NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1- Accounting for Not-for-Profit Organisation

Accountancy is crucial for all kinds of businesses. Businesses run with the main aim of earning a profit year-on-year. But some organisations are not run for profit motive; charitable trusts, schools, welfare societies, trade unions and societies for the promotion of culture and art are some examples of not-for-profit organisations. These organisations are operated by trustees responsible to their members and society for using the funds raised to achieve their goals. These organisations do not engage in any commercial activity. But even so, accounting for such an organisation is necessary to help keep track of income and expenditure. Hence it becomes important for students to learn about accounting for not-for-profit organisations. 

The NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1 will help the students identify the need and nature of accounting records for not-for-profit organisations and the financial accounts they must make. 

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Key Topics Covered in NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1

The introductory chapter of Class 12 Accountancy is vital for students to comprehend. The NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1 will provide students with insights into Preparing the Receipt and Payment Account and Income and Expenditure Account; Preparing Income and Expenditure Account and Balance Sheet from a given Receipt and Payment Account and the treatment of certain peculiar items such as subscriptions from members, special funds, legacies, sale of old fixed assets, etc.

Some key topics covered in NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1 are as follows:

  • Meaning of not-for-profit organisations
  • Characteristics of not-for-profit organisations
  • Accounts maintained for not-for-profit organisations
  • Receipts and Payment Account
  • Income and Expenditure Account
  • The Differentiation between Income and Expenditure Accounts and Receipts and Payments Accounts.  
  • Balance Sheet 
  • Treatment of Peculiar Items

Let us now look at the detailed information on each of the above-listed subtopics in the NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1:

Meaning of Not-for-Profit Organisations

Not-for-profit organisations (NPOs) serve society rather than make a profit. Hospitals, religious institutions and labour unions are some organisations that fall under NPO. Life membership fees, subscriptions, grants, contributions and other forms of income are sources of income for not-for-profit organisations.

Since the primary motive is public welfare, they do not deal in trading and manufacturing activities, and the requirement of maintaining trading and profit and loss account does not exist. 

Characteristics of not-for-profit organisations

The characteristics of not-for-profit organisations, as given in the NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1, are mentioned under

  • These organisations provide services to a particular group or the general public, such as sports, recreation, health care, and education, without considering caste, creed, or colour. Instead of making a profit, its only goal is to provide services that are either free or inexpensive.
  • These are set up as charitable trusts or societies, and people who subscribe to such organisations are known as members.
  • A managing/executive committee chosen by its members is often in charge of running its affairs.
  • Such organisations primarily rely on membership dues, public donations, bequests, grants-in-aid, investment income, etc., as funding sources.
  • The cash raised by such organisations from various sources is credited to a capital fund or a general fund.
  • The surplus generated as an excess income over expenditure is not given to the members. It is added to the capital fund.
  • Not-for-profit organisations build their reputation by contributing to the welfare of society rather than by satisfying clients or owners.
  • The accounting information offered by such organisations is intended for current and potential contributors and to meet statutory requirements.

Accounts maintained for not-for-profit organisations.

  • Subscriptions from members, gifts, grants from the government, and income from investments are the main sources of funding for not-for-profit organisations. They conduct the majority of their transactions in cash or through banks. 
  • According to the law, not-for-profit organisations must maintain accurate accounting records and control how their assets are used. For this reason, they typically keep a cash book in which all payments and receipts are accurately recorded. 
  • Additionally, they keep a ledger that includes all of the accounts for revenues, expenditures, assets and liabilities. It makes it easier to produce financial statements after the accounting period. 
  • Not-for-profit organisations must keep an inventory registry updated with a detailed list of all fixed assets and consumables.
  • They do not keep a capital account. Instead, it maintains a general fund, also known as a capital fund, which continues to grow due to surpluses, money collected annually from life membership fees and other sources, etc.

They must prepare the final accounts to provide the financial information to the members of the not-for-profit organisations, donors, contributors and the Registrar of societies. The final accounts that the not-for-profit organisations prepare are as below:

  1. Receipt and Payment Account
  2. Income and Expenditure Account, and
  3. Balance Sheet.

A detailed explanation of the final accounts is provided in the NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1.

Receipts and Payment Account

The receipts and payments account (R & P Account) summarises actual cash receipts and payments taken from the cash book for a specific period. Cash payments are recorded on the Payments side of the R & P Account, and cash receipts are recorded on the Receipts side. The Cash Book, constructed based on all these transactions, has records of all cash and bank transactions. All cash and bank transactions of revenue and capital nature are recorded. It keeps track of all transactions, including cash and bank receipts.

This account assists in estimating the closing balance of bank and cash receipts, thereby assessing the cash position of a non-profit organisation or NPO.

Features of Receipts and Payment Account:

  • The receipts and payments account is a real account because it is a summarised version of the cash book. The debit side keeps a record of all receipts, while the credit side keeps a record of all payments.
  • All receipts and payments are recorded regardless of whether they are of a capital or revenue nature. The cash basis is used to record transactions.
  • It begins with cash in hand or cash at the bank balance. Cash always has a debit balance, whereas banks might have either a debit or a credit balance (overdraft). Similarly, cash in hand or cash in the bank is represented by the closing balance.
  • It does not include any adjustments for unpaid balances, depreciation, accrued income, etc., because all transactions are recorded using a cash basis.
  • It spans the fiscal year. On the receipt side, all receipts are recorded, whether they relate to the current year, a previous year or a future year. The credit side shows payments that the not-for-profit organisation made during the current year, the year before or the year after.
  • Receipts and Payments A/c show cash in hand and cash in the bank at the end. It does not indicate a surplus of revenue over expenses or vice versa.

Income and Expenditure Account

The Income and Expenditure (I & E) account is the same as the Profit and Loss (P & L) account (Profit and Loss Account). While a P&L account determines net profit or loss at the end of the accounting period, an income and expenditure account determines surplus and deficit throughout the accounting period. It is a nominal account that only tracks transactions with a financial component. The closing balance is either deficit or surplus.

The income and expenditure account features, as given in NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1, are mentioned below.

  • The asset side of the opening balance sheet will display the opening balance of cash on hand and the bank balance that appears in the receipt payment account. The closing balance of cash and the bank will appear in the closing balance sheet.
  • All cash receipts are displayed on the liabilities side of the balance sheet while keeping in mind that expenses connected to these funds are subtracted from the relevant fund, and income related to the appropriate fund is added to it.
  • After making the required adjustments for accrued and prepaid expenses in the relevant expense, the items of revenue expenditure are debited to the income and expenditure account.
  • The income and expense account is balanced and closed. It indicates either a surplus or a deficit.

Difference between Receipts and Payments Account and Income and Expenditure Account

Basis of ComparisonReceipts and Payments AccountIncome and Expenditure Account
NatureThe receipts and payments account contains a summary of bank and cash transactions.The income and expenditure account contains a breakdown of the current year’s income and expenses.
Revenue and CapitalTransactions in both revenue and capital are recorded in the receipts and payments account.The only transactions recorded in the income and expenditure account are those that generate revenue.
Debit SideThe debit side records the cash and bank receipts.The debit side records expenses and losses incurred for the current accounting year.
Credit sideThe credit side records payments received in the form of cash and cheques.The credit records incomes and gains during the current accounting year.
Account TypeThe receipts and payments account is known as a Real AccountThe income and expenditure account is known as a Nominal Account.
Accounting PeriodThe receipts and payments made during the year, which may be related to the current, previous or next accounting year, are required in this account.It records only the expenditure and income made during the current accounting year.
ObjectThe cash position of the not-profit-organisation is represented by the receipts and payments account.The income and expenditure account shows the net results regarding deficits or surpluses.
DepreciationNon-cash items like depreciation are not included in the receipts and payments account.It includes non-cash items like depreciation, bad-debts for determining net profit or loss.
AdjustmentBefore preparing financial statements, the payments and receipts received during the year can be adjusted in this account.In the income and expenditure account adjustment, cash and non-cash transactions can occur.
SystemIt has a basic cash system for recording transactions.It has an accrual basis system for recording transactions.

