You are on page 1of 62

IPCC CHAPTER 9

This e-Lecture was Recorded on:


23 January, 2013

FINANCIAL STATEMENTS OF
NON PROFIT
ORGANISATION
Chapter 9
Not for profit organisation

PROF. RAHUL J. MALKAN

The Institute of Chartered Accountants of India

Disclaimer
1
2
3

This lecture has been delivered by faculty members to supplement the Study
Material, Practice Manual and other content

The views expressed in this lecture are of the Faculty Member.

The content of this video lecture has not been specifically discussed by the
Council of the Institute or any of its Committees and the views expressed
herein may not be taken to necessarily represent the views of the Council or
any of its committees

ICAI, 2013

Important Note

This e-Lecture was Recorded on:


23 January, 2013

The e-Lectures, PPT, Podcasts


and Video lectures on ICAI
Cloud Campus aim to
supplement the Study Material,
Practice Manual and
Supplementary Study Material

The lecture recordings are made


according to the syllabus and
laws existing/ applicable as on
the date of recording.

Due to changes in law, there is


likely to be some time gap
between these changes and the
recording of updated lectures.

Hence, students are advised to


refer to the Study Material
including Supplementary Study
Material, if any, and other
relevant legislation for latest
provisions/ amendments
required for forthcoming
examination.

ICAI, 2013

INTRODUCTION
A Non profit organisation is a legal and accounting
entity that is operated for the benefit of the society as a
whole, rather than for the benefit of a sole proprietor
or a group of partners or shareholders.
In every society, some organisation or organisation are
found which do not have profit making as their as
objective
The main objective may be social, educational,
religious or charitable and they take the form of clubs,
societies or charitable bodies and so on.
ICAI, 2013

CHARACTERISTICS
Entity

Financing
Funds

Service

ICAI, 2013

Form

No
Profit
Motive

FINANCIAL STATEMENTS
These organisations, prepare, at the year end,
the following three financial statements
Receipts and Payments Account
Income and Expenditure Account
Balance sheet

ICAI, 2013

RECEIPTS AND PAYMENT A/C


Receipts and payment account is a cash book. It is
summary of all cash transactions. It starts with opening
cash and bank balance and ends with the closing cash
and bank balance. All receipts (Cash and Cheque) are
shown on the left hand side i.e. debit side and all
payments (cash and cheque) are written on right hand
side i.e. credit side.

ICAI, 2013

RECEIPTS AND PAYMENT A/C


The features of Receipt and Payment Account are as following.
Its a summary of cash and bank transactions
It starts with opening cash and bank balance and ends
with closing cash and bank balance.
All receipts are recorded on the debit side and all
payments on the credit side.
It records all receipts irrespective of the period they
belong to. Means it records receipts and payments for
past, current and future periods
ICAI, 2013

RECEIPTS AND PAYMENT A/C


The features of Receipt and Payment Account are as following.
It records all receipts / payments irrespective of its
nature. i.e. it records both revenue and capital receipts
and payments
It does not record any non cash transaction.
This account is not an trial balance but a cash trial.

ICAI, 2013

RECEIPTS AND PAYMENT A/C


A specimen of Receipt and Payment A/c
Name of the Institution / Club
Dr

Receipt and Payment Account for the year ended 31st March, 2011

Receipt
To opening Balance
Cash
Bank
To Subscriptions
09 - 10
10 - 11
11- 12
To Entrance Fees
To Donation
To Sale of Furniture
To rent received

xxx
xxx
xxx
xxx
xxx

xxx

xxx
xxx
xxx
xxx
xxx
xxx

ICAI, 2013

Payment

By Salaries
By Rent
By Electricity
By Purchase of Furniture
By Purchase of Investment
By Repairs on machinery
By Sundry Expenses
By Cleaning Expenses
By Insurance Expenses
By Books
By Closing Balance
Cash
Bank

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx

Cr

R & P - Illustration
S-M Illustration 1 page 9.2
The receipt and payments for the swaraj club for the year ended
December 31st, 2010 were : Entrance fees 300, Membership Fees
3,000, Donation for club pavilion 10,000, Foodstuff sales 1,200,
salaries and wages 1,200, Purchase of Foodstuff 800, Construction
of Club pavilion 11,000, General Expenses 600, Rent and Taxes
400, Bank charges 160.
Cash in hand Jan 1st 200, Dec 31st 350
Cash in Bank Jan 1st 400, Dec 31st 590

ICAI, 2013

R & P - Solution
Swaraj Club
Dr

Receipt and Payment Account for the year ended 31st Dec, 2010
Receipts

To Balance B/d
Cash in Hand
Cash with Bank
To Entrance Fees
To Membership Fees
To Donation on Account of
Club Pavilion
To Sales of Foodstuff

200
400
300
3,000
10,000
1,200
15,100

ICAI, 2013

Payments

By Salaries and Wages


By Purchase of Foodstuff
By Club Pavilion
(Expense on construction)
By General Expenses
By Rent and Taxes
By Bank Charges
By Balance c/d
Cash in Hand
Cash with Bank

Cr

1,200
800
11,000
600
400
160
350
590
15,100

INCOME AND EXPENDITURE A/C


The income and Expenditure Account is equivalent to
the Profit and Loss Account of business enterprise. It is
prepared by matching revenues against the expenses
for a specific period, usually a year. However since this
is not an profit making institution, it is known as
Income and Expenditure and the balance is not known
as profit or loss but is known as deficit or surplus.

ICAI, 2013

INCOME AND EXPENDITURE A/C


The features of Income and Expenditure Account are as following.

Its a revenue account prepared at the end of financial


period.
It is prepared by matching expenses against revenue of
the period concerned.
All expenses are shown on the left hand side i.e. Debit
side
All Income are shown on the right hand side i.e. Credit
side
ICAI, 2013

INCOME AND EXPENDITURE A/C


The features of Income and Expenditure Account are as following.

