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SECOND YEAR ACCOUNTANCY
PART I
NOTES WITH ILLUSTRATIONS
Preapred by
VINOD E B
O L L H S S UZHAVOOR
Ph: 9544 389 770
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CHAPTER 1
ACCOUNTS OF NOT-FOR – PROFIT ORGANISATIONS
Not-for -Profit Organisations refer to the organisations that are used for the welfare of the
society and are set up as charitable institutions which function without any profit motive.
Their main aim is to provide service to a specific group or the public at large
EXAMPLES
TEMPLES
CHARACTERISTICS
1 Such organisations are formed for providing service to a specific group or public at
large
2 These are organised as charitable trusts/societies and subscribers to such
organisation are called members
3 Their affairs are usually managed by a managing/executive committee elected by its
members
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4 The main sources of income of such organisations are: (i) subscriptions from
members, (ii) donations, (iii) legacies, (iv) grant-in-aid, (v) income from
investments,etc.
5 The funds raised by such organisations through various sources are credited
to capital fund or general fund.
6 The surplus generated is simply added in the capital fund.
Accounting Records of Not-for-Profit Organisations
1. Receipt and Payment Account
2. Income and Expenditure account
3. Balance Sheet
Receipts and Payments Account
It is the summary of cash and bank transactions of a not for profit organisation.This
account has TWO sides; a receipt side and a payment side. All cash and bank receipts
are entered on its receipts side and all cash and bank payments are entered on its
payments side. The opening balance in Receipt and Payment Account represents cash in
hand/cash at bank which is shown on its receipts side and the closing balance of this
account represents cash in hand and bank balance as at the end of the year, which
appear on the credit side of the Receipt and Payment Account. However, if it is bank
overdraft at the end it shall be shown on its debit side as the last item
Steps in the Preparation of Receipt and Payment Account
1. Take the opening balances of cash in hand and cash at bank and enter them on the
debit side. In case there is bank overdraft at the beginning of the year, enter the same on
the credit side of this account
2.Show the total amounts of all receipts on its debit side irrespective of their
nature(whether capital or revenue) and whether they pertain to past, current and future
periods.
3.Show the total amounts of all payments on its credit side irrespective of their
nature(whether capital or revenue) and whether they pertain to past, current and future
periods
4. None of the receivable income and payable expense is to be entered in this account
5. Find out the difference between the total of debit side and the total of credit side of
the account and enter the same on the credit side as the closing balance of cash/bank.
In case,however,the total of the credit side is more than the total of the debit side, show
the difference on the debit as bank overdraft and close the account
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Illustration 1
From the following particulars relating to Silver Point, prepare a Receipt and Payment
Account for the year ending March 31, 201
Particulars Amount Particulars Amount
Opening cash balance 1,000 Rent paid 3,000
Opening bank balance 7,200 Sports materials purchased 4,800
Subscriptions collected for: Purchase of refreshments 600
2015-16 - 500 Expenses for maintenance of
2016-17 - 7,600 tennis court 2,000
2017-18 - 900 9,000 Salary paid 2,500
Entrance fees received 1,000 Tournament expenses 2,400
Sale of refreshments 1,000 Furniture purchased 1,500
Sale of old sports materials 1,200 Office expenses 1,200
Donation for Pavilion 4,600 From the following particulars relating to Silver Point, prepare a Receipt and
Payment account for the year ending March 31, 2017
Particulars
Opening cash balance
Opening bank balance
Subscriptions collected for:
2015-16 - 500
2016-17 - 7,600
2017-18 - 900
Entrance fees received
Sale of refreshments
Sale of old sports materials
Donation for Pavilion
Ans
Date Receipts
Amount
1,000
7,200
9,000
1,000
1,000
1,200
4,600
Rent paid
Particulars
Sports materials purchased
Purchase of refreshments
Expenses for maintenance of tennis court
Salary paid
Tournament expenses
Furniture purchased
Office expenses
Closing cash in hand
RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31st March 2017
Opening Balance
Cash
J/F Amount
1,000
Date
Rent
Payments
Sports materials
Amount
3,000
4,800
600
2,000
2,500
2,400
1,500
1,200
400
J/F Amount
3,000
4,800
Closing cash in hand 400
Bank 7,200 Refreshments 600
Subscriptions: Expenses for maintenance
2,000
2015-16 - 500 of tennis court
2016-17 - 7,600 Salary 2,500
2017-18 - 900
9,000
Tournament expenses 2,400
Entrance fees 1,000
Sale of refreshments 1,000 Furniture 1,500
Sale of old sports material 1,200 Office expenses 1,200
Donation for pavilion 4,600 Balance c/d
Cash 400
25,000 Bank (Balancing Figure)
18,600 6,600
25,000 25000
Solution:
RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31 st March 2017
Date Receipts J/F Amount Date Payments J/F Amount
Opening Balance Rent 3,000
Cash 1,000 Sports materials 4,800
Bank 7,200 Refreshments 600
Subscriptions: Expenses for maintenance
2015-16 - 500 of tennis court 2,000
2016-17 - 7,600 Salary 2,500
2017-18 - 900 9,000 Tournament expenses 2,400
Entrance fees 1,000 Furniture 1,500
Sale of refreshments 1,000 Office expenses 1,200
Sale of old sports Balance c/d
material 1,200 Cash 400
Donation for pavilion 4,600 Bank (Balancing Figure) 6,600
25,000 25,000
Income and Expenditure Account
It is the summary of income and expenditure for the accounting year. It is just like the
profit and loss account prepared by business organisations. It includes only revenue
items and the balance at the end represents surplus or deficit. All the revenue expenses
and losses are shown on the expenditure side and incomes and gains on the income side
of this account. It shows the net operating result in the form of surplus (i.e. excess of
income over expenditure) or deficit (i.e. excess of expenditure over income), which is
transferred to the capital fund shown in the balance sheet.
Steps in the Preparation of Income and Expenditure Account
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SECOND YEAR ACCOUNTANCY
PART I
NOTES WITH ILLUSTRATIONS
Preapred by
VINOD E B
O L L H S S UZHAVOOR
Ph: 9544 389 770
, Join Telegram Channel
https://t.me/hsslive Downloaded from www.Hsslive.in ®
CHAPTER 1
ACCOUNTS OF NOT-FOR – PROFIT ORGANISATIONS
Not-for -Profit Organisations refer to the organisations that are used for the welfare of the
society and are set up as charitable institutions which function without any profit motive.
Their main aim is to provide service to a specific group or the public at large
EXAMPLES
TEMPLES
CHARACTERISTICS
1 Such organisations are formed for providing service to a specific group or public at
large
2 These are organised as charitable trusts/societies and subscribers to such
organisation are called members
3 Their affairs are usually managed by a managing/executive committee elected by its
members
, Join Telegram Channel
https://t.me/hsslive Downloaded from www.Hsslive.in ®
4 The main sources of income of such organisations are: (i) subscriptions from
members, (ii) donations, (iii) legacies, (iv) grant-in-aid, (v) income from
investments,etc.
5 The funds raised by such organisations through various sources are credited
to capital fund or general fund.
6 The surplus generated is simply added in the capital fund.
Accounting Records of Not-for-Profit Organisations
1. Receipt and Payment Account
2. Income and Expenditure account
3. Balance Sheet
Receipts and Payments Account
It is the summary of cash and bank transactions of a not for profit organisation.This
account has TWO sides; a receipt side and a payment side. All cash and bank receipts
are entered on its receipts side and all cash and bank payments are entered on its
payments side. The opening balance in Receipt and Payment Account represents cash in
hand/cash at bank which is shown on its receipts side and the closing balance of this
account represents cash in hand and bank balance as at the end of the year, which
appear on the credit side of the Receipt and Payment Account. However, if it is bank
overdraft at the end it shall be shown on its debit side as the last item
Steps in the Preparation of Receipt and Payment Account
1. Take the opening balances of cash in hand and cash at bank and enter them on the
debit side. In case there is bank overdraft at the beginning of the year, enter the same on
the credit side of this account
2.Show the total amounts of all receipts on its debit side irrespective of their
nature(whether capital or revenue) and whether they pertain to past, current and future
periods.
