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 Comparison Receipts and Payments Account Income and Expenditure Account
Nature The 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 Capital Transactions 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 Side The debit side records the cash and bank receipts. The debit side records expenses and losses incurred for the current accounting year.
Credit side The credit side records payments received in the form of cash and cheques. The credit records incomes and gains during the current accounting year.
Account Type The receipts and payments account is known as a Real Account The income and expenditure account is known as a Nominal Account.
Accounting Period The 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.
Object The 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.
Depreciation Non-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.
Adjustment Before 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.
System It 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.

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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

Basis Receipts & Payments A/c Income & Expenditure A/c
Nature It 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 balance It starts with the opening balance of cash and bank. It has no opening balance.
Revenue and capital items It records receipts and payments of both revenue and capital nature. It records income and expenditure of only revenue nature.
Recording Receipts 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 system It is based on the cash system of accounting. It is based on the mercantile system of accounting.
Credit transactions Credit sales and purchases are not recorded in this account. Credit sales and purchases are recorded.
Closing balance Closing 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 balance Closing 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:

Basis Receipts & Payments A/c Income & Expenditure A/c
Nature It 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 items It records receipts and payments of both revenue and capital nature. It records income and expenditure of only revenue nature.
Recording Receipts 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 system It is based on the cash system of accounting. It is based on the mercantile system of accounting.
Closing balance Closing 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 Hand 5,000
Cash at Bank 25,000
Subscriptions 1,65,000
Donations 35,000
Investment Purchased 80,000
Rent Paid 20,000
General expenses 21,500
Postage and stationery 2,000
Courier charges 1,000
Sundry Expenses 2,500
Closing cash in hand 12,000

Ans

Books of Health Club

Receipts and Payments Account

for the year ending….
Receipts ₹ Payments ₹
To Balance b/d By Investment 80,000
Cash 5,000 By General exp. 21,500
Bank 25,000 By Rent 20,000
To Subscription 1,65,000 By Postage and
To Donation 35,000 Stationery 2,000
By Courier exp. 1,000
By Sundry exp. 2,500
By Balance c/d
Cash 12,000
Bank 91,000
2,30,000 2,30,000

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/d Furniture 3,000
Cash at Bank 22,000 Investments 55,000
Cash in Hand 8,800 Advance for building 20,000
Donations 16,000 Charities 60,000
Subscriptions 50,200 Salaries 10,400
Endowment fund 60,000 Rent and Taxes 4,000
Legacies 12,000 Printing 1,000
Interest on Investment 3,800 Postage 300
Interest on Deposits 800 Advertisements 1,100
Sale of old newspapers 500 Insurance 4,800
Donation for Building 16,000 Balance c/d:
Legacy for 12,000 Cash at Bank 32,000
Building Cash in hand 10,500
2,02,100 2,02,100

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 Charities 60,000 By Subscriptions 50,200
To Salaries 10,400 By Donation 16,000
Add: Out. 1,200 11,600 By Int. on invest.
To Rent and taxes 3,800
4,000 Add: O/s 2,000 5,800
Add: out. 800 4,800 By Legacies 12,000
To Printing 1,000 By Int. on deposits 800
To Postage 300 By Old newspapers 500
To Advertisement
1,100
Add: out. 200 1,300
To Insurance 4,800
To Surplus 1,500
85,300 85,300

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

Details ₹
Fees collected, including ₹80,000 on account of the previous year 5,20,000
Fees for the year outstanding 30,000
Salary paid, including ₹5,000 on account of the previous year 68,000
Salary outstanding at the end of the year 3,000
Entertainment expenses 8,000
Tournament expenses 25,000
Meeting expenses 18,000
Travelling expenses 7,000
Purchase of Books and Periodicals, including ₹31,000 for purchase of books 40,000
Rent 15,000
Postage, telegrams and telephones 6,000
Printing and Stationery 18,000
Donations received 25,000

Ans

Income and Expenditure Account
Expenditure ₹ Income ₹
To Entertainment 8,000 By fees
To Salaries 68,000 5,20,000
(-): Prepaid 5,000 Less: for last year
(+):O/s 3,000 66,000
To Tournament exp. 25,000 (80,000)
To Meeting exp. 18,000 Add: O/s 30,000 4,70,000
To Travelling exp. 7,000
To Rent 15,000
To Postage etc. 6,000
To Printing and st. 18,000
To Surplus 3,07,000
4,70,000 4,70,000