Both cash and non cash items are considered. For e.g.
depreciation
All capital expenditure and incomes are excluded.
Only current years incomes and expenses are
considered.
If incomes are more than the balance is known as
surplus, and if expenses are more than the balance will
be known as deficit.
ICAI, 2013

INCOME AND EXPENDITURE A/C


A specimen of Income and Expenditure A/c
Name of the Institution / Club
Dr

Income and Expenditure Account for the year ended 31st March, 2011
Expenses

To Salaries
Add Outstanding
To Rent
To Insurance
Less Prepaid
To Printing and Stationery
To Repairs of Equipment
To Depreciation
Furniture
Equipment
Books
To sundry Expenses
To surplus (Bal. Figure)

ICAI, 2013

xxx
xxx
xxx
xxx

xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx

Incomes

By Subscription
Add outstanding
Less Advance
By donations
By Entrance Fees
By Sale of Old newspapers
By sundry receipts
By rent received

xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx

xxx

Cr

Distinguish between R & P and I & E


Receipts and Payment
It is a Real Account

Income and Expenditure


It is a Nominal Account

It is a summary of actual cash receipts


and payments of a particular period.

It is a summary of incomes and


expenses of a particular period.

It includes both capital and Revenue


items

It incomes only Revenue items

It includes all receipts and payments


irrespective of the period to which it
belongs

It includes only incomes and expenses


of a particular period for which the
account is prepared.

It does not include non cash


transactions

It includes both the cash and non cash


transactions.

It begins with the opening cash/bank


balance and ends with the closing
cash/bank balance
ICAI, 2013

It does not have any opening balance.


Closing balance may either represent
deficit or surplus.

BALANCE SHEET
The Balance sheet of non profit concern is prepared on
the same principles as the balance sheet of a profit
seeking business. Its a statement of all assets and
liabilities of the business. It may be prepared either in
the order of liquidity or in the order of permanence.

ICAI, 2013

BALANCE SHEET
A specimen of Balance Sheet
Name of the Institution / Club
Balance Sheet as on 31st March, 2011
Liabilities
Capital Funds
Add Entrance Fees
Add surplus
Subscription received in
Advance
Outstanding Wages
Prize Fund
Building Fund

xxx
xxx
xxx
xxx

xxx

xxx
xxx
xxx
xxx

xxx

ICAI, 2013

Assets
Building
Less Depreciation
Furniture
Less Depreciation
Books
Less Depreciation
Investments
Outstanding Subscription
Prepaid Insurance
Cash at Bank
Cash in hand

xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

TERMINOLOGY USED IN ACCOUNTS OF


NPO
Subscription

It is the major source of revenue income of a non profit


organisation. It is paid periodically by the member of the club.
It can be computed in any of the following three ways.
Receipts and Payments
Receipts
Payments
Sub

xx

In statement form

Income and Expenditure


Expenses
Incomes
sub

xx

In Account form
In equation form

ICAI, 2013

TERMINOLOGY USED IN ACCOUNTS OF NPO


Subscription

In Statement Form
Receipts and Payments
Receipts
Payments
Sub

Income and Expenditure


Expenses
Incomes

xx

sub

Income for the year


Subscription (From Receipts)

xxx

Add : Outstanding at End

xxx

Asset

Closing

Less : Outstanding at Beginning

xxx

Asset

Opening

Less : Advance at End

xxx

Liability Closing

Add : Advance at Beginning

xxx

Liability Opening

Subscription (To Income)

xxx

ICAI, 2013

xx

TERMINOLOGY USED IN ACCOUNTS OF NPO


Subscription

In Account Form
Receipts and Payments
Receipts
Payments
Sub

Dr

Particulars
To Outstanding Subscription
( At the Beginning)

xx

Income and Expenditure


Expenses
Incomes

Subscriptipn A/c

Particulars
xxx By Advance Subscription
( At the Beginning)

sub

xxx

To Income and Expenditure


(Balancing Figure)

xxx

By Bank A/c
(Receipt and Payment A/c)

xxx

To Adcance Subscription
(At the End)

xxx

By Outstanding Subscription
(At the End)

xxx

ICAI, 2013

xxx

xxx

Cr

xx

TERMINOLOGY USED IN ACCOUNTS OF NPO


Subscription

In Equation Form
Receipts and Payments
Receipts
Payments
Sub

SI = SR + OS2 + AS1 OS1 AS2


SI = Subscription to Income
SR = Subscription as per receipts
OS2 = Outstanding at the End
AS1 = Advance at the Beginning
OS1 = Outstanding at the Beginning
AS2 = Advance at the End
ICAI, 2013

xx
Income and Expenditure
Expenses
Incomes
sub

xx

TERMINOLOGY USED IN ACCOUNTS OF NPO


Subscription

Illustration - 1

Compute the subscription for the year 2012 from the following
particulars of a club
Subscription received = 1,50,000
1/1/2012
31/12/2012
Outstanding
9,000
7,000
Advance
4,000
6,000
Solution
Subscription (From Receipts)
Add : Outstanding at End
Less : Outstanding at Beginning
Less : Advance at End
Add : Advance at Beginning
Subscription (To Income)

ICAI, 2013

1,50,000
7,000
9,000
6,000
4,000
1,46,000

TERMINOLOGY USED IN ACCOUNTS OF NPO


Subscription

Illustration - 2

Calculate the subscription to be credited to income and expenditure


A/c for the year ended 31/12/2012 from the following information.
Subscription received 2011 - 1,000, 2012 4,000 and 2013 - 800.
The club had 100 members, each paying an annual subscription of Rs.
50 . Subscription outstanding as on 31st December, 2011 were Rs. 1200
Solution
Subscription (From Receipts)
Add : Outstanding at End
Less : Outstanding at Beginning
Less : Advance at End
Add : Advance at Beginning
Subscription (To Income)
ICAI, 2013

