Show the accounting 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 accounting 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 whether they relate to current, previous or next year, is shown on the debit side of the Receipts and Payments Account.
(b) Subscriptions relating to the current year whether received or not, are shown on the credit side of the Income and Expenditure Account.
(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 because this is the amount which can only be used for the specific purpose for which it is received.
(iii) Sale of Fixed Assets:
(a) The amount received from the sale of any fixed assets are recorded on the debit side of the Receipts and Payments Account.
(b) Whereas the profit or loss on the sale of fixed assets is credited or debited (as the case may be) 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 or old periodicals by any organisation is considered as revenue receipts. So it is shown on the credt 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 Receipts and Payments Account.
(b) As the sale of sports materials by any sports 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 Receipts and Payments Account.
(b) Life Membership lees is not recurring in nature and received once for a whole life from a member. Thus. as Lite 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 whether they relate to current, previous or next year, is shown on the debit side of the Receipts and Payments Account.
(b) Subscriptions relating to the current year whether received or not, are shown on the credit side of the Income and Expenditure Account.
(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 because this is the amount which can only be used for the specific purpose for which it is received.
(iii) Sale of Fixed Assets:
(a) The amount received from the sale of any fixed assets are recorded on the debit side of the Receipts and Payments Account.
(b) Whereas the profit or loss on the sale of fixed assets is credited or debited (as the case may be) 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 or old periodicals by any organisation is considered as revenue receipts. So it is shown on the credt 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 Receipts and Payments Account.
(b) As the sale of sports materials by any sports 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 Receipts and Payments Account.
(b) Life Membership lees is not recurring in nature and received once for a whole life from a member. Thus. as Lite Membership Fees are capital receipts, so these are added to the Capital Fund on the Liabilities side of the Balance Sheet.
