It is not intended to be legal advice. Check other sources, such as the IRS, and consult with legal counsel or an accountant. Financial Accounting Foundation.
Financial Accounting Standards Board. Accessed Oct. Department of the Treasury Internal Revenue Service. January Accounting Periods and Methods ," Page 9. January Accounting Periods and Methods ," Page Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content.
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If adjustment given in adjustment Closing balance Sheet. Liabilities Rs. Prize fund XXX Prize fund investment opening balance op. Debit exceeds the Credit, and the resultant debit balance of Rs. Incidental Trading Activities Sometimes, trading activities such as chemist shop, hospital, canteen, bar etc. In such a situation a trading account is prepared to calculate profit or loss from that trading aspect.
Explain the meaning and characteristics of accounting not-for-profit organizations; 2. List the principal financial statements prepared by not for-profit organizations and explain their nature; 3.
Prepare the Receipt and Payment Account from a given date; 4. Explain the procedure of preparing the Income and Expenditure Account from a given Receipt and Payment Account and some additional information; 5. Explain treatment of certain peculiar items of receipts and payments such as subscriptions from members, special funds, legacies, sale of old fixed assets, etc.
What is a Non Profit Oriented Not for Profit Organization There are certain organisations which are set up for providing service to its members and the public in general. Such organisations include clubs, charitable institutions, schools, religious organisations, trade unions, welfare societies and societies for the promotion of art and culture. These organisations have service as the main objective and not the profit as is the case of organisations in business.
Normally, these organisations do not undertake any business activity, and are managed by trustees who are fully accountable to their members and the society for the utilization of the funds raised for meeting the objectives of the organisation.
Hence, they also have to maintain proper accounts and prepare the financial statement which take the form of Receipt and Payment Account; Income and Expenditure Account; and Balance Sheet. The main characteristics of such organisations are: 1. Such organisations are formed for providing service to a specific group or public at large such as education, health care, recreation, sports and so on without any consideration of caste, creed and colour.
Its sole aim is to provide service either free of cost or at nominal cost, and not to earn profit. The main sources of income of such organisations are: i subscriptions from members, ii donations, iii legacies, iv grant-in-aid, v income from investments, etc. The funds raised by such organisations through various sources are credited to Capital fund or Accumulated fund. The surplus generated in the form of excess of income over expenditure is not distributed amongst the members.
It is simply added in the capital fund. The accounting information provided by such organisations is meant for the present and potential contributors meet the statutory requirement. Receipt and Payment Account It is prepared at the end of the accounting year on the basis of cash receipts and cash payments recorded in the cash book.
It simply is a summary of cash and bank transactions under various heads Salient Features 1. It is a summary of the cash book. Its form is identical with that of simple cash book without discount and bank columns with debit and credit sides. Receipts are recorded on the debit side while payments are entered on the credit side. It shows the total amounts of all receipts and payments irrespective of the period to which they pertain.
For example, in the Receipt and Payment account for the year ending on March 31, , we record the total subscriptions received during —07 including the amounts related to the years — and Similarly, taxes paid during —07 even if they relate to the years —06 and — can also be recorded in this account of With the exception of the opening and closing balances, the total amount of each receipt and payment is shown in this account.
No non-cash items such as depreciation outstanding expenses accrued income, etc. Other Resources Videos. Subscribe to our newsletter. Can't Find Something? Ask Us. Accounting and Bookkeeping. Originally Posted: October 1, Each fund has a separate self-balancing set of accounts in which are recorded the resources segregated for specific purposes, the related liabilities and residual equity fund balance or net assets , and the changes therein.
Financial statements typically must be presented to report the financial position and operating activities of a fund of a government. Such "funds" are not separate accounting entities, but are accounted for by establishing appropriately titled asset and liability accounts within the organization's general ledger. No, the creation of a fund does not constitute authority to spend or obligate its resources.
In most not-for-profit organizations, particularly governments, authority to spend or obligate fund resources is conferred only upon an appropriation s being made by the legislative body or governing board. Difficulty: 1 Learning Objective: 4 AACSB: Reflective thinking Question "Expenditures" may be defined as the amount of net financial resources expended during an accounting period for current operations, capital outlay, and long-term debt principal retirement and interest.
Expenditures are measured in governmental fund accounting. Expenses are measured in proprietary fund accounting. When equipment is purchased for instance, expenditures are incurred; but expenses are incurred during its period of use.
Organizational objectives. Because the basic purpose of a business is to generate revenues sufficient to cover all costs of providing the services and to generate a return for owners, these measurements relate directly to the objectives of the owners and are seen to indicate management success or failure during a given period of time.
The objective of such organizations is to provide as many goods or as much service as available resources permit. For most government and not-for- profit entity services, there is no expectation that providing the services will generate revenues or that any revenues raised through user charges will cover costs.
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