5,800
1,200
1,200
800
------5,000

1000 + 200

TERMINOLOGY USED IN ACCOUNTS OF NPO


Subscription

Illustration - 3

Calculate the subscription to be credited to income and expenditure A/c for the
year ended 31/12/2012 from the following information.
Subscription received 2011 - 10,000, 2012 60,000 and 2013 12,000.
1. Subscription received in advance as at 31/12/2011 11,000
2. Subscription outstanding as at 31/12/2011 12,000
3. Subscription outstanding for the year 2012 is 8,000

Solution
Subscription (From Receipts)
Add : Outstanding at End
Less : Outstanding at Beginning
Less : Advance at End
Add : Advance at Beginning
Subscription (To Income)
ICAI, 2013

82,000
10,000
12,000
12,000
11,000
79,000

8,000 + 2,000

TERMINOLOGY USED IN ACCOUNTS OF NPO


Entrance Fees / Admission Fees
It is the initial amount paid by the members who intends to
become the member of the association, it should be treated as
capital receipt and credited to Capital Fund Account.
If the amount is small, just to cover the expenses on
admission, then it can also be treated as revenue receipt and
credited to income and expenditure account.

When the problem provides specific direction, then it


should be dealt with in the way specified in the question.

ICAI, 2013

TERMINOLOGY USED IN ACCOUNTS OF NPO


Entrance Fees / Admission Fees

Illustration

Entrance fees received in the year 2011-12


1,00,000. 40% of entrance fees is to be capitalised.
Solution
40,000 (40%) should be capitalised and Added capital fund
60,000 (60%) should be credited to income and expenditure A/c.

ICAI, 2013

TERMINOLOGY USED IN ACCOUNTS OF NPO


Donation
1. Donation are received from persons, firms, companies in
the form of money or in kind.
2. If the amount is small and recurring in nature, then it
should be credited to Income and Expenditure A/c.
3. Donation may also be received for specific purpose , then
they should be treated accordingly. For eg. Donation of
Building or Donation for Prizes
ICAI, 2013

TERMINOLOGY USED IN ACCOUNTS OF NPO


Donation

Illustration

Prize Fund as on 31/3/2012 24,000. Donation for Prize


Fund received 5,000 and prizes awarded for the year
8,000.
Solution
Liabilities

Extracts of Balance Sheet as at 31/3/2012

Assets

Prize Fund
Opening Balance
Add : Donations
Less : Prizes Awarded
ICAI, 2013

24,000
5,000
8,000

21,000

TERMINOLOGY USED IN ACCOUNTS OF NPO


Legacies
It is the Amount or any other item received from a deceased
person under the terms of the will. If the legacy is received
for the specific purpose then it is to treated accordingly.
However if the purpose is not specified, then it can be
capitalised and directly added to capital fund.

ICAI, 2013

TERMINOLOGY USED IN ACCOUNTS OF NPO


Government Aid
Government may help a NPO by the way of a grant in aid or
subsidy.

General
1. General Aid : Theses aids
are treated as revenue receipts
and thus, are transferred to
the credit of the income and
expenditure.
ICAI, 2013

Aid

Specific

2. Special Aid : They are to be


treated as capital receipts and
should be added to capital
fund

TERMINOLOGY USED IN ACCOUNTS OF NPO


Sale of Fixed Assets
Sale of Fixed Assets should be treated as capital receipts and
should be credited to Assets A/c. However, assets should be
credited with book value of Asset and profit or Loss arising
from the sale should be recorded in Income and Expenditure
Account.
Income and Expenditure A/c
Expenses
Incomes

Receipts and Payment A/c


Receipts
To Sale of Plant
(B.V 1000)

Payment

By Profit
on Sale

1200
Liabilities

Balance Sheet
Assets
Plant
Less Sold

ICAI, 2013

200

xxx

1000

TERMINOLOGY USED IN ACCOUNTS OF NPO


Consumable Items
Many non profit seeking organisations consume some
consumables items e.g. Stationery, sports materials,
medicines etc. In such cases the amount consumed should be
debited to Income and Expenditure Account.

ICAI, 2013

TERMINOLOGY USED IN ACCOUNTS OF NPO


Consumable Items

Illustration

Calculate the amount of printing and stationery to be debited to income and


expenditure a/c from the following information
Receipts and Payment A/c

Payments

Receipts
By Printing and
Stationery
890
Adjustment : Opening stock of stationery is 125 and closing Stock 87.

Solution

Opening Stock
Add : Purchase
Less : Closing Stock
Consumed

ICAI, 2013

125 Opening Balance Sheet


890
1,015
87
Closing Balance Sheet
928 Income and Expenditure Account

TERMINOLOGY USED IN ACCOUNTS OF NPO


Honorarium
A token payment made to a person who has voluntarily
undertaken a service which would normally command a fee.
It is thus an expression of gratitude rather than a payment
for the work done.

ICAI, 2013

FUND BASED ACCOUNTING


Funds are cash or its equivalent. Under fund based accounting,
in order to keep a record for the funds received or raised for a
particular purpose, a Capital Fund Account is opened.
Non profit organisations may also set up fund for a special
purpose. For example, a club may wish to acquire building and
may set up special fund for this purpose. It should be noted
that the amount received through donation for a particular
purpose should be transferred to the fund and not to the credit
of income and expenditure account. Similarly, all expenses
should be charged to the fund and not income and expenditure
account. Incase if the fund is for the creation of Asset, then
once the asset is created the fund should be dissolved and
transferred to Capital.
ICAI, 2013

FUND BASED ACCOUTING


Illustration
Following is the extract of receipt and payment Account for Gotham Club.
Show how would you deal with the items in the account and the information
following.
Receipts and Payment A/c
Payments