 

Balance Sheet 

Non-profit organisations create a Balance Sheet to determine the financial position of the organisation. It follows the same format as that of normal business entities. Liabilities are displayed on the left, while assets are displayed on the right. But in place of the capital, there will be a Capital Fund or General Fund. Any surplus or deficit of the Income and Expenditure Account is either added or subtracted from the capital fund. Additionally, it is usual to include some capitalised assets, such as inheritances, admission fees, and life membership payments, directly in the capital fund.

Treatment of Peculiar Items

A couple of sources of income and expenses of these organisations have unique characteristics; thus, their presence in the final accounting needs additional consideration. They are peculiar to these organisations.

  • Subscriptions- A subscription is an annual membership fee the member must pay. It is how most of these organisations make their money. The members’ subscription payments are recorded as a receipt in the receipt and payment account and income in the income and expense account. The amount shown in the Receipt and Payment Account displays the total subscriptions received throughout the year. In contrast, the amount shown in the Income and Expenditure Account is restricted to the figure related to the current period only. It is regardless of whether the amount has been received or not.
Details Amount(Rs.)
Subscriptions Received as per Receipt and Payment account 

Add: Subscriptions outstanding at the end of the year

Add: Subscriptions received in advance at the beginning of the year

Less: Subscriptions due at the beginning of the year

Less: Subscriptions received in advance at the end of the year

xxx

                xx

                xx

               (xx)

               (xx)

Income from the subscription for the year                xxx

 

  • Donations- It is these form of gifts that you get in the form of money or property from a person or organisation. It is shown on the receipt side of the Receipts and Payments account. Donations may be made for specialised or general causes.
  1. Specific Donations- When a donation is used to accomplish a specific goal, it is referred to as a Specific Donation. The particular objective could be to expand the current building, develop a new computer lab, establish a book library, etc. Regardless of the donation size, it must be capitalised and recorded on the liabilities side of the balance sheet. The money will only be used for the intended purpose, as stated.
  2. General Donations- General donations are to be used to support the organisation’s overall objective. Since this is a consistent source of income, it is recognised as revenue and added to the income side of the current year’s Income and Expenditure Account.
    • Legacies- The amount obtained due to a deceased person’s will may or may not indicate how the not-for-profit will use the money. Specific legacies are those whose use is predetermined and are reflected as liabilities on the balance sheet. If the purpose is not stated, it is assumed to be revenue-generating and is credited to the income and expense account.
    • Life Membership Fees- Some members would rather pay a one-time charge for a life membership than a recurring one. This sum is considered a capital receipt and is immediately credited to the capital or general fund.
    • Entrance Fees- The entrance cost, also known as the admission charge, is paid only once when the member becomes a member. Limited and expensive entrance fees apply to organisations like clubs and some charitable institutions. As a result, it is considered a one-time expense and is credited to the capital or general fund.
    • Sale of Old Assets- The receipts from the sale of an old asset are recorded in the year’s receipts and payments account. However, any profit or loss from the sale of an asset is added to the income and expense account. A gain from the asset’s sale is listed on the income side of the income and expenditure account. The income and expenditure account will show a loss on the expenditure side.
    • Sale of Periodicals- It appears on the income side of the Income and Expenditure Account and is a recurring item.
    • Sale of Sports Materials- Any sports club regularly offers the sale of sporting goods (used goods like old balls, bats, nets, etc.). Typically transaction of this nature appears in the Income and Expenditure account as income.
    • Payment of Honorarium- Honorarium is the sum paid to a person who isn’t a regular employee of an institution. An honorarium is a payment to a performing artist for their appearance at the club. The income and expenditure side of the expense account displays this honorarium payment.
    • Endowment Funds- A fund is made by a gift or bequest, the revenue from which it is used for a certain objective. It is a capital receipt and is listed as an item of a special purpose fund on the liabilities side of the balance sheet.
    • Government Grants- Public hospitals, colleges, and other institutions rely on government funding for their operations. The recurring funds in the form of maintenance grants are credited to the Income and Expenditure account and are recognised as revenue receipts (i.e., the current year’s income). However, grants like the building grant are viewed as capital receipts and deposited into the building fund account. The organisation should mention that some financial assistance from the government or government agencies is received. The year the subsidy is received is also counted as revenue income.
  • Special Funds- For specific goals or activities, the Not-for-Profit Organisations office creates special funds, such as “prize funds,” “match funds,” and “sports funds,” among others. These funds invest in securities, and the income is added to their fund. It is not credited to the income and expense account. Similarly, the costs associated with such particular purposes are subtracted from the special fund. The balance sheet displays the special funds. However, suppose the balance in a specific or special fund is negative after adjustments to revenue and expenses. It is either transferred to the debit side of the Income and Expenditure Account or adjusted following the established guidelines.
  • Stationery – Charges for stationary, consumables and other expenses are typically made to the income and expense account. However, if a stationery stock (opening or closing) is provided, the procedure would be to make the required adjustments to stationery purchases, calculate the cost of stationery consumed, and then show that amount in the income and expense account along with the stock of stationery in the balance sheet.

NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1: Exercise and Solutions

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Q.1 What is meant by Not-For-Profit Organisations?

Ans

Not- for-Profit organisations refer to the organisations that are used for the welfare of the society and are set up as charitable institutions which function without any profit motive. Normally they do not manufacture, purchase or sell of goods and may not have credit transactions.

Q.2 State the meaning of Receipt and Payment account.

Ans

A Receipt and payment account is a summary of bank and cash transactions. All Receipts are shown both revenue and capital on the left hand side. Similarly all payments both revenue and capital are shown on the right hand side.

Q.3 State the meaning of Income and Expenditure account.

Ans

Income and Expenditure account is an account prepared on accrual basis by Not-profit organisations, to find out the excess of income over expenditure (surplus) or exceeds of expenditure over income (deficit). It is just like a profit and loss account and it’s a nominal account. Expenditures are recorded at the debit side and income at the credit side for the current period only and the balance is either surplus or deficit.

Q.4 State the features of Receipt and Payment account.

Ans

Features of Receipt and Payment account:

  • It is a real account and the opening cash or bank balance is written in the beginning.
  • All the receipts both of capital and revenue nature are recorded on receipts side.
  • It includes all payments of capital and revenue nature on the payment side.
  • It shows the balance of cash and bank at the close of the year.
  • It is a summary of the cash book and does not show net income or net loss.

Q.5 What steps are taken to prepare Income and Expenditure account from a Receipt and Payment account?

