Show the treatment of the following items by a
Not-for-Profit Organisation:
(i)
Annual subscription
(ii)
Specific donation
(iii)
Sale of fixed assets
(iv)
Sale of old periodicals
(v)
Sale of sports materials
(vi)
Life membership fee
Show the treatment of the following items by a Not-for-Profit Organisation:
|
(i) |
Annual subscription |
|
(ii) |
Specific donation |
|
(iii) |
Sale of fixed assets |
|
(iv) |
Sale of old periodicals |
|
(v) |
Sale of sports materials |
|
(vi) |
Life membership fee |
i) Annual Subscription
a) Subscriptions received during
an accounting year (whether related to the current year or previous and
subsequent year) are shown on the debit side of the Receipts and Payments
Account.
b) Subscription amount related to
the current accounting year only, whether received or yet to be received are
shown on the credit side of the Income and Expenditure Account.
c) Subscriptions received in
advance for the subsequent year are shown on the Liabilities side of the
Balance Sheet.
d) Subscriptions due but not received are shown in the
Assets side of the Balance Sheet.
ii) Specific donation
a) The amount received for
specific donation is shown on the debit side of the Receipts and Payments
Accounts.
b) The amount
received for specific donation is shown on the Liabilities side of the Balance
Sheet as it is used for the specific purpose for which it is received.
iii) Sale of fixed assets
a) The amount received from the
sale of fixed assets are recorded on the debit side of the Receipts and
Payments Account.
b) Profit (or loss) on the sale of
fixed assets is credited (or debited) to the Income and Expenditure Account.
c) The book-value of the fixed
assets sold is deducted from its respective assets on the Assets side of the
Balance Sheet.
iv) Sale of old periodicals
a) The amount received from the
sale of old periodicals are shown on the debit side of the Receipts and
Payments Account.
b) As the sale of old periodicals
by any organisation is considered as revenue receipts, so it is shown on the
credit side of the Income and Expenditure Account.
v) Sale of sport Materials
a) The amount received from the
sale of sport materials are debited to the Receipt and Payments Account.
b) As the sale of sport materials
by any sport club is considered as revenue income, so it is shown on the credit
side of the Income and Expenditure Account.
vi) Life Membership Fees
a) The amount paid by a person to
become a member of an organisation is called life membership fees. As this is a
receipt for an NPO, so it is debited to the Receipt and Payment Account.
b) Life Membership fees is not
recurring in nature and received once for a whole life from a member. Thus, as
Life Membership Fees are capital receipts, so these are added to the Capital
Fund on the Liabilities side of the Balance Sheet.
i) Annual Subscription
a) Subscriptions received during an accounting year (whether related to the current year or previous and subsequent year) are shown on the debit side of the Receipts and Payments Account.
b) Subscription amount related to the current accounting year only, whether received or yet to be received are shown on the credit side of the Income and Expenditure Account.
c) Subscriptions received in advance for the subsequent year are shown on the Liabilities side of the Balance Sheet.
d) Subscriptions due but not received are shown in the Assets side of the Balance Sheet.
ii) Specific donation
a) The amount received for specific donation is shown on the debit side of the Receipts and Payments Accounts.
b) The amount received for specific donation is shown on the Liabilities side of the Balance Sheet as it is used for the specific purpose for which it is received.
iii) Sale of fixed assets
a) The amount received from the sale of fixed assets are recorded on the debit side of the Receipts and Payments Account.
b) Profit (or loss) on the sale of fixed assets is credited (or debited) to the Income and Expenditure Account.
c) The book-value of the fixed assets sold is deducted from its respective assets on the Assets side of the Balance Sheet.
iv) Sale of old periodicals
a) The amount received from the sale of old periodicals are shown on the debit side of the Receipts and Payments Account.
b) As the sale of old periodicals by any organisation is considered as revenue receipts, so it is shown on the credit side of the Income and Expenditure Account.
v) Sale of sport Materials
a) The amount received from the sale of sport materials are debited to the Receipt and Payments Account.
b) As the sale of sport materials by any sport club is considered as revenue income, so it is shown on the credit side of the Income and Expenditure Account.
vi) Life Membership Fees
a) The amount paid by a person to become a member of an organisation is called life membership fees. As this is a receipt for an NPO, so it is debited to the Receipt and Payment Account.
b) Life Membership fees is not recurring in nature and received once for a whole life from a member. Thus, as Life Membership Fees are capital receipts, so these are added to the Capital Fund on the Liabilities side of the Balance Sheet.