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 01/04/2015 35,000
Sports fund investments 35,000
Interest on sports fund 4,000
Donations for sports fund Investment 15,000
Sports prizes awarded 10,000
Expenses on sports events 4,000
General fund 80,000
General fund investments 80,000
Interest on general fund investments 8,000

Ans

Income and Expenditure Account
Expenditure ₹ Income ₹
To Surplus 8,000 By Int. on GF
Investment 8,000
8,000 8,000

Sports Fund Account

Particulars ₹ Particulars ₹
To prizes awarded 10,000 By Balance b/d 35,000
To exp. on sports 4,000 By int. on S. fund 4,000
To balance c/d 40,000 By donation S. fund 15,000
54,000 54,000

Balance Sheet

Liabilities ₹ Assets ₹
Sports fund 40,000 Sports fund invest. 35,000
General fund G. Fund investment 80,000
80,000 Cash in hand 13,000
(+): Surplus 8,000 88,000
1,28,000 1,28,000

Cash Account

Particulars ₹ Particulars ₹
To int. on S. fund 4,000 By prizes awarded 10,000
To donation S. fund 15,000 By exp. on sports 4,000
To int. on GF invt. 8,000 By Balance c/d 13,000
27,000 27,000

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 pavilion 12,25,000
Expenditure incurred up to 31/03/2017 on its construction 10,80,000
The total estimated expenditure on construction of Pavilion 25,00,000
Tournament Fund:

Balance as on 01/04/2016

 10,700
Subscriptions for tournament received during the year 65,800
Expenditure incurred during the year on conducting tournaments 72,400
Life Membership Fee received during the year 28,000

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 construction 10,80,000
Balance of pavilion fund 1,45,000

₹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 year 65,800
Less: Expenditure incurred for conducting tournament 72,400
Balance in tournament fund 4,100

₹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 hand 4,000 News paper 1,850
Cash at Bank 15,550 Electricity 3,000
Subscriptions Fixed deposit with bank (on 31/06/2017) @ 10% p.a. 18,000
2016 1,200 Books 7,000
2017 26,500 Salary 3,600
2018 500 28,200 Rent 6,500
Sale of old newspapers 1,250 Postage charges 300
Govt. grant 12,000 Furniture (Purchased) 10,500
Sale of old furniture (book value ₹5,000) 3,700 Balance c/d:
Interest received on FD 450 Cash in hand 3,000
Cash at bank 8,200
65,150 65,150

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. 3,200 By subscription
To rent 6,500 28,200
(-): prepaid 590 5,910 Less: for
To salary 3,600 2016 1,200
(+) O/s 600 4,200 2018 500
To electricity 3,000 Add: Out. 1,500 28,000
To postage charges 300 By old newspaper 1,250
To Loss on fur. sold 1,300 By Govt. grant 12,000
To newspaper 1,850 By Int. on FD 450
To surplus 22,390 Add: accrued 450 900
42,150 42,150

Balance Sheet

as at 31st December, 2017

Liabilities ₹ Assets ₹
Capital fund 38,550 Cash in hand 4,000
(Balancing figure) Cash at bank 15,550
Subscription o/s 2,000
Furniture 12,000
Books 5,000
38,550 38,550

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/d 2,270 Rent 6,600
Subscriptions 32,500 Electric charges 3,200
Life membership fee 3,250 Lecturer’s fees 730
Donation 2,500 Office expenses 1,480
Profit from entertainment 7,250 Printing and Stationery 1,050
Sale of old books (books value ₹ 1,000) 750 Legal fee 1,870
Interest 350 Books 6,500
Furniture purchased 8,600
Expenses on nukar drama 1,300
Balance c/d:
Cash in hand 8,040
Cash at bank 9,500
48,870 48,870