Receipts

To Donations for Prize Fund 5,000 By Prizes Awarded


4,000
The opening Balance of the Prize fund was 2,000

Solution
Liabilities
Prize Fund
Opening
+ Donations Received
- Prizes Awarded
ICAI, 2013

Balance Sheet

2,000
5,000
4,000 3,000

Assets

FUND BASED ACCOUTING


Illustration
Following is the extract of receipt and payment Account for Gotham Club.
Show how would you deal with the items in the account and the information
following.
Receipts and Payment A/c
Payments

Receipts

40,000
To Donations for Building
50,000 By Construction of Building
The opening Balance of the Building fund was 20,000
Balance Sheet
Solution

Assets
Liabilities
Capital Fund
+ Building Fund (cap)
Building Fund (op)
+ Donations Received
- Capitalised
ICAI, 2013

xxxx
40,000
20,000
50,000
40,000

Building
30,000

40,000

TYPES OF PROBLEMS

1. Preparation Income and Expenditure Account and


Balance sheet when Receipt and Payment Account and
other information are given.
2. Preparing Income and Expenditure Account and
Balance Sheet from Receipt and Payment Account and
Opening Balance Sheet and Other information.
3. Preparing Receipts and Payment Account from
Income and Expenditure Account and Closing Balance
Sheet.
4. Preparing Opening and Closing Balance Sheet from
Receipt and Payment Account and Income and
Expenditure Account
5. Preparing Receipt and Payment Account from
Opening and Closing Balance Sheet and Additional
Information.
6. Preparing Income and Expenditure Account and
Balance
ICAI,
2013 Sheet from Trial Balance.

practice manual Q - 5
1. Preparation Income and Expenditure Account and Balance sheet when Receipt and
Payment Account and other information are given.

Mahaveer Sports Club gives the following receipts and payments for the year ended 31st March,
2011.
Dr
Receipts and Payment A/c
Cr
Receipts

Payments

To Opening
Op
5,200 By Salaries R
15,000
Balance
To Subscription R 34,800 By Rent and Taxes R 5,400
To Donations C
10,000 By Elect. charges R
600
R
To Interest R
1,200 By Sports Goods C 2,000
To Sundry Recpts
300 By Library Books C 10,000
R
By Newspapers R
1,080
By Misc. Expenses R 5,400
By Balance c/d
12,020
Clo
51,500
51,500

31-03-2010 31-03-11

Outstanding Expenses
Salaries
Newspapers
Rent and Taxes
Electricity Charges
Library Books
Sports Goods
Furniture
Subscription receivable
Investment
Accrued Interest

1,000 2,000
400
500
600
600
800 1,000
10,000
-8,000
-10,000
-5,000 12,000
50,000
-600
600

Provide Depreciation on :
Furniture @ 10 % p.a
Sports Goods @ 20 % p.a , Library Books @ 10% p.a
Donations are to be capitalized.
You are required to prepare clubs opening Balance Sheet as on 1.4.2010, income and expenditure account for
the year ended 31.3.2011 and the balance sheet as on that date.

ICAI, 2013

Mahaveer Sports Club


Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr
Expenditure

Income
By Sub. (wn. 2)

Assets

ICAI, 2013

Less : Sale

12,000

O/s Subscription

5,000

Cash and Bank

5,200

Exp/ Inc Sub


Interest Salary
34,800
R&P
Add O/s E 12,000
Less O/s B 5,000
Less Adv E --------Add Adv B -------I&E
41,800

Assets
Opening
Add : Purchase

Subscription
receivables

41,800

Balance Sheet as on 31/3/2011


Liabilities

Balance Sheet as on 31/3/2010


Liabilities

Assets

Less : Dep
Closing

Furniture

Elect.

Rent

Sports Goods

Books

News

Mahaveer Sports Club


Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr
Expenditure

Income

To Salaries (wn.2)

16,000

By Sub. (wn. 2)
By Interest (wn. 2)
By Sundry Receipts

41,800
1,200
300

Balance Sheet as on 31/3/2011


Liabilities

Add : Donations

10,000

Outstanding Exp
Salaries

2,000

ICAI, 2013

Assets

Balance Sheet as on 31/3/2010


Liabilities

Assets
O/s Salaries

Accrued Interest
Subscription
receivables

600
12,000

1,000
O/s Subscription

5,000

Accrued Int.
Cash and Bank

600
5,200

Exp/ Inc Sub


Interest Salary Elect.
34,800
1,200 15,000
R&P
12,000
600 2,000
Add O/s E
600 1,000
Less O/s B 5,000
Less Adv E --------- --------- ------Add Adv B -------- -------- -------I&E
41,800 1,200 16,000

Assets
Opening
Add : Purchase
Less : Sale
Less : Dep
Closing

Furniture

Rent

Sports Goods

Books

News

Mahaveer Sports Club


Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr
Expenditure

Income

To Salaries (wn.2)
To Elec. (wn. 2)
To Rent (wn. 2)

16,000
800
5,400

By Sub. (wn. 2)
By Interest (wn. 2)
By Sundry Receipts

41,800
1,200
300

Balance Sheet as on 31/3/2011


Liabilities

Add : Donations

10,000

Outstanding Exp
Salaries

2,000

Electricity Char
Rent and Taxes

1,000
600

ICAI, 2013

Assets

Balance Sheet as on 31/3/2010


Liabilities

Assets
O/s Salaries
O/s Elec.
O/s Rent

600
12,000

1,000
800
600

O/s Subscription

5,000

Accrued Int.
Cash and Bank

600
5,200

Exp/ Inc Sub


Interest Salary Elect.
Rent
News
15,000
34,800
1,200
600
5,400
R&P
600 2,000
1,000
600
Add O/s E 12,000
600 1,000
800
600
Less O/s B 5,000
-------- -------Less Adv E --------- --------- ------Add Adv B -------- -------- --------------- -------I&E
41,800 1,200 16,000
800
5,400

Assets
Opening
Add : Purchase

Accrued Interest
Subscription
receivables

Less : Sale
Less : Dep
Closing

Furniture

Sports Goods

Books

Mahaveer Sports Club


Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr
Expenditure

Income

To Salaries (wn.2)
To Elec. (wn. 2)
To Rent (wn. 2)
To News (wn. 2)
To Misc Exp.

