income and expenditure account-what-features-accounting records-format- terms

1. NON-TRADING /
NON-PROFITABLE
ORGANISATION
Femy Moni
Assistant Professor

2. The organizations that are worked for the welfare of the
society.
Formed for rendering services rather than making profit
Organised as charitable trust, clubs………..

3. Accounting Records of Non-trading
Organisations
 Receipts and payment accounts:
 Income and expenditure account:
 Balance sheet:

4. INCOME AND EXPENDITURE
ACCOUNT

5. What is income and expenditure account?
“The income and expenditure account is
prepared by the non-trading organizations to
determine surplus or deficit for a particular
period of time.”

6. Features
• Nominal Account
• Based on a double entry system of accounting
• Prepared on accrual basis
• Prepared at the end of a period
• Similar to P&L Account
• No opening balance
• Presented by non trading organization to decide the surplus or deficit
of the organization
• Only considers the revenue items
• Surplus or deficit moved to capital fund account in the balance sheet

7. Format

8. Terms used
• Honorarium:
It is a voluntary payment made to the person who rendered a service
without any fee.
• Grants received:
Non repayable fund given by one party to a recipient ,often a non-trading
concerns, educational institutions.
General Grant: It shown on Income and expenditure account as income
received.

9. • Subscription Received:
It is the amount paid by members to keep their membership alive.
Adjustment regarding subscription
Subscription received during the year XXXX
Add: Subscription outstanding at the end XXX
Subscription Pre received at the beginning XXX
Less: subscription outstanding at the beginning XXX
Subscription pre received at the end XXX
Subscription shown in in come and expenditure account XXXX

10. • Entrance fee received:
It’s a revenue receipt. To the extent not capitalized is treated as revenue
item and shown in income and expenditure account
• Life membership fee:
It’s a Capital receipt. Hence is shown on liability side as capital fund.
• Legacy
Amount receives as a donation under the will of a deceased person.
If its for a specific purpose, it will treated as a liability.
If its not for a specific purpose , it will treated as an revenue income.

11. • Depreciation on fixed asset:
Depreciation on fixed asset is considered as an expense and it will debited
to income and expenditure account.
• Profit/loss on sale of fixed asset:
Profit or loss on sale of fixed asset is considered as revenue receipt or
payment. Hence it shown in income and expenditure account.

12. • Donation:
General donation treated as revenue item. So it should be included in the
account.
Specific donation is taken as capital receipt and shown on liability side of
balance sheet
• Sale of news paper, articles:
it is treated as revenue receipt

13. Thank you