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 Rent 6,600 By Subscription
To Elec. charges 3,200 32,500
To Lecturer’s fees 730 Less: for
To Office expenses 1,480 2018 500
To Printing & st. 1,050 Add: Out. 750 32,750
To Legal fees 1,870 By Donation 2,500
To Exp. on drama 1,300 By Profit from
To Depreciation on entertainment 7,250
Furniture 580 By Interest 350
Books 750
Building 1,000
To loss on sale of
books 250
To Surplus 24,040
42,850 42,850

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: 7,890 Salary 11,000
Subscriptions 52,000 Electric charges 5,500
Life membership fee 2,200 Billiard Table 17,500
Entrance fee 3,200 Office expenses 4,100
Tournament fund 26,000 Printing & Stationery 2,300
Locker rent 1,250 Tournament expenses 18,500
Sale of old sports goods (costing ₹2,200) 2,500 Repair of ground 2,000
Sale of old newspaper 750 Furniture purchased 7,700
Legacy 37,500 Sports equipments 12,000
Cash in hand 12,690
Cash at bank 10,000
Fixed deposit (on 01/10/2017 for 10% p.a) 30,000
1,33,290 1,33,290

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 salary 11,000 By subscription
Add: out. 1,000 12,000 52,000
To electric charge 5,500 Less: P.Yr. 1,200
To office expenses 4,100 Add: C.Yr. 3,200 54,000
To P & St. 2,300 By entrance fees 3,200
To Rep. of ground 2,000 By locker rent
To depreciation 1,250
Building 3,600 Add: o/s 250 1,500
Furniture 1,970 By profit on sale
Sports eq. 2,730 8,300 of sports mat. 300
To surplus 26,300 By sale of old
newspaper 750
By int. on FD 750
60,500 60,500

Balance Sheet

as at 1st Jan 2017

Liabilities ₹ Assets ₹
Capital fund 74,590 Cash in hand 7,890
(Balancing figure) Subscription o/s 1,200
Building 36,000
Furniture 12,000
Sports equipment 17,500
74,590 74,590

Balance Sheet

as at 31st December, 2017

Liabilities ₹ Assets ₹
Capital fund Cash in hand 12,690
74,590 Cash at bank 10,000
(+) Legacy 37,500 Subscription o/s 3,200
(+) Surplus26,300 1,38,390 Fixed deposit 10% 30,000
Life mem. Fees 2,200 Accrued interest 750
Salary out. 1,000 Building 32,400
Tourna. Fund Furniture 17,730
26,000 Sports equipment 24,570
(-) Exp. 18,500 7,500 Billiards table 17,500
Out. Locker rent 250
1,49,090 1,49,090

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 01/04/16 6,800 Salaries 24,000
Subscription 60,200 Travelling expenses 6,000
Donation 3,000 Stationery 2,300
Sale of furniture (book value ₹6,000) 4,000 Rent 16,000
Entrance fee 800 Repair 700
Life membership fee 7,000 Books purchased 6,000
Interest on Investment (@ 5% for full year) 5,000 Building purchased 30,000
Cash in hand as 31/03/2017 1,800
86,800 86,800

Additional Information:

01/04/2016 31/03/2017
₹ ₹
Subscription received in advance 1,000 3,200
Outstanding subscription 2,000 3,700
Stock of stationery 1,200 800
Books 13,500 16,500
Furniture 16,000 8,000
Outstanding rent 1,000 2,000

Ans

Income and Expenditure Account

for the year ending 31st March, 2017

Expenditure ₹ Income ₹
To rent 16,000 By subscription
(-) P Yr. 1,000 60,200
(+) Out. 2,000 17,000 (-) P Yr. 2,000
To stationery 2,700 (-)N Yr. 3,200
To loss on sale of (+) O/s 3,700 59,700
furniture 2,000 By donation 3,000
To salaries 24,000 By int. on invt. 5,000
To travelling exp. 6,000 By entrance
To repairs 700 fees 800
To depreciation on
Books 3,000
Furniture 2,000
To surplus 11,100
68,500 68,500

Balance Sheet

as on 1st April 2016

Liabilities ₹ Assets ₹
Rent outstanding 1,000 Cash in hand 6,800
Subs in advance 1,000 Subscription o/s 2,000
Capital fund 1,37,500 5% Investments 1,00,000
(Balancing figure) Stationery 1,200
Books 13,500
Furniture 16,000
1,39,500 1,39,500