16,000
800
5,400
1,180
5,400

By Sub. (wn. 2)
By Interest (wn. 2)
By Sundry Receipts

41,800
1,200
300

Balance Sheet as on 31/3/2011


Liabilities

Add : Donations

10,000

Outstanding Exp
Salaries
Newspapers
Electricity Char
Rent and Taxes

2,000
500
1,000
600

ICAI, 2013

Assets

Balance Sheet as on 31/3/2010


Liabilities

Assets
O/s Salaries
O/s Newspapers
O/s Elec.
O/s Rent

O/s Subscription

5,000

Accrued Int.
Cash and Bank

600
5,200

Exp/ Inc Sub


Interest Salary Elect.
Rent
News
15,000
34,800
1,200
600
5,400
1,080
R&P
2,000
12,000
600
1,000
600
500
Add O/s E
600 1,000
800
600
400
Less O/s B 5,000
-------- -------- -------Less Adv E --------- --------- ------Add Adv B -------- -------- --------------- -------- -------I&E
41,800 1,200 16,000
800
5,400 1,180

Assets
Opening
Add : Purchase

Accrued Interest
Subscription
receivables
Cash and Bank

1,000
400
800
600

600

Less : Sale

12,000
12,020

Less : Dep
Closing

Furniture

Sports Goods
2,000

Books
10,000

Mahaveer Sports Club


Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr
Expenditure

Income

To Salaries (wn.2)
To Elec. (wn. 2)
To Rent (wn. 2)
To News (wn. 2)
To Misc Exp.

16,000
800
5,400
1,180
5,400

By Sub. (wn. 2)
By Interest (wn. 2)
By Sundry Receipts

41,800
1,200
300

Balance Sheet as on 31/3/2011


Liabilities

Add : Donations
Outstanding Exp
Salaries
Newspapers
Electricity Char
Rent and Taxes

ICAI, 2013

Assets

10,000

2,000
500
1,000
600

Balance Sheet as on 31/3/2010


Liabilities

Assets
O/s Salaries
O/s Newspapers
O/s Elec.
O/s Rent

O/s Subscription

5,000

Accrued Int.
Cash and Bank

600
5,200

Exp/ Inc Sub


Interest Salary Elect.
Rent
News
15,000
600
34,800
1,200
5,400
1,080
R&P
2,000
1,000
12,000
600
600
500
Add O/s E
600 1,000
800
600
400
Less O/s B 5,000
-------- -------- -------Less Adv E --------- --------- ------Add Adv B -------- -------- --------------- -------- -------I&E
800
41,800 1,200 16,000
5,400 1,180

Assets
Opening
Add : Purchase

Accrued Interest
Subscription
receivables
Cash and Bank

1,000
400
800
600

600

Less : Sale

12,000
12,020

Less : Dep
Closing

Furniture
10,000
-------10,000
-------10,000
1,000
9,000

Sports Goods
8,000
2,000
10,000
---------10,000
2,000
8,000

Books
10,000
10,000
20,000
---------20,000
2,000
18,000

Mahaveer Sports Club


Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr
Expenditure

Income

To Salaries (wn.2)
To Elec. (wn. 2)
To Rent (wn. 2)
To News (wn. 2)
To Misc Exp.
To Dep. (wn. 3 )

16,000
800
5,400
1,180
5,400
5,000

By Sub. (wn. 2)
By Interest (wn. 2)
By Sundry Receipts

41,800
1,200
300

Balance Sheet as on 31/3/2011


Liabilities

Add : Donations
Outstanding Exp
Salaries
Newspapers
Electricity Char
Rent and Taxes

ICAI, 2013

10,000

2,000
500
1,000
600

Assets

Fixed Assets
Furniture
Sports Good
Library Books

9,000
8,000
18,000

Investment

50,000

Accrued Interest
Subscription
receivables
Cash and Bank

Balance Sheet as on 31/3/2010


Liabilities

Assets
Library Books
Sports Goods
O/s Salaries
1,000
Furniture
O/s Newspapers
400
O/s Subscription
O/s Elec.
800
Investment
O/s Rent
600
Accrued Int.
Cash and Bank

10,000
8,000
10,000
5,000
50,000
600
5,200

Exp/ Inc Sub


Interest Salary Elect.
Rent
News
15,000
600
34,800
1,200
5,400
1,080
R&P
2,000
1,000
12,000
600
600
500
Add O/s E
600 1,000
800
600
400
Less O/s B 5,000
-------- -------- -------Less Adv E --------- --------- ------Add Adv B -------- -------- --------------- -------- -------I&E
800
41,800 1,200 16,000
5,400 1,180

Assets
Opening
Add : Purchase

600

Less : Sale

12,000
12,020

Less : Dep
Closing

Furniture
10,000
-------10,000
-------10,000
1,000
9,000

Sports Goods
8,000
2,000
10,000
---------10,000
2,000
8,000

Books
10,000
10,000
20,000
---------20,000
2,000
18,000

Mahaveer Sports Club


Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr
Expenditure

Income

To Salaries (wn.2)
To Elec. (wn. 2)
To Rent (wn. 2)
To News (wn. 2)
To Misc Exp.
To Dep. (wn. 3 )

16,000
800
5,400
1,180
5,400
5,000

By Sub. (wn. 2)
By Interest (wn. 2)
By Sundry Receipts

To Surplus

41,800
1,200
300

9,520
43,300

43,300

Balance Sheet as on 31/3/2011


Liabilities
Capital Fund
Opening
Add : Surplus
Add : Donations
Outstanding Exp
Salaries
Newspapers
Electricity Char
Rent and Taxes

