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NON – PROFITABLE ORGANISATION
At the end of the year the profit making organization prepare a Profit and
Loss A/c to know their profitable position and a Balance sheet to know their
financial position. Similarly there are various Non – Trading organization like
schools, colleges, clubs, charitable trusts, hospitals etc.
They also have to prepare their financial statement and since profit
making is not a objective of such institution, instead of the usual Profit of Loss
A/c they prepare income and expenditure A/c and the balance sheet as usual.

Point to remember
➢ Instead of Profit and Loss A/c here the word used will be Income &
Expenditure A/c
➢ If the income side is more it is surplus, and if the expenditure side is more
it is deficit.
➢ The recurring income and expenses are recorded in the Income and
Expenditure A/c and the Non – recurring item are recorded in the
Balance Sheet.
➢ Donations is one of the income of a N.P.O
Donations

Specific Donation Non Specific Donations / General


Donations
When the Donation is received with the particular purpose, then
it is specific donations and therefore it is assumed as Non - recurring item &
therefore it is written on a balance sheet liability side.
When the Donation is received in general there is no specific
purpose to it then it is non – specific donation. Such donation is assumed to be
recurring & therefore it is written in income & expenditure A/c.
➢ Subscription is one of the recurring income of N.P.O and therefore it will
be written in the Income & Expenditure A/c
➢ Any special type of fund created like price fund, sports fund, tournament
fund etc. will be written on the balance sheet liability side. If any
expenses are incurred from it, then they will be reduced from the
fund directly and if there are any incomes relating to the fund,
they will be added to the fund directly. On the balance sheet
liability side.
➢ If any asset is sold, then the profit or loss on the sale of the asset is written
in the income & expenditure account.

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Important for ma t of Income and Expenditure

accounts.
Expenditure Amou
nt
Income Amou
nt
To Salaries xxxx By Subscriptions xxxx
To Rent xxxx By interest on Investments xxxx
To Printing & Stationary xxxx By grants from Governments. xxxx
To Electricity Expenses xxxx By Hire of Hall xxxx
To Telephone Expenses xxxx By Tennis court receipts xxxx
To News Papers & Periodicals. xxxx By Billiard fees xxxx
To Repairs and Maintenance xxxx By Tennis fees xxxx
To Office Expenses xxxx By Miscellaneous Receipts xxxx
To Gardening xxxx By Drama Receipts xxxx
To Insurance premium xxxx By proceeds from charity show xxxx
To Tennis Expenses xxxx By Subscription for annual dinner xxxx
To Billiard expenses xxxx By Proceeds from entertainments xxxx
To Bar Expenses xxxx By Profit on sale of old assets xxxx
To Purchases of Medicines xxxx By Donation (General) xxxx
To Miscellaneous Expenses. xxxx
To wages xxxx
To Lecturer’s Fees xxxx
To Refreshment Expenses xxxx
To depreciation on assets xxxx
To Bad debts xxxx
To Magazine expenses xxxx
To annual function expenses xxxx
To loss on sale of old assets xxxx
To drama expenses xxxx
To Surplus xxxx

xxxx xxxx

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1. Dr. Ramesh started practice as a medical practitioner: On 1 Jan, 1997. He
gives you the Receipts and Payment accounts for the year 1997and the
adjustments to be made. Prepare the Income and Expenditure account and his
Balance sheet for the year 1997.
Receipts Rs. Payments Rs.
To cash introduces 7,500 By Furniture 3,000
To visits 24,000 By Equipments 3,750
To Receipts from dispensary 15,000 By Drugs 4,500
To sundry Receipts 150 By salaries 3,000
By Rent 2,250
By Conveyance 1,500
By Stationery 150
By lighting 225
By journals 375
By Drawings 18,000
By Balance C/F 9,900

46,650 46,650
Adjustments:
1. Receipts in arrears are visits Rs. 1,500/- and dispensary Rs. 900/-
2. Salaries Outstanding are Rs. 300/- and Rs. 300/- are outstanding for
expenses on drugs.
3. 40% amount of the conveyance was for domestic use.
4. Stock of drugs in hand at the end of the year RS. 1,200/-
5. Depreciate furniture and equipment s@ 10%.

