Accounts of ‘Not for Profit’ Concerns | Aster Classes

Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, Hsc, Maharashtra, State, Board, Chapter 2, Accounts of ‘Not for Profit’ Concerns, Full solution,

Chapter 2: Accounts of ‘Not for Profit’ Concerns

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Write the Word/ Term/ Phrase which can substitute of the following statement: 👈 Click here

State whether the following statement is True or False with reasons 👈 Click here

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Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, Hsc, Maharashtra, State, Board, Chapter 2, Accounts of ‘Not for Profit’ Concerns, Full solution,

Library Books ₹ _________ ? Less 10 % Depreciation ₹ 5,000 = ₹ 45,000.


Solution: 


Library Books ₹ 50,000Less 10 % Depreciation ₹ 5,000 = ₹ 45,000


Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, Hsc, Maharashtra, State, Board, Chapter 2, Accounts of ‘Not for Profit’ Concerns, Full solution,

Opening stock of stationery ₹ 5,000, purchases of stationery ₹ 7000, outstanding stationery bill ₹ 12,000, closing stock ₹ 1000. What is the amount of stationery consumed?


Solution: 


Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, Hsc, Maharashtra, State, Board, Chapter 2, Accounts of ‘Not for Profit’ Concerns, Full solution,

12% p.a. Interest on Bank loan ₹ 80,000 for 1 year.


Solution: 
12 % p.a. Interest on Bank loan ₹ 80,000 for 1 year.

Interest = (PNR/100) = 80000 x (12/100) = ₹ 9600


Thus, interest on Bank loan ₹ 80,000 for 1 year = ₹ 9600.


Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, Hsc, Maharashtra, State, Board, Chapter 2, Accounts of ‘Not for Profit’ Concerns, Full solution,

Calculate the following:

10 % p.a. Depreciation on Furniture ₹ 50,000 (for three months)


Solution
10 % p.a. Depreciation on Furniture ₹ 50,000 (for three months)

Depreciation = Cost of Asset × Rate × Period=50,000 × (10/100) × (3/12)= ₹ 1250

Depreciation for 3 months


Thus, Depreciation on furniture @10% on ₹ 50,000 for 3 months = ₹ 1250.


Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, Hsc, Maharashtra, State, Board, Chapter 2, Accounts of ‘Not for Profit’ Concerns, Full solution,

Complete the table



Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, Hsc, Maharashtra, State, Board, Chapter 2, Accounts of ‘Not for Profit’ Concerns, Full solution,

Chapter 2: Accounts of ‘Not for Profit’ Concerns

Find odd one

Trading Account, Profit and Loss Account, Receipts and Payments Account, Balance Sheet.


Trading Account

Profit and Loss Account

Receipts and Payments Account,

Balance Sheet.


Machinery, Furniture, Computers, Salaries.


Machinery

Furniture

Computers

Salaries.


Subscription, Stationery, Interest Received, Locker Rent received,


Subscription

Stationery

Interest Received

Locker Rent received


Reliance Industries, Venna Vidya Mandir, Laxmi Hospital, Manoj Sports club.


Reliance Industries

Venna Vidya Mandir

Laxmi Hospital

Manoj Sports club


Surplus, Deficit, Net Profit, Capital fund.

Surplus

Deficit

Net Profit


Capital fund


Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, Hsc, Maharashtra, State, Board, Chapter 2, Accounts of ‘Not for Profit’ Concerns, Full solution,

Chapter 2: Accounts of ‘Not for Profit’ Concerns

What do you mean by ‘Not for Profit’ Concern?

A concern or organisation which is formed and established to serve its members and society or general public by undertaking various activities without any profit motive is called a ‘Not for Profit’ concern.


Which organisations prepare Income and Expenditure Account?

‘Not for profit’ concern prepares Income and Expenditure Account.


What is Receipts and Payments Account?

An account which is prepared by a ‘Not for Profit Concern’ to record a summary of all types of cash receipts and cash payments inclusive of bank transactions is called receipts and Payments Account.


Why Income and Expenditure Account is prepared?

Income and Expenditure Account is prepared to ascertain, whether the concern has sufficient incomes to meet its expenses, or not.


What is Capital Fund?

