Do you know about - Non behalf society Accounting
Certainly, allowable accounting is essential for non-trading institutions. These concerns maintain, generally, a cash book and later they prepare a overview of cash transactions appearing in the cash book. This overview takes the form of an account known as receipts and payments account.
What I said. It isn't outcome that the true about
Vehicle Donation. You look at this article for information on a person wish to know is
Vehicle Donation.
How is Non behalf society Accounting
![]()
We had a good read. For the benefit of yourself. Be sure to read to the end. I want you to get good knowledge from
Vehicle Donation.
Such concerns also prepare 'income and expenditure account' (which is more or less on the lines of profit and loss account) and the balance Sheet.
The day-to-day accounting consists of maintaining.
(i) Cash book for recording receipts and payments, and
(ii) Ledger for classification of transactions under allowable heads.
Receipts and payments account
It is a overview of cash book for a given period, but the Receipts and Payments account shows the totals of cash transactions under different heads. All the receipts, be cheque or cash are entered on the debit (receipts) side (as in cash book) whereas all the payments (both by cheque or cash) are shown on the prestige (payments) side. Following features of the receipts and payments account will help to recognize its nature clearly :
1. It is a overview of cash book, like a cash book, receipts are shown on the debit side and
payments on the prestige side.
2. Cash and bank items are merged in one column. That means receipts in cash as-well-as by , cheque are entered in one column on debit and payments in cash as-well-as by cheque are entered in one column on prestige side. Contra entries in the middle of cash and bank get eliminated.
3. It is not a part of duplicate entry book-keeping. It is just a overview of cash book which is a , part of duplicate entry system.
4. Just like cash book, it starts with the opportunity balance of cash and bank and closes with the conclusion balance of cash and bank.
5. Both earnings and capital receipts and payments are recorded in this account. For example, ...An society that is exclusively set up to carryon with the object of carrying out group service or promo & society of group activities, is a non-trading enterprise. Cost for rent and Cost for building and machinery both are recorded on its payments side. Similarly, receipts on account of subscription and machinery are shown on the receipts side.
6. Usually, it shows a debit balance which represents cash in hand and at bank. However, in case of bank overdraft, which is larger than cash in hand, the account will show a prestige balance.
7. Receipts and payments account fails to disclose gain or loss made by the concern while the duration because (a) it is prepared on actual receipt basis i.e. It records all receipts-irrespective of the duration to which it relates (previous year, current year or future), (b) it also ignores the nature of the receipts and payments (whether capital or revenue). I
8. Accounting idea of gain or loss is based on "accrual concept" which by its very nature "receipts and payments account" is not capable of considering. Therefore, fails to disclose gain or loss (earned or suffered by the concern) while the period. For example, this account ignores: !
(i) Decrease or increase i.e. Depreciation or appreciation in the value of assets;
(ii) increase or decrease in the value of stock;
(iii) Provision for expenses incurred but payments not made-outstanding expenses.
(iv) Accounting for Cost in enlarge for the services to be utilized in the next accounting period-prepaid expenses.
It also fails to distinguish between:
(v) Capital and earnings payments-whether expenditure or purchase of an asset, and
(vi) company fee and appropriation- either company expenditure or drawings.
Limitations of receipts and payments account
Receipts and payments account suffers from following limitations :
(a) It does not show expenses and incomes on accrual basis.
(b) It does not show either the club or community is able to meet its day-to-day expenses out of its incomes.
(c) It does not show expenses on account of depreciation of assets.
(d) It does not account for the details about many expenses and incomes. In order to account for such questions, treasurer of the club prepares 'Income and expenditure account' and balance sheet.
Income and expenditure account
This account is prepared by non-trading concerns who want to know if while the financial year their earnings has been more than their expenditure i.e. profit or vice versa ( i.e. Loss). Since the object of these concerns is not primarily to' earn profit, therefore, they feel shy in giving it the name of profit and loss account. Because the word 'profit' is a taboo which any community 'looks down upon'. Of course, it discloses either the implicated convention earned or lost.
