Grant------A grant is an amount of money that a government or other institution gives to an individual or

to an organization for a particular purpose such as education or home improvements.

(I)Entrance fees : It is basically received from the new members apart from the annual subscription. It
may be capitalised or revenue. In absence of any information it will be treated as revenue and hence it
will be shown on credit side of income and expenditure acccount.

(ii) Legacy : It is a amount which is received out of "WILL" of a deceased person. It appears on debit side
of receipts and payment account. It is a capital receipt and added to capital fund in the Balance Sheet.

(iii) Specific Donations : When donation is received for a specific purpose i.e., donation for a building
etc., it can be used for that purpose only and hence it will be capitalised and shown on the liabilities side
of balance sheet.

(iv) Subscription : It is the main source of income of non-profit entity. Since it is of recurring nature
hence it will be shown as a income and on the credit side of the income and expenditure account.

LIMITATIONS OF RECEIPTS AND PAYMENTS ACCOUNT

The Receipts and Payments Account is a summary of cash transactions of a particular year. It suffers
from certain limitations:

1. It is prepared on cash basis of accounting. It does not record non cash expenses or incomes e.g.
depreciation, outstanding expenses and accrued incomes.

2. It records not only the expenses and incomes of the current year but also the past and future
expenses and incomes received and paid during the current year are also recorded in it.

3. It records both the revenue and capital receipts and payments in a particular year. Itdoes not show
any surplus (excess of expenditure over income).

4. It is not a part of the double entry system of book-keeping. The posting is not done to the respective
ledger accounts from this account.

5. Balance Sheet can't be prepared from this account only.

In view of the above limitations of the Receipts and Payments Account, it has got very limited scope
SincESSENTIALS (FEATURES) OF INCOME AND EXPENDITURE ACCOUNT
ESSENTIALS (FEATURES) OF INCOME AND EXPENDITURE ACCOUNT
The following are the main features of Income and Expenditure Account:
(i) It is a nominal account.
(ii) It records items of revenue nature only. Capital receipts and capital payments are not recorded in it.
(iii) It records all losses and expenses on its debit side and all incomes and gains on its credit side.
(iv) It does not record those items of expenditure and income which do not relate to the current period.
Only current year incomes and expenses are recorded in it.
v) It also records non cash items like depreciation, bad debts, expenses payable and ( incomes receivable
for the current accounting period.
(vi) If credit side is bigger than the debit side, the result is surplus, also called Excess of Income over
Expenditure. Similarly, if expenditure side is bigger than income, the result is deficit, also called . .
Excess of Expenditure Over Income.
The following is the list of items to be recorded in Income and Expenditure Account
FEATURES OF NOT-FOR-PROFIT ORGANISATIONS
1. Social Organisation. These organisations are formed with some social goals such as, helping the poors,
providing education to the needy people.
2. Service Motive. These organisations are service providers to the members or to the society.
3. Source of finance. The funds are raised through donations, subscriptions, entry fees, membership fees
etc. for carrying out the activities of the organisation.
4. No profit earning objective. The primary objective of these organisations is to promote art, science,
culture, religion, commerce etc., without aiming at profits. However, while performing the activities, if
some surplus is left that is retained by the organisation and is never distributed among the members.
5. Accounts. The accounts of not for profit organisation do not Comprise Trading andProfit and Loss
Account as sale and purchase of goods are not made and the purpose is not to earn profits
. 6. Form. These organisations are set-up as charitable societies, trusts or clubs etc. with the main
objective of rendering social, educational, charitable or religious services.

7. Funding. These organisations collect donations and contributions form the members and outsiders to

meet the cost the project undertaken and also to meet the operation cost.