86,000
9,520
10,000
1,05,520
2,000
500
1,000
600

ICAI, 2013 1,09,620

Assets

Fixed Assets
Furniture
Sports Good
Library Books

9,000
8,000
18,000

Investment

50,000

Accrued Interest
Subscription
receivables
Cash and Bank

Balance Sheet as on 31/3/2010


Liabilities

Assets
Library Books
Capital Fund
86,000
Sports Goods
O/s Salaries
1,000
Furniture
O/s Newspapers
400
O/s Subscription
O/s Elec.
800
Investment
O/s Rent
600
Accrued Int.
Cash and Bank
88,800

Exp/ Inc Sub


Interest Salary Elect.
Rent
News
15,000
600
34,800
1,200
5,400
1,080
R&P
2,000
1,000
12,000
600
600
500
Add O/s E
600 1,000
800
600
400
Less O/s B 5,000
-------- -------- -------Less Adv E --------- --------- ------Add Adv B -------- -------- --------------- -------- -------I&E
800
41,800 1,200 16,000
5,400 1,180

Assets
Opening
Add : Purchase

600

Less : Sale

12,000
12,020

Less : Dep
Closing

1,09,620

10,000
8,000
10,000
5,000
50,000
600
5,200
88,800

Furniture
10,000
-------10,000
-------10,000
1,000
9,000

Sports Goods
8,000
2,000
10,000
---------10,000
2,000
8,000

Books
10,000
10,000
20,000
---------20,000
2,000
18,000

practice manual Q - 7
2. Preparation Income and Expenditure Account and Balance sheet when Opening
Balance Sheet, Receipt and Payment Account and other information are given.

Smith Library Society showed the following position on 31st March, 2010
Balance Sheet as on 31/3/2010
Liabilities

Assets
Electrical
Capital Fund 7,93,000 Fittings
Expenses
Furniture
payable
7,000 Books
Investments
Cash at Bank
Cash in Hand
8,00,000

1,50,000
50,000
4,00,000
1,50,000
25,000
25,000
8,00,000

Receipts and Payment A/c for the year 31/3/2011


Receipts

Payments

To Balance b/d
Cash at Bank
25,000 By Electricity R 7,200
Op
Cash in Hand
25,000 By Postage R
5,000
To Entrance
By Telephone R
5,000
C
Fees
30,000 By Books C
60,000
To SubscriptionR200000 By O/s Exp R
7,000
To Sale of old
By Rent R
88,000
Newspaper R
1,500 By Investment C 40,000
To Hire of
By Salaries R
66,000
R
Lecture Hall
20,000 By Balance c/d
Cash at Bank
20,000
To Interest on
R
clo
Investments
8,000 Cash in Hand
11,300
3,09,500
3,09,500

You are required to prepare income and


expenditure account for the year ended
31/3/2011 and the balance sheet as at that day
after making following adjustments
1. Membership subscription included 10,000 received in advance. 2. Provide for outstanding
rent 4,000 and salaries 3,000. 3. 75 % of entrance fees is to be capitalized. 4. Books,
Electrical fittings and furniture are also to be depreciated at 10% rate. 5. Interest on securities is
to calculated @ 5% p.a including purchases made on 1.10.2010 for 40,000.

ICAI, 2013

Smita Library Society


Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr
Expenditure

Income
By Entrance Fees
By Subscription

7,500
1,90,000

Exp/ Inc
R&P
Add O/s E
Less O/s B
Less Adv E
Add Adv B
I&E

Sub

Interest

Rent

Salary

200000
----------------10,000
--------190,000

Assets
Electrical
Furniture Books
Opening
1,50,000 50,000 4,00,000
Add : Purch

Balance Sheet as on 31/3/2011


Liabilities
Capital Fund
Opening
Add : Entrance

Assets

Less : Dep
Closing

7,93,000
22,500

Investments
(150,000
Advance
Subscription

ICAI, 2013

10,000

Less : Sale

Smita Library Society


Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr
Expenditure

To Elec. Charges
To Postage
To Telephone
To Rent
To Salaries

7,200
5,000
5,000
92,000
69,000

Income
By Entrance Fees
By Subscription
By Sale of Old
Newspapers
By Hire of Lecture
hall
By Interest on
securities

7,500
1,90,000
1,500
20,000
8,500

Balance Sheet as on 31/3/2011


Liabilities
Capital Fund
Opening
Add : Entrance

Outstanding Exp
Rent
4,000
Salaries 3,000
Advance
Subscription

ICAI, 2013

Assets

10,000

Investments
(150,000
+ 40,000)
Outstanding
Interest

1,90,000
500

Sub
200000
----------------10,000
--------190,000

Interest
8,000
500
------------------8,500

Rent

Salary

88,000 66,000
4,000 3,000
------- ------------- ------------- ------92,000 69,000

Assets
Electrical
Furniture Books
Opening
1,50,000 50,000 4,00,000
Add : Purch
60,000
1,50,000 50,000 4,60,000
Less : Sale
-------Less : Dep
Closing

7,93,000
22,500

7,000

Exp/ Inc
R&P
Add O/s E
Less O/s B
Less Adv E
Add Adv B
I&E

Smita Library Society


Dr Income and Expenditure A/c for the year ended 31/3/2011 Cr
Income

To Elec. Charges
To Postage
To Telephone
To Rent
To Salaries
To Depreciation
Electrical Fitting
Furniture
Books

7,200
5,000
5,000
92,000
69,000
15,000
5,000
46,000
2,44,200

Expenditure

By Entrance Fees
By Subscription
By Sale of Old
Newspapers
By Hire of Lecture
hall
By Interest on
securities

7,500
1,90,000

By Deficit

16,700
2,44,200

1,500
20,000
8,500

Balance Sheet as on 31/3/2011


Liabilities
Capital Fund
Opening
Add : Entrance
Less : Deficit
Outstanding Exp
Rent
4,000
Salaries 3,000
Advance
Subscription