Ans

Steps:

  1. Exclude opening and closing cash or bank balances.
  2. Eliminate all receipts and payments having capital nature and take revenue receipts and payments.
  3. Exclude revenue receipts and payments which pertain to either the previous year or subsequent year.
  4. Include revenue income which has not been received during the period and include revenue expenditure which has not been paid during that period.
  5. Include amount received or paid in the previous year but pertaining to the year in the revenue items for the current year.
  6. Show all adjusted figures of income in the credit side of income and expenditure account and also show all adjusted figures of expenditure in the debit side of income and expenditure account.
  7. Non cash items such as provision for bad and doubtful debts, depreciation profit and loss on sale of fixed assets which affect to profit should be brought into account.

Q.6 What is subscription? How is it calculated?

Ans

It is the main source of income of the not-profit organisation. It is a contribution by member for meeting expenses of the organisation and shown in the Receipt and payment account.

The subscription received during the year will be shown in the receipts and payments account. The actual amount of subscription due during the year will be shown as income in the income and expenditure account. It is computed by multiplying total number of members by subscription per member.

Q.7 What is Capital Fund? How is it calculated?

Ans

Capital fund is the name used for capital in case of not-for-profit organisations, which is also known as general fund. It is the difference between assets and outside liabilities. Surplus or deficit as per income and expenditure account is added or deducted to (or from) this fund. If capital fund is not given then it is computed by preparing Balance Sheet at the beginning of the year.

Q.8 Explain the statement: “Receipt and Payment account is a summarised version of Cash Book”.

Ans

This account is a merely a summary of the transaction appearing in the cash book. According to William Pickles, Receipts and Payments account is nothing more than a summary of the cash book over a certain period, analyse and classified under suitable headings. Receipts and Payments account is prepared at the end of the year from cash book.

All receipts and payments which are entered in the cash book are also entered in the receipts and payments account, or course in a summary from like cash book. Receipts and payment account starts with the opening balance of cash in hand and cash at bank. Cash in hand always has a debit balance and therefore appears on the debit side. Like cash book, this account also records only actual receipt of cash and payment of cash.

Q.9 “Income and Expenditure account of a Not-for-Profit organisation is akin to profit to loss account of a business concern”. Explain the statement.

Ans

Income and expenditure account is similar to the Profit and loss account of a profit-seeking entity and is prepared to ascertain the surplus or deficit of the current year. It is prepared in the same manner in which a trading and profit and loss account is prepared in case of trading organisation. All revenue items relating to current period are shown in the income and expenditure account.

The Income and Expenditure Account is prepared on accrual basis with the help of Receipts and Payments Account along with additional information regarding outstanding and prepaid expenses and depreciation etc. Hence many items appearing in Receipts and Payments Account are adjusted.

Q.10 Distinguish between Receipts and Payments account and Income and expenditure account.

Ans

BasisReceipts & Payments A/cIncome & Expenditure A/c
NatureIt is a real account like a cash a/c which shows summary of cash transactions.It is a nominal account like profit and loss account.
Opening balanceIt starts with the opening balance of cash and bank.It has no opening balance.
Revenue and capital itemsIt records receipts and payments of both revenue and capital nature.It records income and expenditure of only revenue nature.
RecordingReceipts are recorded on the debit side and payments on the credit side.Expenditures are recorded on the debit side and income on the credit side.
Accounting systemIt is based on the cash system of accounting.It is based on the mercantile system of accounting.
Credit transactionsCredit sales and purchases are not recorded in this account.Credit sales and purchases are recorded.
Closing balanceClosing balance of this account shows cash in hand and at bank or bank overdraft.Closing balance of this account shows surplus or deficiency.
Transfer of closing balanceClosing balance of this account is transferred to the next year’s Receipt and Payments A/c.Closing balance of this account is transferred to the capital fund in the Balance Sheet.

Q.11 Explain the basic features of Income and Expenditure account and of Receipt and Payment account.

Ans

Features of Income and Expenditure Account:

  • There are no opening and closing balances in this account.
  • It is a nominal account.
  • Debit side of the account records expenditure, while credit side records income.
  • It records only revenue receipts and capital receipts are not recorded in it.
  • Revenue expenditure of current year are recorded in this account. All items of previous year or next year are adjusted.
  • Income and expenditure account is prepared on accrual basis, outstanding expenses and accrued incomes are adjusted in this account.
  • Balance sheet is prepared on the basis of this account.
  • It shows surplus or deficit.

Features of Receipts and Payment account:

  • It is a real account and the opening cash or bank balance is written in the beginning.
  • Debit side of the account records receipts, while credit side records payments.
  • All the receipts both of capital and revenue nature are recorded on Receipts side.
  • It includes all payments of capital and revenue nature on the payment side.
  • All the receipts and payments concerning current year, previous year and advance of next year are shown in this account.
  • It shows the balance of cash and bank at the close of the year.
  • It is a summary of cash book.
  • This account does not show net income or net loss.

Q.12 Show the treatment of the following items by a not-for-profit organisation:

  1. Annual subscription
  2. Specific donation
  3. Sale of Fixed assets
  4. Sale of old periodicals
  5. Sale of sports materials
  6. Life membership fee

Ans

1) Annual subscriptions: Subscription is a membership fee paid by the member on annual basis. This is the main source of income of such organisations. Subscription paid by the members is shown as receipt in the Receipt and Payment account and as income in the Income and Expenditure account.

2) Specific donation: If donation received is to be utilised to achieve specified purpose, it is called specific donation. The specific purpose can be an extension of the existing building, construction of new computer laboratory, creation of a book bank, etc. Such donation is to be capitalised and shown on the liabilities side of the Balance Sheet.

3) Sale of fixed assets: Receipts from the sale of an old asset will appear in the Receipts and Payments account of the year in which it is sold. But any gain or loss on the sale of asset is taken to the Income and Expenditure account of the year. Book value of the asset sold is deducted in the Balance Sheet.

4) Sale of old Periodicals: It is an item of recurring nature and shown as the income side of the Income and Expenditure account. It is also shown in the Receipts and Payments Account as receipt.

5) Sale of sports material: Sale of sports materials (used materials like old balls, bats, nets, etc) is the regular feature with any sports club. It is usually shown as an income in the Income and Expenditure account. It is also shown in the Receipts and Payments Account as receipt. Book value of the material sold is deducted in the Balance Sheet.

6) Life membership fees: Some members prefer to pay lump sum amount as life membership fee instead of paying periodic subscription, such amount is treated as capital receipt and credited directly to the capital/general fund.

Q.13 Show the treatment of items of Income and Expenditure account when there is a specific fund for those items.

Ans

The not-for-profit organisations create special funds for certain purposes such as ‘prize funds’, ‘match fund’ and ‘sports fund’. Such funds are invested in securities and the income earned on such investments is added to the respective fund, not credited to Income and Expenditure account. Similarly, the expenses incurred on such specific purposes are also deducted from the special fund and not shown in the Income and Expenditure account.

The special funds are shown in balance sheet, however if after adjustment of income and expenses the balance in specific or special fund is negative, it is transferred to the debit side of the Income and Expenditure account.

Q.14 What is Receipt and Payment account? How is it different from Income and Expenditure account?

Ans

The Receipts and payment account is the summary of cash and bank transactions which helps in the preparation of Income and Expenditure account and the Balance Sheet. Besides it is a legal requirement as the Receipts and payments account has also to be submitted to the Registrar of societies along with the Income and Expenditure account and the Balance Sheet.

