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ACCOUNTING FOR
NON-PROFIT
ORGANIZATION
P R E S E N T I N G B Y
M O H A M M E D N A S I H B . M
NON PROFIT ORGANIZATIONS
DEFINITION
“A Non-Profit seeking entity which does not usually involve in trading activities,
but engages in rendering services to members and society.”
 Non profit organizations are established for the purpose of rendering service.
 They are not expected to earn profit, but are organized for social, educational,
religious or charitable purpose.
 They take the form of sports and arts club, hospitals, libraries, charitable
institutions like orphanages, educational institutions, religious institutions etc.
FEATURES OF A NON-PROFIT
ORGANIZATIONS
o Their main objective is to rent a services to members and public.
o They are not expected to earn profit.
o They do not normally engage in trading activities.
o Credit transactions are not usually made.
o Usually such concerns keep only cashbook to record daily transactions.
o They prepare a summary of cashbook at the end called receipts and payments a/c.
o No trial balance is prepared.
o Do not prepare trading, profit and loss a/c, but prepares income and expenditure a/c.
o Do not have capital, but they have only capital fund representing accumulated
services.
ACCOUNTING STATEMENTS
 Usually non-profit making concerns follow the cash system of accounting. Under cash
system, cash book is the most important book where all cash receipts and payments are
recorded in a chronological order.
 A memorandum book is maintained to record the name of the persons and
institutions from whom amounts have not been received.
 A stock register is kept to record the purchase of assets like furniture, books,
equipment etc.
 A non-profit organization prepares three statements at the end of the accounting
year, which form its final accounts. These statements are:
 Receipts and payments account.
 Income and expenditure account.
 Balance sheet.
RECIEPTS AND PAYMENTS
ACCOUNT
 It is a summary of cash and bank transactions which helps in the preparation
of income and expenditure account and the balance sheet.
 A receipts and payments account is a statement prepared at the end of an
accounting year, giving a summary of all receipts and payments recorded in cash
book.
 It is prepared by analyzing and classifying the entrees in the cashbook of a
particular accounting year.
 It is debited with all items of receipts and credited with all payments.
 In preparing these accounts, no distinction is made between capital and
revenue items.
FEATURES
 It is a real account.
 Receipts are recorded in debit side.
 Payments are recorded in the credit side.
 It is a classified summary of cashbook.
THANK YOU…

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ACCOUNTING FOR NON-PROFIT ORGANIZATION

  • 1. ACCOUNTING FOR NON-PROFIT ORGANIZATION P R E S E N T I N G B Y M O H A M M E D N A S I H B . M
  • 2. NON PROFIT ORGANIZATIONS DEFINITION “A Non-Profit seeking entity which does not usually involve in trading activities, but engages in rendering services to members and society.”  Non profit organizations are established for the purpose of rendering service.  They are not expected to earn profit, but are organized for social, educational, religious or charitable purpose.  They take the form of sports and arts club, hospitals, libraries, charitable institutions like orphanages, educational institutions, religious institutions etc.
  • 3. FEATURES OF A NON-PROFIT ORGANIZATIONS o Their main objective is to rent a services to members and public. o They are not expected to earn profit. o They do not normally engage in trading activities. o Credit transactions are not usually made. o Usually such concerns keep only cashbook to record daily transactions. o They prepare a summary of cashbook at the end called receipts and payments a/c. o No trial balance is prepared. o Do not prepare trading, profit and loss a/c, but prepares income and expenditure a/c. o Do not have capital, but they have only capital fund representing accumulated services.
  • 4. ACCOUNTING STATEMENTS  Usually non-profit making concerns follow the cash system of accounting. Under cash system, cash book is the most important book where all cash receipts and payments are recorded in a chronological order.  A memorandum book is maintained to record the name of the persons and institutions from whom amounts have not been received.  A stock register is kept to record the purchase of assets like furniture, books, equipment etc.  A non-profit organization prepares three statements at the end of the accounting year, which form its final accounts. These statements are:  Receipts and payments account.  Income and expenditure account.  Balance sheet.
  • 5. RECIEPTS AND PAYMENTS ACCOUNT  It is a summary of cash and bank transactions which helps in the preparation of income and expenditure account and the balance sheet.  A receipts and payments account is a statement prepared at the end of an accounting year, giving a summary of all receipts and payments recorded in cash book.  It is prepared by analyzing and classifying the entrees in the cashbook of a particular accounting year.  It is debited with all items of receipts and credited with all payments.  In preparing these accounts, no distinction is made between capital and revenue items.
  • 6. FEATURES  It is a real account.  Receipts are recorded in debit side.  Payments are recorded in the credit side.  It is a classified summary of cashbook.
  • 7.