2. From the following information supplied to you prepare income and


expenditure account for the year ended on 31st December 1980 and Balance sheet
as on that date for Subhash Sports Club, Aurangabad.
Balance sheet as on 1st January 1980
Liabilities Rs. Assets Rs.
Subscription received in 1,000 Land & Building 50,000
advance 2,800 Furniture] 10,000
Out standing expenses 10,000 Cash in hand 20,000
8% Loan 67,200 Outstanding Debtors for subscription 700
Capital fund Locker Rent 300

81,000 81,000

Receipt and Payments Accounts for the year ended 31st December 1980
Receipts Rs. Payments Rs.

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To Balance (01.01.0980) 20,000 By expenses:
Subscription : 1979 2,400
1979 400 1980 4,000 6,400
1980 4,000 By Furniture (01 -07 1980) 8,000
1981 300 4,700 By Loan Repayment (01.0701980) 10,000
Entrance fees 1,300 By interest on Loan account 400
Locker Rent 1,000 4,200
Income from refreshment 7,000 By refreshment Expenses 6,000
Donations 1,000 By balance ( 31.12.1980) 35,000
35,000
Following adjustments are to be taken into consideration:
1. Outstanding subscriptions for 1980 Rs. 1,500/-
2. Outstanding Expenses for 1980 Rs. 500
3. Outstanding Salary Rs. 1,000/-
4. Depreciate Land and Building at 2% and Furniture @ 10% per annum.
5. Entire amount of donations and one – half amount of entrance fees are to
be capitalized.
6. Locker Rent outstanding for 1980 is Rs. 200/-

3. Mr. SASA started practice as a medical practitioner: On 1st Jan, 1997. He gives
you the Receipts and Payment accounts for the year 1997and the adjustments to
be made. Prepare the Income and Expenditure account and his Balance sheet for
the year 1997.
Receipts Rs. Payments Rs.
To cash 9,500 By Equipments 3,000
To visits 24,000 By Furniture 3,750
To Receipts from dispensary 16,000 By Drugs 4,500
To sundry Receipts 1150 By salaries 3,000
By Rent 2,250
By Conveyance 1,500
By Stationery 1150
By lighting 1225
By journals 2375
By Drawings 18,000
By Balance C/F 9,900
50,650 50,650
Adjustments:
1. Receipts in arrears are visits Rs. 1,500/- and dispensary Rs. 900/-
2. Salaries Outstanding are Rs. 300/- and Rs. 300/- are outstanding for
expenses on drugs.
3. 80% amount of the conveyance was for domestic use.
4. Stock of drugs in hand at the end of the year RS. 1,200/-
5. Depreciate furniture and equipment s@ 15%.

4. From the following Receipts and Payments account of Hanuman Vyayam


Shala, Jalgaon; and the adjustment given you are required to prepare Indome
and Expenditure account and a balance sheet.

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Receipts and Payments Account for the
Year ended 31-12-1996
Receipts Rs. Payments Rs.
To Balance b/d 4160 By Salaries 5500
To Subscriptions By Entertainment Expenses 2580
1996 16,000 By Lighting 1000
1997 412 16,412 By General Expenses 1536
To Donations 5,000 By Taxes 500
To Receipts from 3,644 By Investments 12000
entertainment By Printing & Stationery 944
To Interest 324 By Expenses of 1995 Paid 2400
To Entrance Fees 4500 By Fixed Deposit 4000
By Balance c/d 3580
34040 34040
Adjustments:-
1. There are 450 members paying and annual Subscription of Rs. 40/- each
2. Salary outstanding was Rs. 1,000/-
3. Land and building stood in the books at Rs. 60,000/- and furniture at Rs.
4,600/- and it is required to write off depreciation at 2% and 10%
respectively.
4. Interest on Investments AT 5% p.a. has accrued for 3 months.
5. The capital fund was Rs. 66,360/- On 1st January, 1996.
6. 50% of the entrance fees is to be capitalized.