Following are the important points of distinction between the two:

BasisReceipts & Payments A/cIncome & Expenditure A/c
NatureIt is a real account like a cash a/c which shows summary of cash transactions.It is a nominal account like profit and loss account.
Revenue and capital itemsIt records receipts and payments of both revenue and capital nature.It records income and expenditure of only revenue nature.
RecordingReceipts are recorded on the debit side and payments on the credit side.Expenditures are recorded on the debit side and income on the credit side.
Accounting systemIt is based on the cash system of accounting.It is based on the mercantile system of accounting.
Closing balanceClosing balance of this account shows cash in hand and at bank or bank overdraft.Closing balance of this account shows surplus or deficiency.

Q.15 From the following particulars taken from the Cash Book of a health club. Prepare a Receipts and Payments Account.

Particulars₹
Opening balance:
Cash in Hand5,000
Cash at Bank25,000
Subscriptions1,65,000
Donations35,000
Investment Purchased80,000
Rent Paid20,000
General expenses21,500
Postage and stationery2,000
Courier charges1,000
Sundry Expenses2,500
Closing cash in hand12,000

Ans

Books of Health Club

Receipts and Payments Account

for the year ending….

Receipts₹Payments₹
To Balance b/dBy Investment80,000
Cash5,000By General exp.21,500
Bank25,000By Rent20,000
To Subscription1,65,000By Postage and
To Donation35,000Stationery2,000
By Courier exp.1,000
By Sundry exp.2,500
By Balance c/d
Cash12,000
Bank91,000
2,30,0002,30,000

Q.16 The Receipt and payment account of Harimohan Charitable institution is given:

Receipt and Payment account

for the year ending March 31, 2015

Receipts ₹Payments ₹
Balance b/dFurniture3,000
Cash at Bank22,000Investments55,000
Cash in Hand8,800Advance for building20,000
Donations16,000Charities60,000
Subscriptions50,200Salaries10,400
Endowment fund60,000Rent and Taxes4,000
Legacies12,000Printing1,000
Interest on Investment3,800Postage300
Interest on Deposits800Advertisements1,100
Sale of old newspapers500Insurance4,800
Donation for Building16,000Balance c/d:
Legacy for12,000Cash at Bank32,000
BuildingCash in hand10,500
2,02,1002,02,100

Prepare the Income and Expenditure account for the year ended on March 31, 2015 after considering the following:
1.Liabilities to be provided for are:
Rent ` 800, Salaries ₹ 1,200, advertisement ₹ 200.
2. ₹ 2000 due for the interest on investment was not actually received.

Ans

Harimohan Charitable Institution

Income and Expenditure Account

for the year ending 31st March, 2015

Expenditure₹Income₹
To Charities60,000By Subscriptions50,200
To Salaries10,400By Donation16,000
Add: Out.1,20011,600By Int. on invest.
To Rent and taxes3,800
4,000Add: O/s2,0005,800
Add: out.8004,800By Legacies12,000
To Printing1,000By Int. on deposits800
To Postage300By Old newspapers500
To Advertisement
1,100
Add: out.2001,300
To Insurance4,800
To Surplus1,500
85,30085,300

Q.17 From the following particulars, prepare Income and Expenditure account.

Details₹
Fees collected, including ₹80,000 on account of the previous year5,20,000
Fees for the year outstanding30,000
Salary paid, including ₹5,000 on account of the previous year68,000
Salary outstanding at the end of the year3,000
Entertainment expenses8,000
Tournament expenses25,000
Meeting expenses18,000
Travelling expenses7,000
Purchase of Books and Periodicals, including ₹31,000 for purchase of books40,000
Rent15,000
Postage, telegrams and telephones6,000
Printing and Stationery18,000
Donations received25,000

Ans

Income and Expenditure Account
Expenditure₹Income₹
To Entertainment8,000By fees
To Salaries68,0005,20,000
(-): Prepaid5,000Less: for last year
(+):O/s3,00066,000
To Tournament exp.25,000(80,000)
To Meeting exp.18,000Add: O/s30,0004,70,000
To Travelling exp.7,000
To Rent15,000
To Postage etc.6,000
To Printing and st.18,000
To Surplus3,07,000
4,70,0004,70,000

Q.18 Following is the information given in respect of certain items of a Sports Club. Show these items in the Income and Expenditure account and the Balance Sheet of the Club:

Details₹
Sports fund as on 01/04/201535,000
Sports fund investments35,000
Interest on sports fund4,000
Donations for sports fund Investment15,000
Sports prizes awarded10,000
Expenses on sports events4,000
General fund80,000
General fund investments80,000
Interest on general fund investments8,000

Ans

Income and Expenditure Account
Expenditure₹Income₹
To Surplus8,000By Int. on GF
Investment8,000
8,0008,000

Sports Fund Account

Particulars₹Particulars₹
To prizes awarded10,000By Balance b/d35,000
To exp. on sports4,000By int. on S. fund4,000
To balance c/d40,000By donation S. fund15,000
54,00054,000

Balance Sheet

Liabilities₹Assets₹
Sports fund40,000Sports fund invest.35,000
General fundG. Fund investment80,000
80,000Cash in hand13,000
(+): Surplus 8,00088,000
1,28,0001,28,000

Cash Account

Particulars₹Particulars₹
To int. on S. fund4,000By prizes awarded10,000
To donation S. fund15,000By exp. on sports4,000
To int. on GF invt.8,000By Balance c/d13,000
27,00027,000

Q.19 How will you deal with the following items while preparing for the Bombay Women Cricket Club its income and expenditure account for the year ending 31/03/2017 and its Balance Sheet as on 31/03/2017?

Details₹
Donation received during the year for the construction of a permanent pavilion12,25,000
Expenditure incurred up to 31/03/2017 on its construction10,80,000
The total estimated expenditure on construction of Pavilion25,00,000
Tournament Fund:

Balance as on 01/04/2016

10,700
Subscriptions for tournament received during the year65,800
Expenditure incurred during the year on conducting tournaments72,400
Life Membership Fee received during the year28,000

Give reasons for your answer.

Ans

(a)

Particulars₹
Donation received during the year for the construction of a permanent pavilion.12,25,000
Less: Expenditure incurred on construction10,80,000
Balance of pavilion fund1,45,000

₹1,45,000 will be shown on the liability side of Balance Sheet and ₹10,80,000 will be shown in the assets side of the balance sheet.

(b)

Particulars₹
Tournament fund (in the beginning)10,700
Add: Subscription for tournament received during the year65,800
Less: Expenditure incurred for conducting tournament72,400
Balance in tournament fund4,100

₹4,100 will be shown on the liability side of Balance Sheet.

(c) Life membership fees will be capitalised and shown on the liabilities side of the Balance Sheet.

Q.20 From the following receipts and payments and information given below, prepare income and expenditure account and opening Balance sheet of Adult Literacy organisation as on December 31, 2017.

Receipts and Payment account for the year ending as on December 31, 2017:

Receipts₹Payments₹
Balance b/d:General exp.3,200
Cash in hand4,000News paper1,850
Cash at Bank15,550Electricity3,000
SubscriptionsFixed deposit with bank (on 31/06/2017) @ 10% p.a.18,000
20161,200Books7,000
201726,500Salary3,600
201850028,200Rent6,500
Sale of old newspapers1,250Postage charges300
Govt. grant12,000Furniture (Purchased)10,500
Sale of old furniture (book value ₹5,000)3,700Balance c/d:
Interest received on FD450Cash in hand3,000
Cash at bank8,200
65,15065,150

Information:

Subscription outstanding as on 31/12/2016: ₹2,000 and on December 31, 2017: ₹1,500.

