This document discusses accounting for non-profit organizations. It defines non-profits as entities that do not seek profit and instead engage in providing services to members and society. Key features of non-profits are that their main objective is to provide services, they do not seek profit, and they do not normally engage in trading. Non-profits typically keep a cashbook to record daily transactions and prepare a receipts and payments account at year-end. The three main accounting statements prepared by non-profits are the receipts and payments account, income and expenditure account, and balance sheet. The receipts and payments account summarizes all receipts and payments from the cashbook in a classified format.

1. ACCOUNTING FOR
NON-PROFIT
ORGANIZATION

2. NON PROFIT ORGANIZATIONS
DEFINITION
“ANon-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.

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