Incomeandexpenditure account

income and expenditure account-what-features-accounting records-format- terms

1. NON-TRADING / NON-PROFITABLE ORGANISATION Femy Moni Assistant Professor

2. The organizations that are worked for the welfare of the society. Formed for rendering services rather than making profit Organised as charitable trust, clubs………..

3. Accounting Records of Non-trading Organisations Receipts and payment accounts: Income and expenditure account: Balance sheet:

4. INCOME AND EXPENDITURE ACCOUNT

5. What is income and expenditure account? “The income and expenditure account is prepared by the non-trading organizations to determine surplus or deficit for a particular period of time.”

6. Features Nominal Account Based on a double entry system of accounting Prepared on accrual basis Prepared at the end of a period Similar to P&L Account No opening balance Presented by non trading organization to decide the surplus or deficit of the organization Only considers the revenue items Surplus or deficit moved to capital fund account in the balance sheet

7. Format

8. Terms used Honorarium: It is a voluntary payment made to the person who rendered a service without any fee. Grants received: Non repayable fund given by one party to a recipient ,often a non-trading concerns, educational institutions. General Grant: It shown on Income and expenditure account as income received. Special Grant: It shown on the liability side of balance sheet.

9. Subscription Received: It is the amount paid by members to keep their membership alive. Adjustment regarding subscription Subscription received during the year XXXX Add: Subscription outstanding at the end XXX Subscription Pre received at the beginning XXX Less: subscription outstanding at the beginning XXX Subscription pre received at the end XXX Subscription shown in in come and expenditure account XXXX

10. Entrance fee received: It’s a revenue receipt. To the extent not capitalized is treated as revenue item and shown in income and expenditure account Life membership fee: I t’s a Capital receipt. Hence is shown on liability side as capital fund. Legacy Amount receives as a donation under the will of a deceased person. If its for a specific purpose, it will treated as a liability. If its not for a specific purpose , it will treated as an revenue income.

11. Depreciation on fixed asset: Depreciation on fixed asset is considered as an expense and it will debited to income and expenditure account. Profit/loss on sale of fixed asset: Profit or loss on sale of fixed asset is considered as revenue receipt or payment. Hence it shown in income and expenditure account.

12. Donation: General donation treated as revenue item. So it should be included in the account. Specific donation is taken as capital receipt and shown on liability side of balance sheet Sale of news paper, articles: it is treated as revenue receipt

13. Thank you