ICAI, 2013

7,93,000
22,500
16,700
7,98,800

7,000
10,000
8,15,800

Assets
Cash in hand
Cash at Bank
Fixed Assets
Electrical Fittings
Furniture
Books
Investments
(150,000
+ 40,000)
Outstanding
Interest

11,300
20,000
1,35,000
45,000
4,14,000
1,90,000
500
8,15,800

Exp/ Inc
R&P
Add O/s E
Less O/s B
Less Adv E
Add Adv B
I&E

Sub
200000
----------------10,000
--------190,000

Interest
8,500
500
------------------9,000

Rent

Salary

88,000 66,000
4,000 3,000
------- ------------- ------------- ------92,000 69,000

Assets
Electrical
Furniture Books
Opening
1,50,000 50,000 4,00,000
Add : Purch
60,000
1,50,000 50,000 4,60,000
--------------Less : Sale
-------150,000 50,000 460,000
46,000
5,000
15,000
Less : Dep
1,35,000 45,000 4,14,000
Closing

practice manual Q - 12
3. Preparation Receipt and Payment Account from Income and Expenditure and Other
information given .

Income and Expenditure Account for the year ended 31st March, 2012 of South Asia Club is
given below.
Expenditure
To Salaries and Wages
To Miscellaneous Exp
To Audit Fees
To Honorarium
To Sports Day Expenses
To Printing and Stationery
To Interest on Loan
To Depreciation on Sports
Equipment
To Surplus

Income
47,500 By Subscription
5,000 By Entrance Fees
2,500 By Contribution for
10,000 Annual Day
5,000 (After deducting Exp
4,500 7,500)
1,500
3,000
6,000
85,000

Additional Information
1. Subscription received in Advance
2. Subscription outstanding
3. Salaries Outstanding
4. Sports Equipment

ICAI, 2013

31.3.2011 31.3.2012
4,500
2,700
6,000
7,500
4,000
4,500
26,000
27,000

Additional Information

75,000
2,500 5. Cash in hand as on 31.3.12 was
16,000
7,500 6. The club took a 5% loan of
30,000 from a bank during 2010
11 for which interest was not
paid in the financial year 2011
12.
Prepare Receipts and payment
account of south Asia club for
85,000
the year ending 31st March
2012.

South Asia Club


Receipt and Payment Account for the year ended 31st March, 2012
Receipt

1. Subscription

As Per Receipt and Payment


Add : Outstanding at End
Less : Outstanding at Beg
Less : Advance at End
Add : Advance at Beg
As Per Income and Expenditure

ICAI, 2013

Payment
By Salaries and Wages
By Miscellaneous Exp
By Audit Fees
By Honorarium
By Sports Day Exp.
By Printing and
Stationery

47,000
5,000
2,500
10,000
5,000

By Sports Equipment

4,000

4,500

2. Salaries and Wages

3. Asset

Sports
Equipment

Opening
26,000
Add : Purchase 4,000
30,000
Less : Sold
-------30,000
Less : Dep.
3,000
Closing
27,000

As Per Receipt and Payment


Add : Outstanding at End
Less : Outstanding at Beg
Less : Advance at End
Add : Advance at Beg
As Per Income and Expenditure

47,000
4,500
4,000
------------47,500

South Asia Club


Receipt and Payment Account for the year ended 31st March, 2012
Receipt

To Balance b/d
12,300
To Subscription
71,700
To Entrance Fees
2,500
To Contribution to Annual
Day (7,500 + 7,500)
15,000

1,01,500
1. Subscription

As Per Receipt and Payment


Add : Outstanding at End
Less : Outstanding at Beg
Less : Advance at End
Add : Advance at Beg
As Per Income and Expenditure

ICAI, 2013

Payment
By Salaries and Wages
By Miscellaneous Exp
By Audit Fees
By Honorarium
By Sports Day Exp.
By Printing and
Stationery
By Annual Day Exp.
By Sports Equipment
By Balance c/d

47,000
5,000
2,500
10,000
5,000
4,500
7,500
4,000
16,000
1,01,500

2. Salaries and Wages

71,700
7,500
6,000
2,700
4,500
75,000

3. Asset

Sports
Equipment

Opening
26,000
Add : Purchase 4,000
30,000
Less : Sold
-------30,000
Less : Dep.
3,000
Closing
27,000

As Per Receipt and Payment


Add : Outstanding at End
Less : Outstanding at Beg
Less : Advance at End
Add : Advance at Beg
As Per Income and Expenditure

47,000
4,500
4,000
------------47,500

4. Preparation Receipt and Payment Account and Balance Sheet from Income and
Expenditure and opening Balance Sheet other information given .

From the following Income and Expenditure Account of Victoria Club for the year ended
31/12/2012 and the balance sheet as on 31/12/2011 and other information, prepare Receipts
and Payments Account for the year ended 31/12/2012 and the balance sheet as on that date.
Income and Expenditure A/c for the year ended 31.12.2012
Expenditure

Income

To Salaries
1,00,000 By Subscription
1,88,000
To Rent
22,000 By Entrance Fees
12,000
To Travelling Exp
1,000 By Donations
20,000
To Printing
2,000 By Interest
10,000
To dep (furniture)
3,000
To Periodicals
1,000
To Surplus
1,01,000
2,30,000
2,30,000
Balance Sheet as on 31/12/2011
Liabilities

Assets
Capital Fund
3,45,000 Furniture
O/s Expenses
Sports Equp
Rent
2,000 Investments
Salaries
13,000 o/s. Subscription
Interest Rec.
Bank Balance
ICAI, 2013 3,60,000

80,000
40,000
2,00,000
10,000
2,000
28,000
3,60,000

Other Details as on 31/12/2012


1. Subscription Receivable 16,000
2. Salaries Outstanding 8,000
3. Rent Outstanding 2,000

Victoria Club
Dr Receipts and Payment A/c for the year ended 31/12/2012 Cr
Receipts

