Non trading concerns accounting, No profit organisation accounting.

2. NON TRADING CONCERNS
A non profit organization, also known as a non-business
entity, not-for-profit organization or non profit
institution, is dedicated to furthering a particular social
cause or advocating for a shared point of view.
In economic terms, it is an organisation that uses its
surplus of the revenues to further achieve its ultimate
objective, rather than distributing its income to the
organization's shareholders, leaders, or members.
Nonprofits are tax exempt or charitable, meaning they do not
pay income tax on the money that they receive for their
organization. They can operate in religious, scientific,
research, or educational settings.

3. SPORTS CLUB,
EDUCATION SOCIETIES,
PUBLIC LIBRARIES,
CHARITABLE HOSPITALS,
LITERARY ASSOCIATIONS,
TEMPLE TRUSTS, ETC.
NON TRADING CONCERNS

4. FINAL ACCOUNTS
Statements prepared by non-trading
organization at the end of the financial
year are;
1.Receipt and Payment Account
2.Income and Expenditure Account
3.Balance Sheet

5. Receipts Amount Payments Amount
Balance b/d XXX Balance b/d XXX
Cash in hand XXX Wages and Salaries XXX
Cash at bank XXX Rent XXX
Subscriptions XXX Rates and Taxes XXX
General Donations XXX Insurance XXX
Sales of newspaper XXX Printing and XXX
Sale of Sports XXX Advertisement XXX
Interest on fixed XXX Sundry expenses XXX
Interest in XXX Telephone charges XXX
Locker rent XXX Entertainment XXX
Sales of scraps XXX Audit Fees XXX
Received from charity XXX Honorarium XXX
Miscellaneous receipts XXX Repairs and Renewals XXX
Sale of Investments XXX Purchase of Assets XXX
Sale of Fixed Assets XXX Purchase of XXX
Life Membership Fees XXX Balance c/d XXX
Entrance fees XXX Cash in hand XXX
Balance c/d XXX Cash at bank XXX
Total XXX XXX
FORMAT OF RECEIPTS AND PAYMENT ACCOUNT

6. RECEIPTS AND PAYMENT ACCOUNT
A. It is a real Account.
B. It is prepared at the end of the financial year.
C. It shows the summary of all receipts and payment of cash
transactions under some important or desired heads.
D. Since this account gives only the summary of cash transactions, the
details of all the transaction can be seen in cash book .
E. It is not a part of double entry book-keeping.
F. It begins and end with balance.
G. It usually shows debit balance (in case of bank overdraft it shows
credit balance).
H. No disclosure of gain or loss.
I. Outstanding items are not recorder.
J. It shows receipts and payments relating to current, previous or
subsequent years.
Following points should be noted in respect of
Income and Expenditure Account:-

7. INCOME AND EXPENDITURE ACCOUNT
Income and Expenditure account shows the summary of all
incomes and expenditures of an organization for
complete year. It is just like Profit and Loss Account .
Following points should be noted in respect of
Income and Expenditure Account:-
A. It is a nominal account.
B. All the expenses are shown in debit side.
C. All incomes are shown in credit side.
D. It shows income and expenditure of current year only
on accrual basis.
E. Only revenue expenses are shown in this account. No
Capital expenditure is shown in this account.

8. THE DIFFERENCE BETWEEN RECEIPT AND PAYMENT ACCOUNT
AND INCOME AND EXPENDITURE ACCOUNT
Receipt and Payment Account Income and Expenditure Account
It is a real account. It is a nominal account
It is cash account of non-trading
organizations.
It is like profit and loss
account
All receipts are shown in debit
side of this account.
All expenses and losses are
shown in debit side of this
account.
All payment are shown in credit
side of this account.
All incomes are shown in credit
side of this account
Opening balance of cash is shown in
beginning of this account.
No such balance is shown in
beginning of this account

9. Receipt and Payment Account Income and Expenditure Account
Balance at the end represents as
closing balance of cash.
Balance at the end represents
excess of income over the
expenditure or vice versa.
All revenue and capital receipts
are recorded in this account.
It records only revenue
receipts.
It shows all receipts and
payment whether they relate to
other financial year.
It show income and expenditures
of current year only.
Depreciation, bad debts etc. are
not recorded in this account.
Depreciation, bad debts are
recorded in this account since
these are the losses to the
organization.
As it is a cash account, it will
always show debit balance.
This account may show debit or
credit balance according to loss
or profit.

10. BALANCE SHEET
Even a non-profit organisation maintains proper books of
accounts. It aims to facilitate simple and convenient
calculation of items of income and expenditure and finding the
correct position of assets and liabilities of the organization.
Preparation of a balance sheet starts with the general fund.
Add the respective surplus or deficit in the amount.
Add life membership fees or legacies at this stage. Put all
fixed assets on the asset side of the balance sheet.
Showcase the amounts paid in advance and amount due on the
assets and liabilities side.
Post the closing balances of the assets and liabilities on
the respective side of the balance sheet.
To calculate the amount of the fund, deduct the value of
total liabilities from the value of assets.

11. There are certain peculiar items in the case of non-trading concerns, which require a
special treatment −
Donations
Non-trading concerns may receive donations time to time. The treatment of donation depends
upon nature of donation.
There are two types of donation as explained below −
• Specific Donation − Some donation may be received for any specific purpose, for
example, for the construction of a room or building and then donation is termed as specific
donation. The amount of such donation cannot be used for any other purpose. It should be
shown on liabilities side of the Balance-sheet and used only for the same purpose it is
meant for.
• General Donation − When a donation is received for a common purpose is termed as
General Donation. If the amount of donation is small, it will be treated as recurring income
and will be recorded in the credit side of income & expenditure account.
Donation of the big amount should be fairly treated as capital receipts and will be shown in
the liabilities side of the Balance sheet. However, donation is of a small amount or a big
amount may depend upon the size of a concern and amount.
Legacy
Sometimes, as per the will of a person, an amount received is called as legacy. It is as
good as donation. It is of a non-recurring nature, therefore should be treated as a capital
receipt, and hence will be appeared in the liabilities side of a Balance sheet. However, it
may also be treated as an income and may be taken to income & expenditure account.
Items Peculiar to Non-Trading Concern

12. Items Peculiar to Non-Trading Concern
Entrance Fees
A club or society usually charge admission fees or entrance fees for the
membership. In case of club etc., admission fees or entrance fees usually charged
as capital receipts, but in case of a hospital or educational institution, it is
treated as a recurring income.
Life Membership Fees
The life membership fees may be taken from the members of institution only once
in their lifetimes. On the basis of lifetime membership, members may enjoy
certain benefits. Amount received as the Life Membership might be transferred to
the “Life Membership Fees Account” of the institution and can be dealt in the
accounts by any of the following methods −
• May be taken as liabilities side of a Balance sheet as Life Membership
Fees.”
• Normal subscriptions of the members may be transferred from the Life
Membership Fees account to the subscription account as an income and the balance
may be carried forward to the following years.
• On the basis of average life of a member, the amount may be transferred to
the income and expenditure account annually and rest will be carried forward
towards the following years.

13. Sale of Scrap or Old Newspapers
Without any dispute, it will be treated as recurring
income and will appear in the credit side of an income and
expenditure account.
Subscription
Subscription is the major source of an income for the non-
trading concerns. Subscriptions are received from the
members of a club or institution. A receipt and payment
account records all the actual subscription received
during the current year and an income & expenditure
account shows the subscriptions, which relates to the
current accounting period. Therefore, some adjustments
require to calculate the subscription of the current year.
Items Peculiar to Non-Trading Concern