Accounting

1
Chapter 18

• Accounting
• for Non-profit
• Organisations

2
Non-Profit Organisations

• Non-profit organisations are formed to provide
  social and welfare facilities or services to its
  members who are the owners.
• The aim of these types of organisations is to
  fulfil the needs of the members rather than
  making profits.
• Common examples include Sports Clubs, Musical
  Groups and Voluntary Service Organisations

3
Sources of Income

• Subscriptions received from members (collected at
  start and throughout the year and becomes part of
  the Accumulated Fund).
• Donations received (please note that this may be
  capitalized at times and must be shown in the
  balance sheet when received for a special
  purpose).
• Receipts (income) from fund raising events.
• Receipts (income) from operating specific
  activities such as sale of bar stocks or
  refreshments.

4
Financial Statements and Accounts

• Receipts and payments account This is a summary
  of the cash and bank account.
• Trading account This is only prepared when there
  is a fund raising activity to make a profit. It
  determines the gross profit/gross loss.
• Subscriptions account This is useful to
  calculate the subscription for the period because
  of subscriptions received either as accruals or
  prepayments. By using this, the accrual
  principle is adhered to and also, the correct
  amount can be transferred to the income and
  expenditure account.

5
Subscriptions a/c
Subscriptions a/c For the period
Balance b/d (arrears) Balancing figure to be transferred to the Income and Expenditure a/c Balance c/d (advance) -------------- -------------- Bal b/d (arrears) Balance b/d (advance) Collections from receipts and payments Balance c/d (arrears) -------------- --------------- Bal b/d (advance)
6
Financial Statements and Accounts

• Income and expenditure account Non-trading
  organisation use the above named account instead
  of profit and loss account. Therefore, the term
  used to determine the yearly amounts will replace
  net profit/net loss with the term
  surplus/deficit.
• Balance sheet This is no change in the
  preparation of the financial statement. Except
  for the replacement of the term Capital with the
  name Accumulated Fund.