It is equivalent to and serves the purpose of 'profit and loss account'.
It is prepared on "accrual basis" (not on receipt basis) meaning thereby that all incomes are to be included which have been earned in the relevant duration (whether beyond doubt received or not). Similarly, it includes all expenses incurred in the relevant duration (whether beyond doubt paid or not). This account serves exactly the purpose which 'profit and loss account' serves in a trading concern. On the pattern of 'profit and loss account' earnings is shown on the prestige side and expenditure on the debit side. It also distinguishes in the middle of 'capital & revenue' items i.e. It does not take into notice capital items both receipts and payments). It follows duplicate entry ideas faithfully.
Balance Sheet
The balance sheet of a non-trading concern is on usual lines. Liabilities on left hand side and assets on right hand side. In trading concerns, excess of assets over liabilities is called 'capital'. Here, in non-trading concerns, excess of assets over liabilities is called 'capital fund'. The capital fund is built up out of surplus from earnings and expenditure account.
Distinction in the middle of "receipts and payments account" and "Income and expenditure account" :
Receipts and Payments Account
1. It is a real account.
2. It need not be accompanied by a balance sheet.
3. It is like a cash book.
4. conclusion balance is carried forward to the next period.
5. Debit side is for receipts and prestige side is for payments.
6. conclusion balance represents cash in hand and at bank.
7. It includes both capital and earnings items.
8. It commonly shows a debit balance.
9. It ignores superior items.
10. It ignores prestige sales and purchases.
11. It includes prepaid items.
12. It begins with a balance.
13. It includes items relating to past, gift or time to come periods.
14. It is not a part of duplicate entry system.
15. It ignores non-cash items like depreciation, bad debts etc.
Income and Expenditure Account
1. It is a nominal account.
2. Must be accompanied by a balance sheet.
3. It is like a profit & loss account.
4. conclusion balance is merged into capital fund.
5. Debit side is for expenses and prestige side for incomes.
6. conclusion balance represents either surplus or deficiency.
7. It includes only earnings items.
8. It may show a debit or prestige balance.
9. It records superior items.
10. It records prestige sales and purchases.
11. It excludes prepaid items.
12. It does not begin with a balance.
13. It includes items relating to current duration only.
14. It is a part of duplicate entry system.
15. It records non-cash items like depreciation, bad debts etc.
Peculiar items of non-trading concern's
Generally, in the exercises, the instructions are given as to the medicine of extra items. Such instructions are based on the rules of the concern. These should be followed while solving the question. In cases, where no exact instructions are given, the following guidelines may be considered:
1. Legacy
It is the estimate received by the concern as per the 'will' of the 'donor'. It appears
on the receipts side of receipts and payments account. It should not be carefully as earnings but should be treated as capital receipt i.e. Credited to capital fund account.
2. Subscriptions
The members of the associations, as per rules, are, generally, required to make
annual subscription to enable it to serve the purpose for which it was created. It appears on the receipts side of the receipts and payments account and is, usually, credited to income. Care must be exercised to take prestige for only those subscriptions which are relevant.
3. Life membership fees
Generally, the members are required to make the Cost in a lump sum only once which enables them to come to be the members for whole of the life. Life members are not required to pay the each year membership fees. As 'life membership fees' is a substitute for 'annual membership fees', therefore, it is desirable that life membership fees should be credited to a detach fund and fair proportion be credited to earnings in subsequent years. In the
examination question, if there is no education as to what proportion be treated as earnings then whole of it should be treated as capital.
4. Entrance fees
This is also an item to be found on the receipts side of receipts and payments account. There are arguments that it should be treated as capital receipt because Entrance fees is to be paid by every member only once (i.e. When enrolled as memer, hence it is nonrecurring in nature. But another argument is that since members to be enrolled every year and receipt of Entrance fees is a quarterly item, therefore, it should -be credited to income. In the absence of the instructions anything of the above medicine may be followed but students should append a note justifying their treatment.