Balance Sheet

as on 31st March, 2017

Liabilities ₹ Assets ₹
Rent outstanding 2,000 Cash in hand 1,800
Subs in advance 3,200 Subscription o/s 3,700
Life mem. fees 7,000 5% Investments 1,00,000
Capital fund Stationery 800
1,37,500 Books 16,500
(+)Surplus 11,100 1,48,600 Furniture 8,000
Building 30,000
1,60,800 1,60,800

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 hand 2,600 Rent 18,000
Entrance fees 3,200 Wages 7,000
Donation for building 23,000 Billiard table 14,000
Locker rent 1,200 Furniture 10,000
Life membership fee 7,000 Interest 2,000
Profit from entertainment 3,000 Postage 1,000
subscription 40,000 Salary 24,000
Cash in hand 4,000
80,000 80,000

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 rent 18,000 By subscription
(-) 1,500 40,000
(+) Out. 1,500 18,000 (-)O/s P. Yr.1,200
To wages 7,000 (+)O/s C.Y. 2,300 41,100
To Dep. on fur. 2,500 By entrance fee 3,200
To salary 24,000 By locker rent 1,200
To int. on loan 2,000 By profit from
To postage 300 entertainment 3,000
(+) Pur. 1,000 By deficit 6,100
(-) stock 200 1,100
54,600 54,600

Balance Sheet

as at 1st Apr. 2016

Liabilities ₹ Assets ₹
Rent outstanding 1,500 Cash in hand 2,600
Loan @ 10% 20,000 Subscription o/s 1,200
Postage stamps 300
Furniture 15,000
Deficit 2,400
(Balancing figure)
21,500 21,500

Balance Sheet

as at 31st March, 2017

Liabilities ₹ Assets ₹
Capital fund Cash in hand 4,000
(2,400) Postage stamps 200
(+) Life mem. 7,000 Subscription o/s 2,300
(-) Deficit 6,100 Furniture 22,500
Rent out. 1,500 Billiards table 14,000
Donation for Capital deficit 1,500
building 23,000
10% Loan 20,000
44,500 44,500

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 balance 12,000 Furniture 4,000
Subscription Telephone expenses 800
2014-15 2000 Salary
2015-16 22000 24,000 2014-15 1,000
Entrance fees 2,800 2015-16 4,000
Locker rent 1,000 Newspaper 700
Life membership fee 1,200 Sundry expenses 1,000
Government grant 11,000 Defence bonds 18,000
Land 20,000
Closing cash balance 2,500
52,000 52,000
Balance Sheet

For the year ending March 31, 2015
Liabilities ₹ Assets ₹
Advance locker rent 200 Cash in hand 12,000
Subscription received in advance 1,000 Outstanding Subscription 3,000
Outstanding salary 2,000 Building 35,000
Loan 10,000
Capital fund 36,800
50,000 50,000

Ans

Income and Expenditure Account

for the year ending 31st March, 2016

Expenditure ₹ Income ₹
To salary 5,000 By subscription
(-) P. Yr. 1,000 4,000 24,000
To tel. exp. 800 (-)O/s P. Yr.2,000
To newspaper 700 (+)O/s C.Y. 1,000 23,000
To sundry exp. 1,000 By entrance fees 2,800
To surplus 31,500 By locker rent
1,000
Add: recd. P. Yr.
200 1,200
By government
grant 11,000
38,000 38,000

Balance Sheet

as at 31st March, 2016

Liabilities ₹ Assets ₹
Capital fund Cash in hand 2,500
36,800 Furniture 4,000
(+) Surplus31,500 68,300 Building 35,000
Life mem. fees 1,200 Defence bonds 18,000
Loan 10,000 Land 20,000
Out. salary 1,000 Outstanding income 1,000
80,500 80,500

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: 15,000 Furniture 18,000
Sale of old furniture(costing ₹ 6,000) 4,000 Library books 10,000
Subscriptions: Salaries 72,000
2015-16 18000 General expenses 18,000
2016-17 60000 Electric charges 12,000
2017-18 12000 90,000 Newspapers 33,800
Sale of old newspapers 10,800 Postage 3,000
Profit from entertainment 44,000 Stationery 40,000
Rent 84,000 Audit fee 8,000
Balance c/d 33,000
2,47,800 2,47,800
Balance Sheet

