Chapter 1 Financial Statements of Not-for-Profit 1.

37 Organisations
Step 4.
Items not existing in Receipts and Payments Account: Following items do not exist in
Receipts and Payments Accunt but are shown in Income and Expenditure Account:
(a) Depreciation on fixed assets as an expense, i.e., in the debit side.
(b) Outstanding Expenses as expenses, i.e., in the debit side.
(c) Accrued or outstanding incomes as an income, i.e., in the credit side.
(d) Loss on sale of fixed assets, if any, as expense (loss), ie., in the debit side.
(e) Gain (Profit) on sale of fixed assets, if any, as income, i.e., in the credit side.
Deduct the amount of depreciation from fixed assets in the Balance Sheet after
adjusting purchase and sale of fixed assets.
Step 5. Detertine Surplus or Deficit in Income and Expenditure Account: By comparing total
of debit side and total of credit side of Income and Expenditure Account. If total of
credit side is more than the total of debit side, it is surplus (i.e., excess of income
over expenditure). And if, total of debit side is more than the total of credit side, it
is deficit (i.e., excess of expenditure over income). Surplus or deficit is transferred to
the Capital Fund and shown in the Balance Sheet.
Step 6. Closing Balance Sheet: Prepare Balance Sheet as at the end of the year after taking into
account opening balances of assets, liabilities and opening Capital Fund, surplus or deficit,
purchase and sale of assets during the year and charging depreciation on the fixed assets.
Illustration 25.
From the following items of Receipts and Payments Acount of Young Club, prepare Income
and Expenditure Account for the year ended 31st March, 2020:
Salaries Paid 5,00,000
50,000
Electricity Expenses
35,000
Printing and Stationery (including 5,000 for the previous year)
Subscriptions received (including 20,000 received in advance and
4,00,000
50,000 for the previous year)
4,50,000
Net proceeds from Refreshment Roomn
1,60,000
Miscellaneous expenses
12,000
Interest paid on Loan for half year
75,000
Rent and Rates (including 10,000 prepaid)
45,000
Lockers rent received
31st March, 2020 were 80,000 and half year's
Additional Information: Subscriptions in
arrears on

interest on loan was also outstanding.

Young Club
Solution: ACCOUNT for the year ended 31st March,
2020 Cr.
Dr. INCOME AND EXPENDITURE
Income
Expenditure 4,00,000
To Salaries 5,00,000 By Subscriptions
To Electricity Expenses 50,000 Less: Advance Received 20,000
lo
Arrears (Prev. Year) 50,000 70,000
Printing and Stationery 35,000 3,30,000
Less: Outstanding for
30,000 Add: Subscriptions in Arrears
Previous Year 5,000 (31st March, 2020) 80,000 4,10,000
fo Miscellaneous Expenses 1,60,000
to Interest on By Net Proceeds from
Loan 12,000 Refreshment Room 450,000
Add: Outstanding 12,000 24,000 45,000
7r 00
By Lockers Rent