ACCOUNTANCY PROJECT
ON
NON-PROFIT
ORGANIZATIONS
MADE BY:- AYUSHI ARORA
CLASS:- 11-D
ACKNOWLEDGEMENT

I AYUSHI ARORA OF 11-D IS
DECLARING THAT THIS PROJECT ON
NON-PROFIT ORGANIZATION IS
ENTIRELY MADE BY ME. I WOULD LIKE
TO THANK MY SUBJECT TEACHER C.P.
AGNIHOTRI SIR FOR GUIDING ME .
INTRODUCTION
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A not-for-profit organization is also known as non profit
organization is an organization setup to render services to
the society not with the aim of earning profit.
It is a separate legal entity not owned by an individual or an
enterprise.
Though the main source of income of such organization is
membership, donation and grants etc.
As the main aim of these organizations is not to earn profit,
they do not prepare Trading and Profit and Loss Account.
But still they have to maintain proper accounts. This is also a
legal requirement and they would also like to know whether
there current incomes are sufficient to meet their current
expenses.
Contd…
For this purpose they prepare an Income
and Expenditure Account which is similar
to Profit and Loss Account of a profit
seeking entity.
 A Balance Sheet is also prepared in order
to show the financial position of the
organization on the last date of the
Accounting year.
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Features of Not- For- Profit
Organization
Services :- Such organization are setup to provide
services to a specific group or the public at large such
as education, health care, sports. The main aim of
these organization is to provide service either free of
cost or at nominal rates and not to earn profit.
 Entity:- Non for profit organization are separate
legal entities promoted a individuals or an
enterprises.
 Form:- These organization are setup as charitable
societies, trust or clubs etc. with a main objective of
rendering social, educational, charitable or religious
services.
 No profit motive:- not for profit organization do
not operate with the objective of earning profit
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Contd…
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Funding :- these organizations collect
donations and contributions from the
members and outsiders to meet the cost of
the project undertaken and also to meet the
operating cost.
Form of Accounts:- The annual accounts
are prepared by them reflect the purpose
for which they are established the annual
accounts comprise of Receipts and Payments
Account, Income and Expenditure Account
and the Balance Sheet.
Difference :Basis
Not-for-profit organization
Profit earning
organization
Motive
Motive is to provide services.
Motive is to earn profit.
Funds
It is represented by the general
fund comprising of donation,
subscription, surplus etc…
It is represented by the
capital contribution by
owners and accumulated
reserves.
Financial
statements
Financial statements includes
Receipts and Payments Account
and Income and Expenditure
Account and Balance Sheet.
Financial Statements
includes trading
Accounts, Profit and
Loss Accounts and
Balance Sheet.
Surplus/Profit
The balance of the Income and
Expenditure account is either
surplus or deficit.
The balance of the Profit
and Loss Account is
either Net Profit or Net
Loss
Distribution of
profit
Surplus or deficit is not
distributed among its members.
It is adjusted in capital fund.
Profit or Loss is
distributed among the
owners of the Business.
Accounting procedures of NotFor-Profit organization
 The final accounts of not for
profit organization comprise of:◦ Receipts and Payment Account
◦ Income and Expenditure Account
◦ Balance Sheet
Receipts and Payment Account
It is a classified summary of cash book
classifying receipt and payment under
appropriate heads of account along with
cash and bank balances in the beginning and
at the end of the accounting period.
 A fair idea can be formed from this account
about the cash position of an organization. It
is maintain on cash system of accounting.
 It does not show expenses and incomes on
accrual basis.
 It is a real account.
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Specimen of Receipts and
Payment Account
Receipts
To Balance b/d
Cash
Amt.
Payments
By Balance b/d
Bank overdraft
Revenue Receipts
To locker’s rent
To rent
To interest
Capital Receipts
Revenue Payments
By rent
By salaries
By Insurance
Capital Payments
To sale of fixed assets
To Entrance fee
To donations
(for specific purpose)
By Investments
By sports equipment
By Balance c/d
Cash
Amt.
Income and Expenditure
Account
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It is a nominal account. It is equivalent to the
Profit and Loss Account of a business firm.
Incomes are shown on the credit side and
Expenses are shown on the debit side
The difference between the two sides is
either surplus or deficit. The surplus/deficit
as a case may be, is added to / deducted
from the capital fund.
It is prepared on accrual basis of accounting
and thus all adjustment relating to prepaid
outstanding expenses and incomes, provision
for depreciation or doubtful debt are made.
Format of the Income and
Expenditure Account
Expenditure
To audit fees
To sports material used
To repairs
To honorarium
To depreciation
To surplus
Amt. Income
By donation
By sundry receipts
By entrance fees
By hall rent
By deficit
Amt.
Accounting Treatment of important
items of Income and Expenditure
Account
Life membership fees:- it is accounted as a
capital receipt and added to capital fund on
the liabilities side of the balance sheet.
 Donation:- it is of two types :
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◦ General donation:- it is taken as an item of
income and it is shown on the income side of the
income and expenditure account.
◦ Specific donation:- it should be capitalized and
is shown on the liabilities side of the Balance
Sheet
Contd…
Subscription:- It is a source of income of not-forprofit organization. Substitution related to the current
year whether receive or not are shown on the credit
side of the Income and Expenditure Account.
Outstanding Subscription are shown on the asset side
of the Balance Sheet. Subscription receive in advance
for the following year are shown on the liabilities side
of the Balance Sheet.
 Sale of used sports material:- These are
consumable assets and are debited to Income and
Expenditure Account on purchase.
 When the assets are consumed, any amount are
realized from sale of such item is treated as income
and is credited to Income and Expenditure Account.
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Balance Sheet
It is a statement that shows the financial
position of an organization.
 The method of preparing the balance
sheet for not-for-profit organization is
similar to that of a business firm.
 It is prepared at the end of the accounting
period after preparing the income and
expenditure account.
 The balance sheet shows assets and
liabilities, capital fund.
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