NIOS Class 12 Accountancy Chapter 19 Not for Profit Organisation: An Introduction Solutions English Medium As Per New Syllabus. to each chapter is provided in the list so that you can easily browse throughout different chapters NIOS Class 12 Accountancy Chapter 19 Not for Profit Organisation: An Introduction Notes and select need one. NIOS Class 12 Accountancy Chapter 19 Not for Profit Organisation: An Introduction Question Answers Download PDF. NIOS Study Material of Class 12 Accountancy Paper Code: 320.
NIOS Class 12 Accountancy Chapter 19 Not for Profit Organisation: An Introduction
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Not for Profit Organisation: An Introduction
Chapter: 19
| Module – 3: Financial Statement |
INTEXT QUESTIONS 19.1
Following are the statements about Not-for-Profit organisation. Put (√) mark against the statements which are the salient features of these organisations and (X) against the others :
(i) The main objective of these organisations is to make profits.
Ans: X.
(ii) These organisations provide service to the society.
Ans: √.
(iii) The accounting principles and system followed by such organisations are the same that are followed by business organisations i.e. meant to earn profit.
Ans: √.
Intext Questions 19.2
I. Following are the items of Not for Profit organisations. Classify them into Receipts and Payments.
(i) Donations.
(ii) Charity.
(iii) Subscription.
(iv) Purchase of Books.
(v) Legacies.
(vi) Honorarium.
Ans: Donations – Receipts.
Charity – Payments.
Subscription – Receipts.
Purchase of Books – Payments.
Legacies – Receipts.
Honorarium – Payments.
lI. Identify the following statements as characteristics or need of Receipts and Payments account
(i) Closing cash or/and Bank Balance is used to prepare Balance Sheet.
Ans: Need.
(ii) It is prepared from the items taken from cash book.
Ans: Characteristics.
(iii) It records cash transactions both of revenue nature and capital nature.
Ans: Characteristics.
(iv) It is used to prepare financial statements of the Not for Profit organisations.
Ans: Need.
INTEXT QUESTIONS 19.3
A student has prepared the following Receipts and Payments A/c. Some of the items have been entered on wrong side. Correct the Account.
Receipts and Payments A/c
for the year ended 31st Dec. 2013
Dr. Cr.
| Particulars | Amount ₹ | Particulars | Amount ₹ |
| Opening balance | 1,800 | Entrance fees | 400 |
| Wages | 800 | Sale of Newspapers | 200 |
| Subscription | 3,600 | Purchase of Books | 2,400 |
| Cash in hand | 2,300 | ||
| Telephone charges | 600 | ||
| Interest on Fixed deposit | 300 | ||
| Total | 6,200 | Total | 6,200 |
Ans:
| Receipts | Amount (₹) | Payments | Amount (₹) |
| Opening Balance | 1,800 | Wages | 800 |
| Subscription | 3,600 | Purchase of Books | 2,400 |
| Entrance Fees | 400 | Telephone Charges | 600 |
| Sale of Newspapers | 200 | Closing Balance | 2,500 |
| Interest on Fixed Deposit | 300 | ||
| Total | 6,300 | Total | 6,300 |
Intext Questions 19.4
(i) In the cash Book, one type of item may appear for a number of times, how many times does an item appear in Receipts and Payments Account?
Ans: Once.
(ii) Subscription of Rs. 2,000 has been received for 2013 and Rs. 150 for 2014. How much amount will be shown as subscription received in the Receipts & Payments Account for 2013?
Ans: ₹2,150.
Is Life Membership Fees an item of Receipt or Payment Account?
Yes, Receipt.
| TERMINAL EXERCISE |
1. State the meaning of Not-for-Profit organisations and explain in brief the various characteristics of Not-for-Profit Organisations (NPOs).
Ans: A Non-Profit Organisation (NPO) is an organisation that is formed to provide services to its members or to the public and not to earn profit. Its main objective is social welfare, education, health, charity, or public service. Any surplus earned is reinvested for achieving its objectives and is not distributed among members.
Examples of NPOs include schools, hospitals, charitable trusts, clubs, welfare societies, and public libraries.
Characteristics of Not-for-profit organisations (NPOs)
Following are the main characteristics or the salient features of Not for Profit organisations (NPOs) :
(i) The objective of such organisations is not to make profit but to provide service to its members and to the society in general.
(ii) The main source of income of these organisations is not the profit earned from purchase and sale of goods and services but is admissions fees, subscriptions, donations, grant-in-aid, etc.
(iii) These organisations are managed by a group of persons elected by the members from among themselves. This group is called managing committee.