3.Show the total amounts of all payments on its credit side irrespective of their
nature(whether capital or revenue) and whether they pertain to past, current and future
periods
4. None of the receivable income and payable expense is to be entered in this account
5. Find out the difference between the total of debit side and the total of credit side of
the account and enter the same on the credit side as the closing balance of cash/bank.
In case,however,the total of the credit side is more than the total of the debit side, show
the difference on the debit as bank overdraft and close the account
, Join Telegram Channel
https://t.me/hsslive Downloaded from www.Hsslive.in ®
Illustration 1
From the following particulars relating to Silver Point, prepare a Receipt and Payment
Account for the year ending March 31, 201
Particulars Amount Particulars Amount
Opening cash balance 1,000 Rent paid 3,000
Opening bank balance 7,200 Sports materials purchased 4,800
Subscriptions collected for: Purchase of refreshments 600
2015-16 - 500 Expenses for maintenance of
2016-17 - 7,600 tennis court 2,000
2017-18 - 900 9,000 Salary paid 2,500
Entrance fees received 1,000 Tournament expenses 2,400
Sale of refreshments 1,000 Furniture purchased 1,500
Sale of old sports materials 1,200 Office expenses 1,200
Donation for Pavilion 4,600 From the following particulars relating to Silver Point, prepare a Receipt and
Payment account for the year ending March 31, 2017
Particulars
Opening cash balance
Opening bank balance
Subscriptions collected for:
2015-16 - 500
2016-17 - 7,600
2017-18 - 900
Entrance fees received
Sale of refreshments
Sale of old sports materials
Donation for Pavilion
Ans
Date Receipts
Amount
1,000
7,200
9,000
1,000
1,000
1,200
4,600
Rent paid
Particulars
Sports materials purchased
Purchase of refreshments
Expenses for maintenance of tennis court
Salary paid
Tournament expenses
Furniture purchased
Office expenses
Closing cash in hand
RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31st March 2017
Opening Balance
Cash
J/F Amount
1,000
Date
Rent
Payments
Sports materials
Amount
3,000
4,800
600
2,000
2,500
2,400
1,500
1,200
400
J/F Amount
3,000
4,800
Closing cash in hand 400
Bank 7,200 Refreshments 600
Subscriptions: Expenses for maintenance
2,000
2015-16 - 500 of tennis court
2016-17 - 7,600 Salary 2,500
2017-18 - 900
9,000
Tournament expenses 2,400
Entrance fees 1,000
Sale of refreshments 1,000 Furniture 1,500
Sale of old sports material 1,200 Office expenses 1,200
Donation for pavilion 4,600 Balance c/d
Cash 400
25,000 Bank (Balancing Figure)
18,600 6,600
25,000 25000
Solution:
RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31 st March 2017
Date Receipts J/F Amount Date Payments J/F Amount
Opening Balance Rent 3,000
Cash 1,000 Sports materials 4,800
Bank 7,200 Refreshments 600
Subscriptions: Expenses for maintenance
2015-16 - 500 of tennis court 2,000
2016-17 - 7,600 Salary 2,500
2017-18 - 900 9,000 Tournament expenses 2,400
Entrance fees 1,000 Furniture 1,500
Sale of refreshments 1,000 Office expenses 1,200
Sale of old sports Balance c/d
material 1,200 Cash 400
Donation for pavilion 4,600 Bank (Balancing Figure) 6,600
25,000 25,000
Income and Expenditure Account
It is the summary of income and expenditure for the accounting year. It is just like the
profit and loss account prepared by business organisations. It includes only revenue
items and the balance at the end represents surplus or deficit. All the revenue expenses
and losses are shown on the expenditure side and incomes and gains on the income side
of this account. It shows the net operating result in the form of surplus (i.e. excess of
income over expenditure) or deficit (i.e. excess of expenditure over income), which is
transferred to the capital fund shown in the balance sheet.
Steps in the Preparation of Income and Expenditure Account