As on March 31, 2017
Liabilities ₹ Assets ₹
Outstanding Salary 6,000 Cash 15,000
Capital Fund 6,94,000 Outstanding subscription 18,000
Library Books 30,000
Furniture 37,000
Land and building 6,00,000
7,00,000 7,00,000

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 Salary 72,000 By Subscription
(-) P. Yr. 6,000 90,000
(+) O/s 1,200 67,200 (+)O/s 15,000 75,000
To Loss on sale fur. 2,000 By Rent 84,000
To General exp. 18,000 By Sale of old
To Electric charges 12,000 newspapers 10,800
To Postage 3,000 By Profit from
To Newspaper 33,800 entertainment 44,000
To Stationery 40,000 By Deficit 200
To Audit fees 8,000
To Dep. L & B 30,000
2,14,000 2,14,000

Balance Sheet

as at 31st March, 2017

Liabilities ₹ Assets ₹
Capital fund Cash in hand 33,000
6,94,000 O/s subscription 15,000
(-) Deficit 200 6,93,800 Land and building 5,70,000
Subs. in advance 12,000 Furniture 49,000
Out. salary 1,200 Books 40,000
7,07,000 7,07,000

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, 2016 80,000
Sports fund investments 80,000
Interest on Sports fund investments 8,000
Donations for sports fund 30,000
Sports prizes awarded 16,000
Expenses on sports events 7,000
General fund 2,00,000
General fund investments 2,00,000
Interest on general fund investments 20,000

Ans

Income and Expenditure Account

Expenditure ₹ Income ₹
To Surplus 20,000 By Int. on GF
Investment 20,000
20,000 20,000

Sports Fund Account

Particulars ₹ Particulars ₹
To prizes awarded 16,000 By Balance b/d 80,000
To exp. on sports 7,000 By int. on S. fund 8,000
To balance c/d 95,000 By donation S. fund 30,000
1,18,000 1,18,000

Balance Sheet

Liabilities ₹ Assets ₹
Sports fund 95,000 Sports fund invest. 80,000
General fund G. Fund investment 2,00,000
2,00,000 Cash in hand 35,000
(+)Surplus 20,000 2,20,000
3,15,000 3,15,000

Cash Account

Particulars ₹ Particulars ₹
To int. on S. fund 8,000 By prizes awarded 16,000
To donation S. fund 30,000 By exp. on sports 7,000
To int. on GF invt. 20,000 By Balance c/d 35,000
58,000 58,000

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/c 68,500
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 year 69,000

Income and Expenditure Account

for the year ending 31st March, 2017

Expenditure ₹ Income ₹
To Surplus 69,000 By Subscription 69,000
69,000 69,000

Balance Sheet

as on 31st March, 2016

Liabilities ₹ Assets ₹
Subscription recd. Subscription
in advance 4,100 outstanding 6,500

Balance Sheet

as on 31st March, 2017

Liabilities ₹ Assets ₹
Subscription recd. Subscription
in advance 2,500 outstanding 5,400

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 hand 14,000 Rent 6,000
Cash at bank 60,000 Salary 12,000
Subscription: Postage 300
2016 5,000 Electricity Charges 6,000
2017 83,000 Purchase of furniture 20,000
2018 3,000 91,000 Books 3,000
Sale of investment 90,000 Defence bonds 1,50,000
Interest on investment 2,000 Help to needy students 22,000
Sale of furniture (book value ₹ 3,000) 3,200 Cash in hand 10,900
Cash at bank 30,000
2,60,200 2,60,200

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. charges 6,000 By subscription
To rent 6,000 91,000
(+): O/s 1,000 7,000 Less: for
To salary 12,000 2016 5,000
(-) advance 2,000 10,000 2018 3,000
To help of students 22,000 Add: Out. 7,000 90,000
To postage 300 By int. on invest. 2,000
To surplus 63,900 By profit on sale
furniture 200
By profit on
Investment 10,000
By int. on bonds 7,000
1,09,200 1,09,200