On December, 31, 2017 Salary outstanding: ₹600 and one month rent paid in advance.

On Jan, 01, 2016 organisation owned furniture ₹12,000, Books ₹5,000.

Ans

Income and Expenditure Account

for the year ending 31st December, 2017

Expenditure₹Income₹
To general exp.3,200By subscription
To rent 6,50028,200
(-): prepaid5905,910Less: for
To salary 3,60020161,200
(+) O/s 6004,2002018500
To electricity3,000Add: Out.1,50028,000
To postage charges300By old newspaper1,250
To Loss on fur. sold1,300By Govt. grant12,000
To newspaper1,850By Int. on FD 450
To surplus22,390Add: accrued 450900
42,15042,150

Balance Sheet

as at 31st December, 2017

Liabilities₹Assets₹
Capital fund38,550Cash in hand4,000
(Balancing figure)Cash at bank15,550
Subscription o/s2,000
Furniture12,000
Books5,000
38,55038,550

Q.21 The following is the Receipts and Payments account of the Nari Kalayan Samittee for the year ended December 31, 2017:

Receipts₹Payments₹
Balance from last year b/d2,270Rent6,600
Subscriptions32,500Electric charges3,200
Life membership fee3,250Lecturer’s fees730
Donation2,500Office expenses1,480
Profit from entertainment7,250Printing and Stationery1,050
Sale of old books (books value ₹ 1,000)750Legal fee1,870
Interest350Books6,500
Furniture purchased8,600
Expenses on nukar drama1,300
Balance c/d:
Cash in hand8,040
Cash at bank9,500
48,87048,870

You are required to prepare an income and expenditure account after the following adjustments:

(a)Subscription still to be received are ₹ 750, but subscription include ₹ 500 for the year 2018.

(b)In the beginning of the year the Sangh owned building ₹ 20,000 and furniture ₹ 3,000 and books ₹ 2,000.

(c)Provide depreciation on furniture @5% (including purchase) books @ 10% and building @ 5%.

Ans

Income and Expenditure Account

for the year ending 31st December, 2017

Expenditure₹Income₹
To Rent6,600By Subscription
To Elec. charges3,20032,500
To Lecturer’s fees730Less: for
To Office expenses1,4802018500
To Printing & st.1,050Add: Out.75032,750
To Legal fees1,870By Donation2,500
To Exp. on drama1,300By Profit from
To Depreciation onentertainment7,250
Furniture580By Interest350
Books750
Building1,000
To loss on sale of
books250
To Surplus24,040
42,85042,850

Q.22 Following is the receipt and payment account of Indian Sports Club, prepare Income and Expenditure account, Balance Sheet as on December 31, 2017:

Receipt and Payment account for the year ending December 31, 2017:

Receipts₹Payments₹
Balance b/d:7,890Salary11,000
Subscriptions52,000Electric charges5,500
Life membership fee2,200Billiard Table17,500
Entrance fee3,200Office expenses4,100
Tournament fund26,000Printing & Stationery2,300
Locker rent1,250Tournament expenses18,500
Sale of old sports goods (costing ₹2,200)2,500Repair of ground2,000
Sale of old newspaper750Furniture purchased7,700
Legacy37,500Sports equipments12,000
Cash in hand12,690
Cash at bank10,000
Fixed deposit (on 01/10/2017 for 10% p.a)30,000
1,33,2901,33,290

Other information:

Subscription outstanding was on December 31, 2016 ₹1,200 and ₹3,200 on December 31, 2017. Locker rent outstanding on December 31, 2017 ₹250. Salary outstanding on December 31, 2017 ₹1,000.

On January 01, 2017 club has building ₹36,000, furniture ₹12,000. Sports equipment ₹17,500. Depreciation charged on these items @ 10% (including purchase).

Ans

Income and Expenditure Account

for the year ending 31st December, 2017

Expenditure₹Income₹
To salary11,000By subscription
Add: out.1,00012,00052,000
To electric charge5,500Less: P.Yr. 1,200
To office expenses4,100Add: C.Yr.3,20054,000
To P & St.2,300By entrance fees3,200
To Rep. of ground2,000By locker rent
To depreciation1,250
Building 3,600Add: o/s2501,500
Furniture 1,970By profit on sale
Sports eq. 2,7308,300of sports mat.300
To surplus26,300By sale of old
newspaper750
By int. on FD750
60,50060,500

Balance Sheet

as at 1st Jan 2017

Liabilities₹Assets₹
Capital fund74,590Cash in hand7,890
(Balancing figure)Subscription o/s1,200
Building36,000
Furniture12,000
Sports equipment17,500
74,59074,590

Balance Sheet

as at 31st December, 2017

Liabilities₹Assets₹
Capital fundCash in hand12,690
74,590Cash at bank10,000
(+) Legacy 37,500Subscription o/s3,200
(+) Surplus26,3001,38,390Fixed deposit 10%30,000
Life mem. Fees2,200Accrued interest750
Salary out.1,000Building32,400
Tourna. FundFurniture17,730
26,000Sports equipment24,570
(-) Exp.18,5007,500Billiards table17,500
Out. Locker rent250
1,49,0901,49,090

Furniture = ₹12,000 + ₹7,700 – ₹1,970 = ₹17,730.

Sports equipment = ₹17,500 – ₹2,200 + ₹12,000 – ₹2,750 = ₹24,570.

Q.23 From the following receipt and payment account of Jan Kalyan Club, prepare income and expenditure account and balance sheet for the year ending March 31, 2017.

Receipt and Payment Account

For the year ending March 31, 2017

Receipts₹Payments₹
Cash in hand as on 01/04/166,800Salaries24,000
Subscription60,200Travelling expenses6,000
Donation3,000Stationery2,300
Sale of furniture (book value ₹6,000)4,000Rent16,000
Entrance fee800Repair700
Life membership fee7,000Books purchased6,000
Interest on Investment (@ 5% for full year)5,000Building purchased30,000
Cash in hand as 31/03/20171,800
86,80086,800

Additional Information:

01/04/201631/03/2017
₹₹
Subscription received in advance1,0003,200
Outstanding subscription2,0003,700
Stock of stationery1,200800
Books13,50016,500
Furniture16,0008,000
Outstanding rent1,0002,000

Ans

Income and Expenditure Account

for the year ending 31st March, 2017

Expenditure₹Income₹
To rent16,000By subscription
(-) P Yr.1,00060,200
(+) Out.2,00017,000(-) P Yr.2,000
To stationery2,700(-)N Yr.3,200
To loss on sale of(+) O/s3,70059,700
furniture2,000By donation3,000
To salaries24,000By int. on invt.5,000
To travelling exp.6,000By entrance
To repairs700fees800
To depreciation on
Books3,000
Furniture2,000
To surplus11,100
68,50068,500

Balance Sheet

as on 1st April 2016

Liabilities₹Assets₹
Rent outstanding1,000Cash in hand6,800
Subs in advance1,000Subscription o/s2,000
Capital fund1,37,5005% Investments1,00,000
(Balancing figure)Stationery1,200
Books13,500
Furniture16,000
1,39,5001,39,500

Balance Sheet

as on 31st March, 2017

Liabilities₹Assets₹
Rent outstanding2,000Cash in hand1,800
Subs in advance3,200Subscription o/s3,700
Life mem. fees7,0005% Investments1,00,000
Capital fundStationery800
1,37,500Books16,500
(+)Surplus 11,1001,48,600Furniture8,000
Building30,000
1,60,8001,60,800

Q.24 Receipt and Payment account of Shankar Sports club is given below, for the year ended March 31, 2017:

Receipt and Payment Account

for the year ending March 31, 2017

Receipts₹Payments₹
Opening cash in hand2,600Rent18,000
Entrance fees3,200Wages7,000
Donation for building23,000Billiard table14,000
Locker rent1,200Furniture10,000
Life membership fee7,000Interest2,000
Profit from entertainment3,000Postage1,000
subscription40,000Salary24,000
Cash in hand4,000
80,00080,000

Prepare Income and expenditure account and Balance Sheet with help of following information:

Subscription outstanding on March 31, 2016 is ₹1,200 and ₹2,300 on March 31, 2017, Opening stock of postage stamps is ₹300 and closing stock is ₹200, Rent ₹1,500 related to 2015 and ₹1,500 is still unpaid.