(iv) They also prepare their accounts following the same accounting principles and systems that are followed by business for profit organisations that are run with an objective to earn profits :
Financial statements that are generally prepared by Not-for-Profit Organisations (NPOs) are :
(i) Receipts and Payments Account.
(ii) Income and Expenditure Account.
(iii) Balance Sheet.
The receipts and payments account is the summary of cash and bank transactions which helps in the preparation of Income and expenditure Account and the Balance Sheet.
Income and Expenditure A/c is similar to Profit and Loss Account. NPOs usually prepare the Income and Expenditure Account and Balance Sheet with the help of Receipts and Payments Account.
2. Explain in brief the terms:
(a) Legacy.
Ans: Legacy is the amount or property received by a not-for-profit organisation under the will of a deceased person. It is not a regular income and is generally treated as a capital receipt, unless stated otherwise in the will.
(b) Honorarium.
Ans: Honorarium is a voluntary payment given to a person for professional or special services rendered, where no fixed salary or fee is payable. It is usually paid to guest speakers, judges, or experts as a token of appreciation.
(c) Subscriptions.
Ans: Subscriptions are recurring payments received from members of a not-for-profit organisation, usually annually or monthly. They form a major source of regular income and are used to meet the routine expenses of the organisation.
(d) Specific Donation.
Ans: Specific donation is a donation received for a clearly defined purpose, such as building construction or purchase of equipment. It is treated as a capital receipt and must be utilised only for the purpose for which it was received.
3. State the meaning of Receipts and Payments Account. Explain the need for preparing Receipts and Payments Account.
Ans: Receipts and Payments Account is a statement prepared by a not-for-profit organisation to show a summary of all cash and bank transactions during a particular accounting period. It records all receipts and payments in chronological order, irrespective of whether they are of capital or revenue nature and whether they relate to the current, past, or future period. It starts with the opening cash and bank balances and ends with the closing balances, but it does not show profit or loss.
Preparation of Receipts and Payments Account Following are the steps followed to prepare Receipts and Payments A/c :
(i) At first, the cash and bank balance carried forward from the last year is shown on its debit side. In case there is bank overdraft at the beginning of the year, enter the same on the credit side of this account.
(ii) The amounts are shown under relevant heads such as subscription, donations etc. on the receipts side and salary, rent, purchase of sports equipment, books etc. on the Payment side.
(iii) The amounts comprise of only cash and all cash received or paid during the pe-riod for which Receipts and Payments Account is prepared. No distinction is made between the items of revenue nature or capital nature and whether these belong to current year, previous year or the coming year.
Finally, this account is balanced by deducting the total of the credit side i.e. the total payments from the total of the debit side i.e. total receipts and is put on the credit side as ‘balance c/d’.
4. Distinguish between Receipts and Payments Account and Cash Book.
Ans:
| Receipts and Payments Account | Cash Book |
| 1. It is prepared at the end of the accounting year. | It is prepared on a day-to-day basis. |
| 2. An item appears only once. | Items appear a number of times on different dates depending upon their occurrence. |
| 3. It serves the purpose of Trial Balance to prepare the financial statements. | It is a means of maintaining record of cash transactions. |
| 4. It reflects the activities of the whole year. | It is only a systematic record of cash transactions. |
5. From the information given below prepare Receipts and Payments A/c of Friends in Need a Non-Government organisation (NGO) for the year ended 31st December, 2013.
Details
| Details | ₹ |
| Cash in hand on 1st Jan, 2013 | 4,000 |
| Entrance fees | 1,400 |
| Donations | 15,000 |
| Subscription | 15,000 |
| Electricity charges | 1,500 |
| Salaries | 6,500 |
| Honorarium to Secretary | 4,500 |
| Petty Cash Payments | 1,800 |
| Paid into Bank as Fixed Deposits | 15,000 |
| Insurance Premium | 2,100 |
| Grant from the Government | 40,000 |
| Stationery | 1,200 |
Ans: Friends in Need (NGO)
Receipts and Payments Account For the year ended 31st December, 2013
| Receipts | ₹ | Payments | ₹ |
| To Balance b/d (Cash in Hand) | 4,000 | By Electricity Charges | 1,500 |
| To Entrance Fees | 1,400 | By Salaries | 6,500 |
| To Donations | 15,000 | By Honorarium to Secretary | 4,500 |
| To Subscription | 15,000 | By Petty Cash Payments | 1,800 |
| To Grant from Government | 40,000 | By Insurance Premium | 2,100 |
| By Stationery | 1,200 | ||
| By Fixed Deposit (Bank) | 15,000 | ||
| By Balance c/d | 42,800 | ||
| Total | 75,400 | Total | 75,400 |
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