5. From the following Receipt and Payment A/c of Tarun Mitra Mandal, Jalgaon
for the year ending 31-12-1981 and the adjustments given below, prepare Income
And Expenditure A/c for the year ending 31st December 1981 and the Balance
Sheet on 31-12-1981,
Receipts Amount Payments Amount
To Balance 01-01-1981 23,000 By Taxes 1500
To Donations 5,000 By rent 12000
To Entrance Fees 3,500 By stationery 2500
To subscriptions 20,000 By wages 3000
To locker rent 1,000 By billiard table 1950
To Income from Annual 1,500 By electrical fittings 1150
program By Investments 12000
To Sale of furniture 15,000 By repairs 800
(Cost of Rs. 20,000) By annual programmer 1100
expenses
By Match expenses 3000
By Bank Balance 25000
By cash 5000
69000 69000

1. Locker rent includes Rs. 200/- for the year 1980 and Rs. 50 is still
outstanding for current year.

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2. Subscriptions include Rs. 1000/- for the year 1980 and 800/- are
outstanding for this year while Rs. 200/- are received in advance in the
year 1982.
3. Rent Rs. 800/- for the month of December 1981 is still outstanding.
4. ½ of the donations and ½ of entrance fees are to capitalized.
5. Opening stock of stationery stood at Rs. 500/- on 1.1.1981, while at the
end of the year the stock of stationery stood at Rs. 1,000/-
6. The assets on 1.1.1981 were: Furniture Rs. 25,000/- Sports materials Rs.
5000/- while the capital fund on 01 – 01 – 1981 stood at Rs. 54700/-

6. Receipts and Payments Accounts


For the Year ended 31.12.1997

Receipts Amount Payments Amount


To Subscriptions 1,100 By salaries 1000
To Bar Receipts 600 By printing and Stationery 100
To Interest on Securities 150 By telephone 150
To cricket fees 250 By gardening 120
To tennis fees 300 By cricket 200
To Billiard Fees 250 By insurance 100
To Life member’s fees 2000 By tennis 300
To Donations 24800 By billiards 400
To entrance fees 3000 By bar expenses 1200
To Tournament fund 1000 By investments 5000
By land and buildings 2000
By tournament expenses 1000
By furniture 1200
By sports material 1000
By current a/c balance 1000
By cash in hand 680

33450 33450
Additional Information:-
1. Subscriptions outstanding for the year Rs. 550.
2. Subscriptions of Rs. 100 were received in advance.
3. Salaries unpaid for 1997 amounted to Rs. 200
4. Insurance prepaid Rs. 50.
5. Half of the entrance fees received was to be capitalized
6. Donations and Life member’s Fees were to be capitalized.
7. Interest due but not received Rs. 100/-
8. Sports materials were valued at Rs. 800.
9. Depreciate furniture by 5% and land and building by 2. ½ %
From the above information, prepare an Income and Expenditure
Account for the year ended 31.12.1997

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7. The following is the Receipts & Payments Account of Pensioner’s Association for the
year ending 31st March 1998.
Receipts & Payments A/c
For the year ended 31 – 03 – 1998
Receipts Amount Payments Amount
To Balance : 1.4.97 1,500 By Traveling Expenditure 2,000
To Entrance Fees 375 By Stationery 1,500
To Subscriptions By Salaries 3,700
1995 – 96 200 By Wages 8,000
1996 – 97 15,000 By Repairs 1,250
1997 – 98 700 By Interest 470
To Special subscription for 3,250 By balance 31.03.1998 4,105
Chairman’s Party
21,025 21,025
1. Stationery expenses include Rs. 300 for the year 1996 – 97.
2. Similarly, salary for the month of March 1998 Rs. 700 is not yet paid.
3. Subscription unpaid for the current year is Rs. 300.
4. Special subscription of the Chairman’s party Rs. 100 is yet outstanding.
From the above information, you are requested to make out an Income
and Expenditure account of the Association for the year ending 31.03.1998.