On April 01, 2016 the club owned furniture ₹15,000. Furniture valued at ₹22,500.

On March 31, 2017 the club took a loan of ₹20,000 (@ 10% p.a) in 2016.

Ans

Income and Expenditure Account

for the year ending 31st March, 2017

Expenditure₹Income₹
To rent18,000By subscription
(-)1,50040,000
(+) Out.1,50018,000(-)O/s P. Yr.1,200
To wages7,000(+)O/s C.Y. 2,30041,100
To Dep. on fur.2,500By entrance fee3,200
To salary24,000By locker rent1,200
To int. on loan2,000By profit from
To postage300entertainment3,000
(+) Pur.1,000By deficit6,100
(-) stock2001,100
54,60054,600

Balance Sheet

as at 1st Apr. 2016

Liabilities₹Assets₹
Rent outstanding1,500Cash in hand2,600
Loan @ 10%20,000Subscription o/s1,200
Postage stamps300
Furniture15,000
Deficit2,400
(Balancing figure)
21,50021,500

Balance Sheet

as at 31st March, 2017

Liabilities₹Assets₹
Capital fundCash in hand4,000
(2,400)Postage stamps200
(+) Life mem. 7,000Subscription o/s2,300
(-) Deficit 6,100Furniture22,500
Rent out.1,500Billiards table14,000
Donation forCapital deficit1,500
building23,000
10% Loan20,000
44,50044,500

Q.25 Prepare Income and Expenditure account and Balance Sheet for the year ended March 31, 2016 from the following Receipt and Payment account and Balance Sheet of culture club:

Receipt and Payment Account

For the year ending March 31, 2016

Receipts₹Payments₹
Opening cash balance12,000Furniture4,000
SubscriptionTelephone expenses800
2014-152000Salary
2015-162200024,0002014-151,000
Entrance fees2,8002015-164,000
Locker rent1,000Newspaper700
Life membership fee1,200Sundry expenses1,000
Government grant11,000Defence bonds18,000
Land20,000
Closing cash balance2,500
52,00052,000
Balance Sheet

For the year ending March 31, 2015

Liabilities₹Assets₹
Advance locker rent200Cash in hand12,000
Subscription received in advance1,000Outstanding Subscription3,000
Outstanding salary2,000Building35,000
Loan10,000
Capital fund36,800
50,00050,000

Ans

Income and Expenditure Account

for the year ending 31st March, 2016

Expenditure₹Income₹
To salary5,000By subscription
(-) P. Yr.1,0004,00024,000
To tel. exp.800(-)O/s P. Yr.2,000
To newspaper700(+)O/s C.Y. 1,00023,000
To sundry exp.1,000By entrance fees2,800
To surplus31,500By locker rent
1,000
Add: recd. P. Yr.
2001,200
By government
grant11,000
38,00038,000

Balance Sheet

as at 31st March, 2016

Liabilities₹Assets₹
Capital fundCash in hand2,500
36,800Furniture4,000
(+) Surplus31,50068,300Building35,000
Life mem. fees1,200Defence bonds18,000
Loan10,000Land20,000
Out. salary1,000Outstanding income1,000
80,50080,500

Q.26 From the following Receipt and payment account prepare final accounts of a Unity Club for the year ended March 31, 2017:

Receipt and Payment Account

For the year ending March 31, 2017

Receipts₹Payments₹
Balance b/d:15,000Furniture18,000
Sale of old furniture(costing ₹ 6,000)4,000Library books10,000
Subscriptions:Salaries72,000
2015-1618000General expenses18,000
2016-1760000Electric charges12,000
2017-181200090,000Newspapers33,800
Sale of old newspapers10,800Postage3,000
Profit from entertainment44,000Stationery40,000
Rent84,000Audit fee8,000
Balance c/d33,000
2,47,8002,47,800
Balance Sheet

As on March 31, 2017

Liabilities₹Assets₹
Outstanding Salary6,000Cash15,000
Capital Fund6,94,000Outstanding subscription18,000
Library Books30,000
Furniture37,000
Land and building6,00,000
7,00,0007,00,000

Additional Information:
1. The club had 500 members each paying an annual subscription of ₹ 150.
2. On 31/03/2017 salaries outstanding amounted to ₹ 1,200 and salaries paid included ₹ 6,000 for the year 2015-16.
3. Provide 5% depreciation on land and building.

Ans

Income and Expenditure Account

for the year ending 31st March, 2017

Expenditure₹Income₹
To Salary72,000By Subscription
(-) P. Yr.6,00090,000
(+) O/s1,20067,200(+)O/s15,00075,000
To Loss on sale fur.2,000By Rent84,000
To General exp.18,000By Sale of old
To Electric charges12,000newspapers10,800
To Postage3,000By Profit from
To Newspaper33,800entertainment44,000
To Stationery40,000By Deficit200
To Audit fees8,000
To Dep. L & B30,000
2,14,0002,14,000

Balance Sheet

as at 31st March, 2017

Liabilities₹Assets₹
Capital fundCash in hand33,000
6,94,000O/s subscription15,000
(-) Deficit2006,93,800Land and building5,70,000
Subs. in advance12,000Furniture49,000
Out. salary1,200Books40,000
7,07,0007,07,000

Q.27 Following is the information in respect of certain items of a Sports Club. You are required to show them in the Income and Expenditure account and the Balance Sheet.

Details₹
Sports fund as on April 1, 201680,000
Sports fund investments80,000
Interest on Sports fund investments8,000
Donations for sports fund30,000
Sports prizes awarded16,000
Expenses on sports events7,000
General fund2,00,000
General fund investments2,00,000
Interest on general fund investments20,000

Ans

Income and Expenditure Account

Expenditure₹Income₹
To Surplus20,000By Int. on GF
Investment20,000
20,00020,000

Sports Fund Account

Particulars₹Particulars₹
To prizes awarded16,000By Balance b/d80,000
To exp. on sports7,000By int. on S. fund8,000
To balance c/d95,000By donation S. fund30,000
1,18,0001,18,000

Balance Sheet

Liabilities₹Assets₹
Sports fund95,000Sports fund invest.80,000
General fundG. Fund investment2,00,000
2,00,000Cash in hand35,000
(+)Surplus 20,0002,20,000
3,15,0003,15,000

Cash Account

Particulars₹Particulars₹
To int. on S. fund8,000By prizes awarded16,000
To donation S. fund30,000By exp. on sports7,000
To int. on GF invt.20,000By Balance c/d35,000
58,00058,000

Q.28 Receipt and payment account of Maitrey sports club showed that ₹68,500 were received by way of subscriptions for the year ended on March 31, 2017.