Payments
By Salaries
By Rent
By Travelling
expenses
By Printing and
Stationery
By Periodicals

1,05,000
20,000
1,000
2,000
1,000

Balance Sheet as on 31/12/2012


Liabilities

Assets
Furniture

Add Surplus
Outstanding Exp
Salaries
Rent

ICAI, 2013

1,01,000

8,000
4,000

77,000

Exp/ Inc
Sub
R&P
Add O/s E
Less O/s B
Less Adv E
Add Adv B
I&E
Assets
Furniture
Opening
80,000
Add : Purch
------80,000
Less : Sale
-------80,000
3,000
Less : Dep
77,000
Closing

Salary
Rent
105000 20,000
8,000
4,000
13,000
2,000
-------- ---------------- --------100,000 22,000

Victoria Club
Dr Receipts and Payment A/c for the year ended 31/12/2012 Cr
Receipts

To Balance b/d
To Subscription
To Entrance Fees
To Donations
To Interest
(10,000 + 2,000)

28,000
1,82,000
12,000
20,000
12,000

2,54,000

Payments
By Salaries
By Rent
By Travelling
expenses
By Printing and
Stationery
By Periodicals
By Balance c/d

1,05,000
20,000
1,000
2,000
1,000
1,25,000
2,54,000

Balance Sheet as on 31/12/2012


Liabilities
Capital Fund
Opening
Add Surplus
Outstanding Exp
Salaries
Rent

Assets

3,45,000
1,01,000
4,46,000

Furniture
Sports Equipment
Investments
Subscription Due
Bank Balance

77,000
40,000
2,00,000
16,000
1,25,000

8,000
4,000
4,58,000

ICAI, 2013

4,58,000

Exp/ Inc
Sub
Salary
Rent
105000
R&P
182000
20,000
8,000
Add O/s E
16,000
4,000
13,000
Less O/s B
10,000
2,000
-------Less Adv E
----------------------- --------Add Adv B
-------I&E
188,000 100,000 22,000
Assets
Furniture
Opening
80,000
Add : Purch
------80,000
Less : Sale
-------80,000
3,000
Less : Dep
77,000
Closing

5. Preparation of opening and closing balance sheet from Receipt and Payment A/c and
Income and Expenditure A/c

Young Generation Society submits the following Receipts and Payment Account and Income
and Expenditure Account for the year ended 31.3.2012
Receipts and Payment A/c for the year ended
31/3/2012
Receipts

Payments

900
To Balance b/d
To Interest
By Printing
150
10-11
200 By Advertisement
282
11-12
300 By Salary
2,600
To Tuition Fees
By Rent
1,040
11-12 2,000 By Miscellaneous
12-13
200 expenses
220
To Entrance Fees
840 By Furniture
1,340
To Membership
10-11
600
11-12 2,300
12-13
780 By Balance c/d
2,748
8,380
8,380

Income and Expenditure A/c for the year ended


31/3/2012
Expenditure

Income

To Printing
160 By Tuition Fees
2,200
To Advertisement
300 By Membership
To Rent
1,200 Fees
2,300
To Salary
2,400 By Miscellaneous
To Miscellaneous
Income
260
expenses
220 By Interest
320
To Surplus
800
5,080
5,080

The society had the following assets as 31/3/2011 : Investments 8,000, Furniture 4,000, Library books
3,000. You are asked to prepare the balance sheet of the society as on 31/3/2011 and 31/3/2012.

ICAI, 2013

Young Generation Society


Balance sheet as ob 31/3/2011
Liabilities

Assets

Membership Fees
Receivable
Interest
Receivable
Bank

600
200
900

Balance Sheet as on 31/3/2012


Liabilities

Assets

Add : Entrance

840

Advance
Tuition Fees
Membership

200
780

Tuition Fees
Receivable
Interest receivable

200
20

Expense Salary
R&P
Add O/s E
Less O/s B
Less Adv E
Add Adv B
I&E
Income
R&P
Add O/s E
Less O/s B
Less Adv E
Add Adv B
I&E

Tuition Fees

Assets
Opening
Purchase

Furniture

Sale
Dep
Closing

ICAI, 2013

Printing

2,200
200
----200
------2,200

Advt.

Rent

Membership Fees
3,680
-----600
780
------2,300

Young Generation Society


Balance sheet as ob 31/3/2011
Liabilities

Capital Fund
(Balancing Fig)

Assets

16,500

Outstanding
Salaries

200

Furniture
Investments
Library Books
Membership Fees
Receivable
Interest
Receivable
Bank

16,700
Balance Sheet as on 31/3/2012
Liabilities
Capital Fund
Opening Balance
Add : Surplus
Add : Entrance
Advance
Tuition Fees
Membership
Outstanding
Printing
Advertisement
Rent

16,500
800
840
18,140
200
780

4,000
8,000
3,000
600
200
900
16,700

5,340
8,000
3,000
200
20
2,748

Expense Salary
R&P
2,600
Add O/s E -----Less O/s B
200
Less Adv E -----Add Adv B -----2,400
I&E

19,308

Printing
150
10
--------------160

Income
R&P
Add O/s E
Less O/s B
Less Adv E
Add Adv B
I&E

Tuition Fees

Assets
Opening
Purchase

Furniture

Sale
Dep
Closing

10
18
160
19,308

ICAI, 2013

Assets
Furniture
Investment
Library Books
Tuition Fees
Receivable
Interest receivable
Bank

2,200
-----200
200
------2,200

4,000
1,340
5,340
------5,340
-----5,340

Advt.
282
18
--------------300

Rent
1,040
160
--------------1,200

Membership Fees
3,680
-----600
780
------2,300

THANK YOU
ICAI, 2013

You might also like