Hence, only revenue no capital items will find place in it. Such type of profit and loss account is generally adopted by non trading concerns like clubs, societies. It recorded all losses and expenses on the debit side and all income and gains on credit side. All items of revenue income and expenditure relating to the current year will appear in it. The result of this account is referred to as surplus or excess of income over expenditure or deficit or excess of expenditure over income.
Income and expenditure account is a nominal account prepared by a non profit seeking organisation, in order to ascertain the surplus or deficit by recording revenue items of particular period. The role of a nontrading firm is to provide services to its members. The income and expenditure account this is similar to the profit and loss account prepared by a trading concern. Sources of income mainly related to clubs, societies and associations. Subscription is the major source of an income for the nontrading concerns. It can include items such as dividend income, profits.
Such type of profit and loss account is generally adopted by non trading concerns like clubs, societies, hospitals, and like etc. The method of preparing final accounts by non trading concerns is different than trading concerns. In the case of profitseeking concerns such money is called capital, while in the case of nonprofitseeking concerns it is called capital fund. Accounts for clubs and societies accounting simpler. The income and expenditure account is an account prepared by nontrading concerns to ascertain surplus or deficit of income over expenditures for a particular period. However, this does not imply that they do not make a trial balance.
Income and expenditure account for the year ended 31. Just click the start quiz button and start nontrading concerns mcqs quiz. Feb 10, 2018 non profit organisation refers to organisation which exist for benefit of society. Any concern whether profitseeking or nonprofitseeking requires money for conducting day to day functions. It is prepared to find out the amount of surplus or deficit made during and accounting period by nontrading concerns. Income and expenditure account is the account of a non trading concern a. All transactions relating to nonprofitseeking concerns like club, library etc. Accounts of non trading concern dynamic tutorials and. Icom part 2 short questions and answers qaswars school.
Any concern whether profitseeking or non profitseeking requires money for conducting day to day functions. What is accounting for non trading concern and feature of non. Receipts and payment account is a a nominal account b personal account c real account d none 3. Balance sheet of nontrading concerns accounting for management. This account is opened in both trading and non trading concerns. The role of a non trading firm is to provide services to its members. This is the primary report prepared by treasures of non trading concerns to present the result of years cash position. Icom part 2 short questions and answers qaswars school of.
Add surplus to or deduct deficit as derived from the income and expenditure account from opening capital fund to arrive at the closing capital fund. Plus two accountancy chapter wise questions and answers. What are the differences between a normal trading and non. Financial accounting nontrading accounts tutorialspoint.
In non profit accounting, a cash book is maintained to record the receipts and payments during a period. The main sources of income for a nontrading concern are donations, fees. A nonprofit organization employs the same accrual basis of accounting used by business enterprises. Nontrading concerns definition, explanation and examples. Income and expenditure account is akin to profit and loss account. Income and expenditure account is a a nominal account b personal account c real account d none 4. Nontrading concerns usually maintain their accounts by the double entry system. Non trading concerns expense debits and credits scribd. The surplus from income and expenditure account is added to and the deficit is deducted from accumulated fund. However, non profit organizations also need to maintain proper books of accounts. As for the nontrading concern like a club or a society. Following the same method, we can calculate the amount of any other expenses.
Nil ct600 bkd surely a nil ct600 can be filed if there is no trade portia i agree to an extent do you mean is the accounts include a statement of financial activities incorporating income and expenditure account that this will reflect the non trading element of the companys activities. The cash book contains a record of all receipts and payments in a. Income and expenditure account income and expenditure account is a nominal account. The main sources of income of nontrading concerns are fees, subscriptions, donations, govt. The cash book is converted into receipt and payment account at the end of the year. The notforprofit organisations usually prepare the income and expenditure account and a balance sheet with the help of receipt and payment account. Using above information, prepare an income and expenditure account for the year ended. Surplus or deficit of revenue for a particular period of a non trading concern can also be ascertained by preparing income and expenditure account or statement. Hence, whether an organisation is a trading concern or a nontrading concern, accounts are kept only the needs and the ways accounts are kept are different. Jan 01, 2012 balance sheet the balance sheet is prepared as in the case of a trading concern. Meaning, characteristics and accounting for non profit. The excess of income over expenditure of a non trading concern is never distributed among the members but rather kept for providing better services in future. Format of trading,income and expenditure account and.
The amount of profit or loss for a particular period of a business concern can be ascertained by preparing an income statement with the help of ledger account balances of revenue nature. Accounts of nonprofit organisation an overview article shared by. Receipts are shown on the debit side and payments are shown on credit side without any distinction between capital and revenue. The nontrading concerns have to maintain the following books of accounts. Treatment of peculiar items of nonprofit seeking concerns. Also, the sources of its income are donations, grants, and subscriptions from the members. No part of excess of income over expenditure is distributed to those who contributed support through subscription or. How to prepare an income and expenditure account bizfluent. Oct 24, 2019 these mcqs can help you to prepare for your exams, interviews and different tests. Icom part 2 short questions and answers chapter no. The excess of income over expenditure is not distributed but is used to fulfill the needs of the concerns. Let us understand more about the income and expenditure account which is prepared by a nonprofit organization.
It is very clear from the above example that the balancing figure represents rent for the current year i. If you find difficulty in answering these questions, read nontrading concerns chapter thoroughly from the explanation section of the. Understand what is the receipts and payments account and income and expenditure account. The income and expenditure account serve the same purpose as the profit and. These mcqs can help you to prepare for your exams, interviews and different tests. Income and expenditure account definition, explanation. Clubs, associations and other non profit making organisations do not have trading and profit and loss accounts drawn up for them, as their main purpose is not trading or profit making. Distinction between income and expenditure account and profit and loss account. Difference between trading concern and non trading concern. The income and expenditure account of a nontrading concern is similar to profit and loss. It is an amount paid by the members of nontrading concerns at regular intervals to. Aug 12, 2010 what is the first line in the book peter pan. Hindi accounting for npo non profit organization with.