Balance Sheet

as at 1st Jan 2017

Liabilities ₹ Assets ₹
Capital fund 2,01,000 Cash in hand 14,000
(Balancing figure) Cash at bank 60,000
Subscription o/s 5,000
Furniture 12,000
Investment 1,10,000
2,01,000 2,01,000

Balance Sheet

as on 31st December, 2017

Liabilities ₹ Assets ₹
Capital fund Cash in hand 10,900
2,01,000 Cash at bank 30,000
(+)Surplus 63,900 2,64,900 Subscription o/s 7,000
Subs. in advance 3,000 Furniture 29,000
Rent outstanding 1,000 Investment 30,000
Prepaid salaries 2,000
Books 3,000
Defence bonds 1,50,000
Int. due 7,000
2,68,900 2,68,900

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/d Charity 11,500
Cash in hand 11,500 Rent and taxes 3,200
Cash at bank 12,600 Salary 6,000
Donation 9,000 Printing 600
Subscription: 42,800 Postage 300
Legacies 18,000 Advertisements 4,500
Interest on Investment 4,500 Insurance 2,000
Sale of old newspapers 200 Furniture 21,600
Investment 23,000
Balance c/d:
Cash in hand 9,900
Cash at bank 16,000
98,600 98,600

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 salary 6,000 By subscription 42,800
(+) O/s 900 6,900 By donation 3,000
To charity 11,500 By int. on invest.
To rent and taxes 4,500
3,200 Add: Accr. 1,100 5,600
(+) O/s 600 3,800 By sale of old
To advertisement newspapers 200
4,500
(+) O/s 1,000 5,500
To insurance 2,000
(-) prepaid 500 1,500
To printing 600
To postage 300
To surplus 21,500
51,600 51,600

Balance Sheet

as on 1.1.2017

Liabilities ₹ Assets ₹
Capital fund 24,100 Cash in hand 11,500
(Bal. figure) Cash at bank 12,600
24,100 24,100

Balance Sheet

as at 31st December, 2017

Liabilities ₹ Assets ₹
Capital fund Cash in hand 9,900
24,100 Cash at bank 16,000
(+) Surplus21,500 45,600 Int. on investment 1,100
Legacies 18,000 Prepaid insurance 500
Donation 6,000 Furniture 21,600
Outstanding exp. Investment 23,000
Rent 600
Salary 900
Advertisement 1,000
72,100 72,100

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: 3,500 General expenses 900
Subscription: Salary 16,000
2015-2016 2000 Postage 1,300
2016-2017 70000 Electricity charges 7,800
2017-2018 3000 75,000 Furniture 26,500
Sale of old books(costing ₹ 3,200) 2,000 books 13,000
Rent from use of hall 17,000 Newspapers 600
Sale of newspapers 400 Meeting expenses 7,200
Profit from entertainment 7,300 T.V.set 16,000
Balance c/d 15,900
1,05,200 1,05,200

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 salary 16,000 By subscription
(-) 2016 1,000 75,000
(+) Out. 1,000 16,000 (-) 2015-2016 2,000
To general expense 900 (-)2017-2018 3,000
To elect. charges 7,800 (+) O/s 20,000 90,000
To newspaper 600 By rent from hall 17,000
To meeting exp. 7,200 By sale of
To loss on sale of newspaper 400
books 1,200 By profit from
To postage 1,300 entertainment 7,300
To surplus 79,700
1,14,700 1,14,700

Balance Sheet

as on 1st April 2017

Liabilities ₹ Assets ₹
Salary outstanding 1,000 Cash in hand 3,500
Capital fund 39,900 Subscription o/s 3,600
(Balancing figure) Land and building 25,000
Furniture 2,600
Books 6,200
40,900 40,900

Balance Sheet

as on 31st December, 2017

Liabilities ₹ Assets ₹
Capital fund Cash in hand 15,900
39,900 Subscription o/s 21,600
(+) Surplus79,700 1,19,600 Land and building 25,000
Subs in advance 3,000 Furniture 29,100
Salary out. 1,000 Books 16,000
TV Set 16,000
1,23,600 1,23,600

