Rs
Salaries outstanding 2,000 Cash in hand 4,000
Subscription received in advance Outstanding subscription:
For 2002-03 4,000 For 2000-2001 1000
(6000-5000)
Capital fund on 1-4-2001 (W.N) For 2001-2002 5000 6,000
2,27,000 Books 20,000
Add- Surplus for the year 5,000 2,32,000 Add- Purchases during the year
10,000
30,000
Furniture 20,000
Less- Depreciation 2,000 18,000
Buildings 2,00,000
Less- Depreciation 20,000 1,80,000
2,38,000 2,38,000

15. Working note for capital fund as on 01-04-2001:
Balance sheet as on 31-03-2001
Liabilities Rs Rs Assets Rs Rs
Salaries outstanding 6,000 Cash in hand 7,000
Loan 20,000 Subscription outstanding
(5000+1000)
6,000
Capital Fund (Bal. fig) 2,27,000 Books 20,000
Furniture and fittings 20,000
Building 2,00,000
2,53,000 2,53,000

16. Thank you.