A trading account b p and l account c manufacturing account d income and expenditure ac. When a non profit firm does so, it needs to prepare an income and expenditure account, which can help it in ascertaining the surplus earned or deficiency incurred during a period. This account is prepared by nontrading concerns who want to know if during the financial year their income has been more than their expenditure i. Nonoperating income is the portion of an organizations income that is derived from activities not related to its core business operations.
But the excess of assets over liabilities of a non trading concern is known as accumulated fund. The income and expenditure account serve the same purpose as. Subscriptions are received from the members of a club or institution. This account is credited with all earning and debited with expenses is called income and expenditure account. Such type of profit and loss account is generally adopted by non trading concerns like. In order to explain such questions, treasurer of the club prepares income and expenditure account and balance sheet. What is accounting for non trading concern and feature of. A non trading concern is also known as a non profit making entity that receives donations and grants from the public and governemnt and uses them to serve the community. Non profit organisation refers to organisation which exist for benefit of society. The organisations which are formed not for profit making purpose, but with a main purpose of providing various services to the people for development of the society are called not for profit or non trading concerns.
In the case of profitseeking concerns such money is called capital, while in the case of non profitseeking concerns it is called capital fund. No part of excess of income over expenditure is distributed to those who contributed support through subscription or donations etc. Jun 28, 2019 income and expenditure account is the account of a non trading concern a. Difference in accounting treatment between trading concerns and non trading concern accounting treatment of trading concern. Accounting treatment of some special items of nontrading concerns. Receipt and payment account is a mere summary of cash book for a year. Income and expenditure account is a nominal account. It is prepared from a cash book at the end of the accounting period. For example all voluntary organizations like sports clubs, trade unions, political associations, consumer cooperatives, medical association, automobile associations, educational institutions, hospitals, charitable trusts etc. A memorandum book is maintained to record the name of. Income and expenditure account all nontrading organizations maintain the receipts and payment account. However, special subscriptions, if collected are kept separately from the general fund for the specific purpose. The income and expenditure account is an account prepared by non trading concerns to ascertain surplus or deficit of income over expenditures for a particular period.
What is a non profit making concern non trading concern. It is just like a cash book and based on real account. Clubs, associations and other nonprofit making organisations do not have trading and profit and loss accounts drawn up. Format of trading,income and expenditure account and balance sheet of a nontrading organization. The management is responsible for the accounts of a nontrading concern and prepares a balance sheet and income and expenditure account at year end. Includes income and expenditure of both, capital and revenue nature. Surplus or deficit of revenue for a particular period of a nontrading concern can also be ascertained by preparing income and expenditure account or statement. Mostly, the accounting for non profit organisations is done by maintaining a system of incomplete records i. Objectives of accounting core accounting purpose and. Oct 14, 2018 difference between trading concern and non trading concern. Difference between profit and nonprofit organizations study. At the end of the year they make out an account called an income and expenditure account and balance sheet.
The excess of income over expenditure of a nontrading concern is never distributed among the members but rather kept for providing better services in future. It is prepared as a part of final accounts of nontrading concerns and is equivalent to profit and loss account prepared by forprofit business enterprises. The cash book is called receipts and payments account. However, in order to do the same, it needs to earn some revenue and incur certain expenditures. Format of trading,income and expenditure account and balance. Mar 07, 2017 accounting for non trading concerns premium academy, kalimati kathmandu. At the yearend result is determined through final accounts. The account through which surplus or deficits of a non trading concern is ascertained. Format of balance sheet of a non trading organization click here to go to content page on all other articles on commonly used accounting reports format.
It is prepared as a part of final accounts of non trading concerns and is equivalent to profit and loss account prepared by forprofit business enterprises. It lists all the incomes and expenses of the non trading organization for a year. Subscription is the main source of income for nonprofit organization. Balance sheet the balance sheet is prepared as in the case of a trading concern. It is prepared to find out the amount of surplus or deficit made during and accounting period by non trading concerns. This video will provide you the detailed steps to understand the accounting for non profit organisation. Income and expenditure account income and expenditure account is merely another name for profit and loss account. Draft the income and expenditure account and balance sheet.
Capital receipts and payments not considered in the income and expenditure account. Jan 15, 2019 the main sources of income of non trading concerns are fees, subscriptions, donations, govt. May 21, 2019 non operating income is the portion of an organizations income that is derived from activities not related to its core business operations. Take a quick multiple choice questions mcqs test about nontrading concerns. Mar 08, 2015 the account through which surplus or deficits of a non trading concern is ascertained. These are the major source of income for the nontrading concern. You are required to prepare clubs opening balance sheet as on 1. Its main objective for maintain the accounts record is to know the profit or loss. Financial accounting nontrading accounts some of the organizations or institutions are constituted to. The income and expenditure account of a non trading concern is similar to profit and loss account of a trading concern. Income and expenditure account for the year ended on 31st march, 2011 expenditure amount income amount to salaries 16,000 by subscription w. As these concerns do not deal in any goods like trading concerns, so they cannot prepare a trading and profit and loss account.
Trading companies engage in business such as investing, lending money, leasing property or buying. Income and expenditure account is merely another name for profit and loss account. Receipt and payment accounts are maintained by trading concern and income and expenditure accounts are maintained by non trading concern. A subscription paid in lump sum by any member of non trading concern for all period of membership is known as life membership fee. Income and expenditure account accounting for nontrading. Trading concerns may be in the form of sole proprietorship, partnership, joint stock company or public enterprises.