This document discusses the accounting statements for non-profit organizations. It explains that non-profits render services to members rather than operating for profit. Their statements include a receipts and payments account, which is like a cash book; an income and expenditure account, which shows surplus or deficit; and a balance sheet. The receipts and payments account records all cash inflows and outflows, while the income and expenditure account uses accrual accounting to determine the current surplus or deficit. Together these statements provide information on the financial position and performance of the non-profit entity.

1. WELCOME

2. H.K.M. COLLEGE OF EDUCATION
UMAYANALLOOR P.O. KOLLAM

3. NAME : RAZLA MOL M.R
OPTION : COMMERCE
CANDIDATE CODE : 19014364009

4. FINANCIAL STATEMENTS OF
NON –PROFIT ORGANISATION

5. Business entities are divided
into two
• Profit making entities
• Non profit entities

6. PROFIT MAKING ENTITIES
Entities which are engaged in trading of goods
and services and there is to make profit
e.g. manufacturers, wholesalers,
bankers, transportation

7. NON PROFIT ENTITIES
Non profit entities are those organizations
whose prime objective is to render services
to their members and not to make profit
e.g. Sports Clubs, Hospitals, Educational
Institutions

8. DIFFERENCE BETWEEN PROFIT
MAKING AND NON PROFIT ENTITIES
BASIS
ENTITIES OF
PROFIT
NON PROFIT
ENTITIES
• Motive Profit making
Rendering
services
• Distribution of
profit
Distributed among
the members
Profit not
distributed among
the members

9. • Result of
activities
Profit &loss surplus or deficit
• Statement
prepared
1. Trading a/c
2. P&L a/c
3. Balance sheet
1.Receipt & payment
a/c
2.Income&
Expenditure
3.Balance sheet
• Accounting
system
Follow accrual system
Follow the
combination of cash &
accrual system

10. Accounting Statement for Non
Profit Organization
• Receipts & Payments Account
• Income & Expenditure Account
• Balance sheet

11. Receipts and Payments Account
Receipts and payments account includes all
cash receipts and cash payments. It is similar
to cash a cash book

12. Preparation of Receipts and
Payments account
 The account starts with opening balance of
cash in hand and cash at bank
 All cash receipts are shown on debit side
 All cash payments are shown on credit side
 The balance of the account is shown as
closing balance

13. Uses of Receipts and Payments
Account
 It helps the management to know from
where funds are generated and how these
funds are utilized
 It reveals the closing balance of cash and
bank at the end of the accounting period

14. Items of Receipts and Payments
Account
 Revenue Receipts
 Capital Receipts
 Revenue Payments
 Capital Payments

15. REVENUE RECEIPTS
 Annual membership subscriptions
 Admission fee not capitalized
 Receipt from sale of old newspapers
 Hall rent
 Donations, Grants, Legacies etc

16. CAPITAL RECEIPTS
 Donations from membership
 Amount received as loan
 Life membership from government
 Grants received from government
 Legacies

17. Revenue Payments
o Payment for the salaries
o Honorarium paid
o Payment for travelling
o Payment for organizing sports meet
o Interest paid on loan

18. Capital Payments
 Payment for construction of building
 Payment for purchase of book for library
 Amount advanced to outsiders
 Amount invested in bank as fixed deposit
 Payment made for the purchase of
furniture

19. INCOME AND EXPENDITURE
ACCOUNT
Income and expenditure account is the
revenue account of a non profit organization.
It is an income statement. It reveals either
surplus or deficit

20. Preparation of Income and
Expenditure Account
 It is prepared to find out current year`s
surplus or deficit
 It includes only revenue income and
revenue expenses
 It is maintained under accrual basis
 Outstanding expenses, prepaid expense etc
in the current year are to be adjusted

21. Balance sheet
Balance sheet of a non profit organization is
prepared in the usual manner. It contains
particulars of assets and liabilities on the date
on which it is prepared. It helps to ascertain
the financial position of a business.