8. From the following information, prepare Income and Expenditure account for the
year ended 31st march, 1998 and a balance sheet as on that date:
Receipts & Payments A/c for the year ended 31.03.1998
Receipts Amount Payments Amount
To Cash in hand (1 . 04 .1997) 1750 By Bank Overdraft 2500
To Subscriptions By Salaries 5300
1996 – 97 150 By Furniture 2000
1997 – 98 14,100 By Investments in Securities 4000
1998 – 99 75 14325 By Printing and Stationery 800
To Proceeds from Drama 2500 By Cost of staging drama 1500
To Entrance Fees 800 By Sundry Expenses 1300
To Interest on Securities 500 By Cash at Bank 2500
To Sale of Old furniture 200 By Cash in hand 175

20075 20075
1. The society has 1500 members, each paying an annual subscription of Rs. 12.

2. Subscriptions of Rs. 100 pertaining to the year 1996 -97 are still in arrears.

3. Value of stationery at hand on 31.3.1997 was Rs. 200 and on 31.3.1998 was Rs. 150

4. Entrance fees are to be treated as Capital receipts.

5. Salary of Rs. 700 for the current year is unpaid.

6. Balances as on 31.03.97.
Investments Rs. 4500
Building Rs. 25000
Furniture Rs. 200

7. Depreciate Building by 2 ½ and furniture by 5%

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9. Dr. Narendra commenced practice in the month of January 1998. He
prepared the following Receipts and Payments Account for the year
ended 31.12.98
Receipts & Payments A/c for the year ended 31.12.98

Receipts Amount Payments Amount


To cash 10,000 By Furniture 1500
To visits 7,000 By Equipments 2500
To Sundry Receipts 400 By Drugs 2000
By Salaries 1000
By Rent 500
By conveyance 700
By Stationery 100
By Lighting 125
By Periodicals 100
By Drawings 4375
By Balance C/d 4500

17400 17400
1. Rs. 200 were to be received on account of visits.
2. Unpaid salaries Rs. 200
3. 60% conveyance is for private purposes.
4. Value of furniture and equipment 10%
5. Depreciate furniture and equipment by 10%
Prepare Income and Expenditure Account and Balance sheet.

10. From the following information, prepare Income and Expenditure


account for the year ended 31.12.1998 and a balance sheet as on that date
Receipts and payments account for the year ended 31.12.1998
Receipts Amount Payments Amount
To Balance B/d 3,500 By Salaries
To Donations 1,500 1997 250
To Subscriptions: 1998 2,250 2500
1997 250 By Rent 4300
1998 3,500 By Postage 300
1999 750 4500 By Printing and Stationery 3000
To Entrance Fees 1000 By Balance c/d 2400
To interest on Investments 2000
12,500 12,500
1. Salaries unpaid Rs. 250.
2. Printing & stationery include Rs. 600
3. Printing paid includes Rs. 500 pertaining to the previous year.
4. Subscriptions outstanding Rs. 650
5. Balances on 1.1.98
Furniture – Rs. 6000
Investments Rs. 50,000
Buildings Rs. 20,000

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11. From the following information relating to thane Cricket Association, prepare the
Income & expenditure account for the year ended 31st March 1999 and the Balance
sheet as at that date. The following is the abstract form the Cash Book for the year.

Particulars Amount Particulars Amount


To Members Subscriptions 10000 By Tournament Expenditure 1800
To Members Admission 300 By Maintenance Charges of 1500
Fees ground
To Miscellaneous Receipts 400 By Rates and Insurance 600
To Hire of Ground 1000 By Telephone 150
To Subscription fee for 3000 By Printing and Stationery 300
Tournaments By General charges 500
To Cash drawn from Bank 6000 By Honorarium to Secretary 1300
To Donations for instituting 1000 By Fixed Deposit in Bank 6000
a prize By Investment 9550
30700 By Sports equipment 2000
By Payment into Bank 7000
30700
Assets on 1st April 1998 were:-
Sports and Equipment 3000
Cash at Bank 6000
Prepaid Insurance 200
Subscription due to the Association 600

Liabilities on 1st April 1998 were:


Printing and Stationery 100
Honorarium to Secretary 100
You are furnished the following further information:-
Donations of Rs. 10000 should be kept in a separate account. Subscription
received for the year 1999-2000 are Rs. 1000/- while Subscriptions outstanding on 31st
March 1999 Rs, 400/-
Investments are of the face value of Rs. 10,000/- and were purchased on 1st
October 1998. Interest thereon at 12% per annum has accrued due. Write off 50% of
Sports equipment, Prepaid Insurance amounts To Rs. 250/- and the Secretary is to be
given a bonus of Rs. 500/-