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/d 7,250 Salary 12,500
Subscriptions 81,750 Stationery 1,700
Donations 3,000 Electricity charges 9,550
Grant from Govt. 15,000 Insurance 7,500
Sale of newspapers 300 Equipments 30,000
Proceeds of charity show 16,500 Petty expenses 500
Interest on investments @ 10% for full year 7,000 Expenses on charity show 12,900
Sundries income 400 Newspapers 1,000
Lectures fee 16,500
Honorarium to Secretary 12,000
Balance c/d 27,050
1,31,200 1,31,200

Additional Information:

Details 01/01/17 31/12/17
₹ ₹
Outstanding salaries 1,200 1,800
Insurance prepaid 700 300
Subscription outstanding 3,750 2,500
Subscription received in advanced 1,750 1,000
Electricity charges outstanding 1,250
Stock of stationery 2,250 700
Equipments 25,600 50,200
Building 1,20,000 1,14,000

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 salary 12,500 By subscription
(-) 2016 1,200 81,750
(+) Out. 1,800 13,100 (-) 2016 3,750
To stationery 2,250 (-) 2018 1,000
(+) Purchase 1,700 (+) O/s 1,750 81,250
(-) stock 700 3,250 By donation 3,000
To electric charges By grant (govt.) 15,000
9,550 By sale of old
(+) O/s 1,250 10,800 newspaper 300
To insurance 7,500 By charity show
(+) Prepaid 2014 proceeds 16,500
700 By int. on invt. 7,000
(-) Prepaid 2015 300 7,900 By S. income 400
To petty expenses 12,000
To charity show exp. 6,000
To newspaper 500
To lecturer fees 12,900
To secretary honora. 1,000
To dep. on build. 16,500
To surplus 39,500
1,23,450 1,23,450

Balance Sheet

as on 1st Jan 2017

Liabilities ₹ Assets ₹
Salary outstanding 1,200 Cash in hand 7,250
Subs in advance 1,750 Subscription o/s 3,750
Capital fund 2,26,600 Investments 70,000
(Balancing figure) Stationery 2,250
Equipment 25,600
Building 1,20,000
Insurance prepaid 700
2,29,550 2,29,550

Balance Sheet

as on 31st December, 2017

Liabilities ₹ Assets ₹
Salary outstanding 1,800 Cash in hand 27,050
O/s electric exp. 1,250 Subscription o/s 2,500
Subs in advance 1,000 Investments 70,000
Capital fund Stationery 700
2,26,600 Equipment 55,600
(+)Surplus 39,500 2,66,100 Building 1,14,000
Insurance prepaid 300
2,70,150 2,70,150

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 hand 1,170
Purchases 24,660 Subscriptions 97,110
Dining room 32,370 Billiard’s Receipts 7,300
Rent 10,470 Sundry Receipts 410
Wages 18,690 Interest on fixed deposit 270
Repairs and Renewals 5,400 Sundry creditors 5,370
Fuel and Light 5,280 Grant from institute (permanent) 42,000
Misc. expenses 4,050 Income and Exp. a/c (2016) 1,380
Cash in hand 560
Cast at bank 2,760
Fixed deposit 8,500
Sundry debtors 2,250
Stationary 600
Billiard table 2,070
Fixtures and fittings 870
Furniture 4,140
Club premises 30,000
1,53,840 1,53,840

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 rent 10,470 By subscription 97,110
To wages 18,690 By S. receipts 410
To repairs and re. 5,400 By int. on FD 270
To fuel and light 5,280 By billiards
To Misc. exp. 4,050 receipts 7,300
To Depreciation on
Furniture 560
Fixtures and fittings 60
Billiards table 390
To stationery consumed 900
To trading loss 56,340
To surplus 2,950
1,05,090 1,05,090

Balance Sheet

as on 31st Mar 2017

Liabilities ₹ Assets ₹
Capital fund Cash in hand 560
1,380 Cash at bank 2,760
(+) Surplus 2,950 4,330 Fixed deposit 8,500
Sundry creditors 5,370 Sundry debtors 2,250
Grant from Stationery 600
Institute 42,000 Billiards table 1,680
Fixture and fittings 810
Furniture 3,580
Club premises 30,000
Stock of restaurant 960
51,700 51,700

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

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

Ans

Profit making organisation Not-for-Profit Organisation
Main objective of such an entity is to earn profit Main 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 investments Interest 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