The additional information was as under:

Subscription outstanding as on March 31, 2016 were ₹6,500.

Subscription received in advance as on March 31, 2016 were ₹4,100.

Subscription outstanding as on March 31, 2017 were ₹5,400.

Subscription received in advance as on March 31, 2017 were ₹2,500.

Show how that above information would appear in the final accounts for the year ended on March 31, 2016 of Maitrey Club.

Ans

Computation of subscription due during the year:

Details₹
Subscription received as per R & P a/c68,500
Add: Outstanding end (March 31 2017)5,400
Advance beginning (March 31 2016)4,100
Less: Outstanding beg. (March 31 2016)6,500
Advance end (March 31 2017)2,500
Income from subscription for the year69,000

Income and Expenditure Account

for the year ending 31st March, 2017

Expenditure₹Income₹
To Surplus69,000By Subscription69,000
69,00069,000

Balance Sheet

as on 31st March, 2016

Liabilities₹Assets₹
Subscription recd.Subscription
in advance4,100outstanding6,500

Balance Sheet

as on 31st March, 2017

Liabilities₹Assets₹
Subscription recd.Subscription
in advance2,500outstanding5,400

Q.29

Following is the Receipt and Payment account of Rohatgi Trust:

Receipt and Payment Account

for the year ending December 31, 2017

Receipts₹Payments₹
Cash in hand14,000Rent6,000
Cash at bank60,000Salary12,000
Subscription:Postage300
20165,000Electricity Charges6,000
201783,000Purchase of furniture20,000
20183,00091,000Books3,000
Sale of investment90,000Defence bonds1,50,000
Interest on investment2,000Help to needy students22,000
Sale of furniture (book value ₹ 3,000)3,200Cash in hand10,900
Cash at bank30,000
2,60,2002,60,200

Prepare Income and expenditure account for the year ended December 31, 2017 and a balance sheet as on that date after the following adjustments:

Subscription for 2017, still owing were ₹7,000. Interest due on defence bonds was ₹7,000, Rent still owing was ₹1,000. The book value of investment sold was ₹80,000, ₹30,000 of the investment were still in hand. Subscription received in 2017 included ₹400 from a life member. The total furniture on January 1, 2017 was worth ₹12,000. Salary paid for the year 2018 is ₹2,000.

Ans

Income and Expenditure Account

for the year ending 31st December,
2017

Expenditure₹Income₹
To elect. charges6,000By subscription
To rent6,00091,000
(+): O/s1,0007,000Less: for
To salary 12,00020165,000
(-) advance 2,00010,00020183,000
To help of students22,000Add: Out.7,00090,000
To postage300By int. on invest.2,000
To surplus63,900By profit on sale
furniture200
By profit on
Investment10,000
By int. on bonds7,000
1,09,2001,09,200

Balance Sheet

as at 1st Jan 2017

Liabilities₹Assets₹
Capital fund2,01,000Cash in hand14,000
(Balancing figure)Cash at bank60,000
Subscription o/s5,000
Furniture12,000
Investment1,10,000
2,01,0002,01,000

Balance Sheet

as on 31st December, 2017

Liabilities₹Assets₹
Capital fundCash in hand10,900
2,01,000Cash at bank30,000
(+)Surplus 63,9002,64,900Subscription o/s7,000
Subs. in advance3,000Furniture29,000
Rent outstanding1,000Investment30,000
Prepaid salaries2,000
Books3,000
Defence bonds1,50,000
Int. due7,000
2,68,9002,68,900

Q.30 Following Receipt and Payment account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2017.

Receipt and Payment Account

For the year ending December 31, 2017

Receipts₹Payments₹
Balance b/dCharity11,500
Cash in hand11,500Rent and taxes3,200
Cash at bank12,600Salary6,000
Donation9,000Printing600
Subscription:42,800Postage300
Legacies18,000Advertisements4,500
Interest on Investment4,500Insurance2,000
Sale of old newspapers200Furniture21,600
Investment23,000
Balance c/d:
Cash in hand9,900
Cash at bank16,000
98,60098,600

Prepare income and expenditure account for the year ended December 31, 2017 and a balance sheet as on that date after the following adjustments:

It was decided a treat one-third of the amount received on account of donation as income.

Insurance premium was paid in advance for three months.

Interest on investment ₹1,100 accrued was not received.

Rent ₹600: Salary ₹900 and advertisement expenses ₹1,000 outstanding as on December 31, 2018.

Ans

Income and Expenditure Account

for the year ending 31st December, 2017

Expenditure₹Income₹
To salary6,000By subscription42,800
(+) O/s9006,900By donation3,000
To charity11,500By int. on invest.
To rent and taxes4,500
3,200Add: Accr. 1,1005,600
(+) O/s6003,800By sale of old
To advertisementnewspapers200
4,500
(+) O/s1,0005,500
To insurance 2,000
(-) prepaid5001,500
To printing600
To postage300
To surplus21,500
51,60051,600

Balance Sheet

as on 1.1.2017

Liabilities₹Assets₹
Capital fund24,100Cash in hand11,500
(Bal. figure)Cash at bank12,600
24,10024,100

Balance Sheet

as at 31st December, 2017

Liabilities₹Assets₹
Capital fundCash in hand9,900
24,100Cash at bank16,000
(+) Surplus21,50045,600Int. on investment1,100
Legacies18,000Prepaid insurance500
Donation6,000Furniture21,600
Outstanding exp.Investment23,000
Rent600
Salary900
Advertisement1,000
72,10072,100

Q.31 From the following Receipt and payment account of a club, prepare Income and Expenditure account for the year ended March 31, 2017 and the Balance Sheet as on that date.

Receipt and Payment Account

For the year ending March 31, 2017

Receipts₹Payments₹
Balance b/d:3,500General expenses900
Subscription:Salary16,000
2015-20162000Postage1,300
2016-201770000Electricity charges7,800
2017-2018300075,000Furniture26,500
Sale of old books(costing ₹ 3,200)2,000books13,000
Rent from use of hall17,000Newspapers600
Sale of newspapers400Meeting expenses7,200
Profit from entertainment7,300T.V.set16,000
Balance c/d15,900
1,05,2001,05,200

Additional Information:

The club has 100 members each paying an annual subscription of ₹900. Subscriptions outstanding on March 31, 2016 were ₹3,600.

On March 31, 2017, salary outstanding amounted to ₹1,000, salary paid included ₹1,000 for the year 2016.

On April 1, 2017 the club owned land and building ₹25,000, furniture ₹2,600 and books ₹6,200.