12. From the following Receipts & Payments account of a Credit Club and the subjoined
information, prepare Income and Expenditure Account for the year ended 31-12-1994
Receipts & Payments Accounts

Particulars Amount Particulars Amount


To Balance – cash A/c 352 By Crockery purchases 265
Current A/c 2738 By Maintenance 682
To Fixed deposit at 6% 3000 By Match Expenses 1324
To Membership 4000 By Salaries 1100
Subscription(including 600 By Conveyance 82
for 1993) By upkeep of Lawn 424
To Entrance Fees 275 By Postage stamps 105
To donations 501 By Purchase of Cricket goods 972
To Interest on Fixed Deposit 90 By Sundries 200
To tournament Fund By investments 570
To sale of Crockery 2000 By Tournaments Expenses 1880
(Book Value of Rs. 120) 200 By Balance :
13156 Cash in hand 220
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Current A/c 2332
By Fixed Deposit 3000 . 5552

13156

Additional Information:-
1. Monthly Salary is Rs. 100
2. The value of unused postage stamps in as follows:
31st December,1993 75
31st December,1994 90
Stock of Cricket Equipment are as follows:
31st December, 1993 321
21st December, 1994 280

Arrears of Membership subscriptions:


1993 660
1994 800

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15. Receipts& payments A/c
For the year ended 31.12.1998
Receipts Amount Payments Amount
To Balance b/c 3,500 By Books 7,500
To Subscriptions: By Printing and Stationery 750
1997 2,000 By Salary and Wages 6,250
1998 17,500 19,500 By Advertising 500
To Interest 2,000 By Sundry Expenses 1,600
To donation for special By Balance C/d 11,100
fund 750
To Rent:
1997 1,300
1998 650 1,950

27,700 27,700

Income and Expenditure A/c


For the year ended 31.12.1998
Expenditure Amount Income Amount
To insurance 600 By Interest 1,900
To salaries 6,500 By subscriptions 19,000
To sundry Expenses 1,600 By Rent 1,300
To Depreciation on Building 3,750
To Printing and Stationery 750
To Advertising 450
To Surplus 8550
22,200 22,200
On 1.1.1998 the assets of the institution were as follows:
Buildings Rs. 85,000
Books Rs. 75,000
Furniture Rs. 5,000
Investments Rs. 25,000
Liabilities: Loan Rs. 5,000
From the above particulars, your are requested to prepare the Opening Balance Sheet
and closing Balance sheet.

16. The following is the Receipts and Payments account of Charitable Hospital for the
year ending 31st December,99.
Receipts Amount Payments Amount
Opening balance_ Furniture
Cash 625 Salaries
Bank 3,625 Surgical Instruments
Govt. Securities 90,000 Diet Expenses
Receipts_ Surgical and Dispensary
Subscription 12,500 Rent and Rates
Interest 4,500 Insurance
Donations 5,750 Office Expenses
Sundry Receipts 325 Traveling Expenses
Medicines
Closing Balance_
Cash
Bank
Govt. security

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117325 117325
You are asked to prepare the Income and Expenditure account for the year ended on 31st
Dec. 1999 and the Balance sheet as on that date after taking into account the following
information.
The assets on 1st Jan 1999 were as follows
Furniture Rs. 1000 Land Rs. 25,000 Building Rs. 75,000 Surgical instruments Rs. 1750
Write of Depreciation a 2 ½ % on Building, 6% on Furniture and 20% on Surgical
instruments. The Govt. Securities were of the face value of Rs. 1,00,000 and represents
the investments of the Endowment fund.
The subscriptions received included Rs. 5000 for the previous years,
whereas the outstanding subscriptions f0or the current year amounted to Rs. 3500.
Salaries of staff include Rs. 500 for the last year and salaries Rs. 750 is outstanding for
the current year.
Interest received include Rs. 1000 for the year 1998 and Rs. 1150 are outstanding for the
current year.

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