5. Sale of newspapers, periodicals, etc.
As the old newspapers, magazines, and periodicals etc. Are to be disposed of every year, the receipts on account of such sale should be treated as income, and therefore, to be credited to earnings and expenditure account.
6. Sale of sports material.
Sale of sports material (used) is also a quarterly highlight of the clubs. Sale proceeds should be treated as income, and therefore, to be credited to earnings and expenditure account.
7. Honorarium
Persons may be invited to deliver lectures or artists may be invited to give their doing by a club (for its members). Any money, paid to invitees, is termed as honorarium and not salary. Such honorarium represents expenditure and will be debited to earnings and expenditure account.
8. extra fund
Legacies and donations may be received for specified purposes. As discussed above, these should be credited to extra fund all expenses associated to such fund are shown by way of deduction from the respective fund and not as expenditure in earnings and expenditure account.
9. Sale of old asset
It is a non-recurring item. It cannot be taken to earnings and expenditure account. It leads to reduction in asset. Therefore, it is shown by way of deduction from the implicated asset. It is leading to note that it is the "book value" that is to be deducted from asset. profit or loss in such a case is taken to earnings and expenditure account. Where the book value of asset is nil, the entire proceeds of sale be treated as income.
10. exact Donations
These are received for exact purpose. For example: Donation for building; Donation for prizes; Donation for pavilion etc. These are capital receipts and shown on liabilities side. It is worthy to note that such donations should not be treated as earnings because if they are taken to earnings and expenditure account, it will increase income. The increased earnings may be utilized for any other purpose. Thus, the purpose of donation will not be served. Such donations appear on the liability side because they create a long term compulsion (liability) on the institution. For example a donor may wish that prizes may be awarded year after year out of the earnings earned on his donations. Such a donation account can't be closed within a year by transferring to earnings and expenditure account.
11. Normal donations
These donations are not for any exact purpose and being a recurring earnings they are to be treated as earnings and are shown on the earnings side of earnings and expenditure account.
12. Endowment fund
It represents donation for a exact purpose. Here, the object of the donor is to contribute a source of permanent earnings to the institution. Thus, it is shown in the liability side of balance sheet. Any earnings earned while the year in such fund is added to it and any expenditure incurred while the year is deducted from it.
13. Proceeds of concerts, lectures and dramas or cultural shows
A concert is a program of musical entertainment. Concerts and lectures of eminent personalities are arranged in aid of charitable Accounts of Non-Trading institutions. estimate in the earnings side of institutions. estimate collected from such shows by sale of tickets is an earnings of convention and shown in the earnings side of earnings and expenditure account.
14. Govt. Grants. These grants are of two types :
(i) Maintenance grants; and
(ii) amelioration grants.
The maintenance grants are for meeting recurring expenses. These are treated as earnings and shown in the earnings side of earnings and expenditure account. The amelioration grant is for acquiring assets. A amelioration grant is a liability.
15. Accumulated (Capital) Fund
All entities, profit seeking on non-profit seeking need money for carrying out their activities. In company society such money is called capital while in case of non-profit organizations it is known by varied names such as Capital fund or Accumulated fund.
It represents the surplus of assets over surface liabilities of the organization. It is commonly made up by extra donations; legacies; capitalization of admission fee ; life membership fee etc. It is increased (or decreased) by any surplus (or deficit) on the earnings and Expenditure account. Some of the lesser known names given to this item are Normal fund or Surplus account.
I hope {you get new knowledge about
Vehicle Donation. Where you can put to use within your life. And most importantly, your reaction is get redirected here Vehicle Donation|
Vehicle Donation|
"Vehicle Donation"|
link Vehicle Donation}.Read more..
link Non behalf society Accounting.
View Related articles associated with
Vehicle Donation. I Roll below. I have counseled my friends to help share the Facebook Twitter Like Tweet. Can you share
Non behalf society Accounting.