Excess of Assets over Liabilities is known as Capital Fund which also consists of contributions, subscriptions, entrance fees, surplus income, etc.


What is a Subscription?

Subscription is the periodical payment made by the members to the ‘Not for Profit’ concern for maintaining his membership.


What is ‘Legacy’?

Any asset, property or amount of cash which ‘Not for Profit’ concern receives as per the provisions made in the will of the donor after his death is called Legacy.


What is Surplus?

Excess of income over expenditure shown by Income and Expenditure Account represents Surplus for the financial year.


To which account ‘Surplus’ or ‘Deficit’ is transferred?


‘Surplus’ or ‘Deficit’ is transferred to Balance Sheet by adding it or subtracting it from Capital Fund


Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, Hsc, Maharashtra, State, Board, Chapter 2, Accounts of ‘Not for Profit’ Concerns, Full solution,

Chapter 2: Accounts of ‘Not for Profit’ Concerns

Fill in the blank:

Not for Profit Organization never is engaged in trading activities.


Not for Profit organization is called service organization.


Receipts and Payments Account falls under the category of Real Account.

 
In Receipts and Payments Account the summary of Cash transactions are recorded.

 
Income and Expenditure Account is similar to the Profit and loss account of Trading Concern. 


Credit side of Receipts and Payments Account shows cash payments


Income and Expenditure Account is a Nominal Account.


Mumbai University prepares Income and expenditure Account instead of a Profit and Loss account.

 
Subscription received from the members is considered as revenue receipts. 


The transactions recorded in Income and Expenditure Account are related only to the Current year.


Balbharati, Solutions, for, Book-keeping, and, Accountancy, 12th, Standard, Hsc, Maharashtra, State, Board, Chapter 2, Accounts of ‘Not for Profit’ Concerns, Full solution,

Chapter 2: Accounts of ‘Not for Profit’ Concerns

State whether the following statement is True or False with reasons

Not for Profit Concerns do not have profit motive.True.

Explanation:Not for profit concerns’, main aim is to give services to its members or to the society at large. They do not carry any Trading activity or Manufacturing activity so there is no question of having profit motive for ‘Not for Profit’ concerns.


Charitable Institutions prepare Profit and Loss Accounts at the end of every financial year.False.

Explanation:Charitable Institutions, Not for Profit concerns, do not undertake any trading activities and hence instead of Profit and Loss Account prepare Income-Expenditure Account to record all revenue expenses/losses and revenue incomes/gains of current year.


There is no difference between Receipts and Payments Account and Income and Expenditure Account.False.

Explanation:
In the receipts and Payments Account, all receipts and payments transactions in cash or through bank are recorded irrespective of the current year, previous year or next year while in IncomeExpenditure Account, only current year’s incomes and expenses (revenue) are recorded.


Income and Expenditure Account represents either surplus or deficit.True.

Explanation:In Income and Expenditure Account, all revenue incomes and expenses are recorded and at the end of the specified period, the difference is found out which is known as ‘Surplus’ (revenue incomes are more than revenue expenses) or ‘Deficit’ (revenue expenses are more than revenue incomes).


Receipts and Payments Accounts do not have any opening balance.False.

Explanation:Receipts and Payments Account is just like a cash book of trading concern and opening balance (Cash or Bank or Cash and Bank) must be there to start a recording of transactions.


Not for Profit concerns do not prepare Balance Sheet.False.

Explanation:
To know the financial position of the organisation, at the end of the particular period, Not for Profit concerns prepare Balance Sheet.


Purchases of Sports Equipments is a Capital Expenditure. True.


Explanation:
Generally, life span of sports equipments is more than one year, so purchase of sports equipment is considered as capital expenditure.


Income and Expenditure Account is Real Account.False.

Explanation:
In Income and Expenditure Account, all the revenue incomes and revenue expenses are recorded and therefore it is a Nominal Account and not a real Account.


Receipts and Payments Account contains only the transactions relating to the current year.False

Explanation:

In receipts and Payments Account, transactions of the not only the current year but of the previous year or of next year are also recorded.


Excess of Assets over liabilities is called Capital Fund. – True.

Explanation:
For ‘Not for Profit’ concerns in the Balance Sheet, when total of Assets is more than the total of Liabilities, the difference of amount is considered as ‘Capital Fund’.


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