Ans

Income and Expenditure Account

for the year ending 31st March, 2017

Expenditure₹Income₹
To salary16,000By subscription
(-) 20161,00075,000
(+) Out.1,00016,000(-) 2015-20162,000
To general expense900(-)2017-20183,000
To elect. charges7,800(+) O/s20,00090,000
To newspaper600By rent from hall17,000
To meeting exp.7,200By sale of
To loss on sale ofnewspaper400
books1,200By profit from
To postage1,300entertainment7,300
To surplus79,700
1,14,7001,14,700

Balance Sheet

as on 1st April 2017

Liabilities₹Assets₹
Salary outstanding1,000Cash in hand3,500
Capital fund39,900Subscription o/s3,600
(Balancing figure)Land and building25,000
Furniture2,600
Books6,200
40,90040,900

Balance Sheet

as on 31st December, 2017

Liabilities₹Assets₹
Capital fundCash in hand15,900
39,900Subscription o/s21,600
(+) Surplus79,7001,19,600Land and building25,000
Subs in advance3,000Furniture29,100
Salary out.1,000Books16,000
TV Set16,000
1,23,6001,23,600

Q.32 Following is the Receipt and Payment account of Women’s Welfare Club for the year ended December 31, 2017:

Receipt and Payment Account

for the year ending December 31, 2017

Receipts₹Payments₹
Balance b/d7,250Salary12,500
Subscriptions81,750Stationery1,700
Donations3,000Electricity charges9,550
Grant from Govt.15,000Insurance7,500
Sale of newspapers300Equipments30,000
Proceeds of charity show16,500Petty expenses500
Interest on investments @ 10% for full year7,000Expenses on charity show12,900
Sundries income400Newspapers1,000
Lectures fee16,500
Honorarium to Secretary12,000
Balance c/d27,050
1,31,2001,31,200

Additional Information:

Details01/01/1731/12/17
₹₹
Outstanding salaries1,2001,800
Insurance prepaid700300
Subscription outstanding3,7502,500
Subscription received in advanced1,7501,000
Electricity charges outstanding1,250
Stock of stationery2,250700
Equipments25,60050,200
Building1,20,0001,14,000

Prepare Income and Expenditure account for the year ended December 31, 2017 and Balance Sheet as on date.

Ans

Income and Expenditure Account

for the year ending 31st December, 2017

Expenditure₹Income₹
To salary12,500By subscription
(-) 20161,20081,750
(+) Out.1,80013,100(-) 20163,750
To stationery 2,250(-) 20181,000
(+) Purchase1,700(+) O/s1,75081,250
(-) stock7003,250By donation3,000
To electric chargesBy grant (govt.)15,000
9,550By sale of old
(+) O/s1,25010,800newspaper300
To insurance7,500By charity show
(+) Prepaid 2014proceeds16,500
700By int. on invt.7,000
(-) Prepaid 2015 3007,900By S. income400
To petty expenses12,000
To charity show exp.6,000
To newspaper500
To lecturer fees12,900
To secretary honora.1,000
To dep. on build.16,500
To surplus39,500
1,23,4501,23,450

Balance Sheet

as on 1st Jan 2017

Liabilities₹Assets₹
Salary outstanding1,200Cash in hand7,250
Subs in advance1,750Subscription o/s3,750
Capital fund2,26,600Investments70,000
(Balancing figure)Stationery2,250
Equipment25,600
Building1,20,000
Insurance prepaid700
2,29,5502,29,550

Balance Sheet

as on 31st December, 2017

Liabilities₹Assets₹
Salary outstanding1,800Cash in hand27,050
O/s electric exp.1,250Subscription o/s2,500
Subs in advance1,000Investments70,000
Capital fundStationery700
2,26,600Equipment55,600
(+)Surplus 39,5002,66,100Building1,14,000
Insurance prepaid300
2,70,1502,70,150

Q.33 As at March 31, 2015 the following balances have been extracted from the books of the Indian Chartered Accountants Recreation Club and you are asked to prepare Income and Expenditure Account for the Year ended March 31, 2017 and a Balance Sheet as at that date.

Debit Balance₹Credit Balance₹
Stock in hand1,170
Purchases24,660Subscriptions97,110
Dining room32,370Billiard’s Receipts7,300
Rent10,470Sundry Receipts410
Wages18,690Interest on fixed deposit270
Repairs and Renewals5,400Sundry creditors5,370
Fuel and Light5,280Grant from institute (permanent)42,000
Misc. expenses4,050Income and Exp. a/c (2016)1,380
Cash in hand560
Cast at bank2,760
Fixed deposit8,500
Sundry debtors2,250
Stationary600
Billiard table2,070
Fixtures and fittings870
Furniture4,140
Club premises30,000
1,53,8401,53,840

On March 31, 2016 stock of stationery consisted of ₹ 900 and ₹ 600 respectively. Provide depreciations ` 60 on fixtures and fittings ₹ 390 on billiard table and ₹ 560 on furniture.

Ans

Income and Expenditure Account

for the year ending 31st March, 2017

Expenditure₹Income₹
To rent10,470By subscription97,110
To wages18,690By S. receipts410
To repairs and re.5,400By int. on FD270
To fuel and light5,280By billiards
To Misc. exp.4,050receipts7,300
To Depreciation on
Furniture560
Fixtures and fittings60
Billiards table390
To stationery consumed900
To trading loss56,340
To surplus2,950
1,05,0901,05,090

Balance Sheet

as on 31st Mar 2017

Liabilities₹Assets₹
Capital fundCash in hand560
1,380Cash at bank2,760
(+) Surplus 2,9504,330Fixed deposit8,500
Sundry creditors5,370Sundry debtors2,250
Grant fromStationery600
Institute42,000Billiards table1,680
Fixture and fittings810
Furniture3,580
Club premises30,000
Stock of restaurant960
51,70051,700

Consumption of stationery = 600 + 900 – 600 = Rs. 900

Q.34 Distinguish between Profit and Not-for-Profit Organisation.

Ans

Profit making organisationNot-for-Profit Organisation
Main objective of such an entity is to earn profitMain objective of such an entity is to provide service and not to earn profits
Share of owners is known as Owner’s Funds which represent the owner’s investmentsInterest of members is known as Capital Fund
Balance of the Income and Expenditure Account is either Surplus or Deficit.Balance of the Income and Expenditure Account is either Net Profit Net Loss.
Financial statements include:

(a) Manufacturing A/c

(b) Trading A/c;

(c) Profit and Loss A/c; and

(b) Balance Sheet.

Financial statements include:

(a Receipts and Payment A/c

(b) Income and expenditure A/c;

(c)Balance Sheet.

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Related Chapters

Chapter 2 - Accounting for Partnership

Chapter 3 - Reconstitution of a Partnership Firm: Admission of a Partner

Chapter 4 - Reconstitution of a Partnership Firm:Retirement/Death of a Partner

Chapter 5 - Dissolution of Partnership Firm

FAQs (Frequently Asked Questions)

The Receipt and Payment Account and the Income and Expenditure Account differ greatly. 

  • The income and expenditure account records only revenue items related to the current accounting year, whereas the former records both capital and revenue receipts and payments from any accounting year. 
  • Non-cash expenses such as fixed asset depreciation and outstanding incomes and expenses are reported in the income and expenditure account but not in the receipts and payments account. 
  • The Income and Expenditure Account does not have an opening balance, but the Receipt and Payment Account does.
  • The closing balance of the receipts and payments account shows the cash and bank balances as of the closure date. In contrast, the closing balance of the income and expenditure account shows any surplus or deficit resulting from business operations.

For learning more about the final account preparation for not-for-organisations, students can refer to the NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1 provided by Extramarks.

The topics mentioned in the NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 1 are as under

  • Meaning and characteristics of Non-profit organisation
  • Accounting records of NPO
  • Balance sheet
  • Incidental trading activity
  • Income and expenditure account based on the trial balance
  • Income and Expenditure account