It is relatively large amount of money advanced to the concern and placed in fixed deposits or invested in securities he endowment fund is a capital receipt and shown on the liability side of balance sheet. Here, the debtors for outstanding https://business-accounting.net/ fees are of a very uncertain nature. Besides this, the professional people do not approach the court for recovery of such outstanding incomes. Thus, they do not treat the outstanding incomes as earned until received in cash.
The accounting for a non-trading concern is generally as per the principles of double entry bookkeeping system. They generally only maintain a cash book to record receipts and payments made during the year. The cash book is converted FINAL ACCOUNTS OF NON-TRADING ORGANIZATIONS into receipt and payment account at the end of the year. The receipts and payments account is a summarized form of cash book and is considered a more useful source of information for preparing final accounts of the entity.
Receipts and Payments Account:
Westcliff University Data Storage Approaches Discussion Many organizations store all documents, such as medical records, engineering data, and patents, as digital files. The aim is the welfare of a specific group or society and not making profits. The account is prepared on the same rules that are applied to the Profit and Loss Account of the Trading enterprises. The organizations can be colleges and universities, hospitals, libraries, religious organizations, welfare societies, foundations, political parties, trade associations, professional associations and so forth.
- A trading account should be prepared for each trading activity in order to calculate the gross profit or loss earned.
- They may relate to the current or last or next year, so long, as they are actually receipts or paid, they must appear in this account.
- Amount, it will be treated as an income and recorded on the income side of the income and expenditure account.
- Thereare three time periods show …Test 5 This bar graph shows the number of days lost due to injury per worker for five countries.
- The excess of assets over liabilities is termed Capital Fund or General Fund.
- It is a primary source of income of a non-profit organisation.
Charitable institution may receive donations from time to time. If the amount is small and if such collections are frequent, then they may be treated as an income. Donations may also be of two types— General Donations and Specific Donations. Any donations received, not for a specific purpose, are treated as General Donations.
Items Peculiar to Non-Trading Concern
Basic rule of double entries is followed to prepare this account. It is prepared from a cash book at the end of the accounting period.
- A trading account shows the results of the buying and selling of goods.
- Maintenance of proper books of accounts is necessary to safeguard the money of its members and general public from any kind of misuse or misappropriations.
- Subscription received from members is treated as revenue income.
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- Pick up opening balance and closing balance to the account.
- The income and expenditure account takes into account only those items which belong to the current accounting year.
It does not take into account outstanding amounts of receipts and payments. Receipts and Payments may be of Capital or Revenue nature; they may relate to the current or previous year or subsequent year; so long as they are actually received or paid, they must appear in this account. Typically, the accounts of a non-trading concern are maintained using the double entry bookkeeping system. At the end of the year, a summary is created, which is known as the income and expenditure summary and balance sheet. The management is responsible for the accounts of a non-trading concern and prepares a balance sheet and income and expenditure account at year end. Maintenance of proper books of accounts is necessary to safeguard the money of its members and general public from any kind of misuse or misappropriations.