Not For Profit Organization

Compiled by Ronish Nepal
NPO- Not for Profit Organization
INTRODUCTION
A non profit organization is a legal and accounting entity that is operated for the benefit of the society
as a whole, rather than for the benefit of a sole proprietor or a group of partners or shareholders. Non-
profit making organisations such as public hospitals, public educational institutions, clubs, etc.,
conventionally prepare Receipts and Payments Account and Income and Expenditure Account to
show periodic performance and Balance Sheet to show financial position at the end of the period.
Students Notes: In General, NPO means those entites whose objective is not to earn profit but
to attain their defined goals.
Such organizations have objective to serve society at large.
Example of NPO
1.Bill & Milenda Gates Foundation (Bill Gates)
The Bill & Melinda Gates Foundation is the largest nonprofit organization in the world. Bill Gates
and Melinda are known not only for their extreme wealth, but for their generosity and philanthropy as
well–the Gates Foundation donates around $1 billion every year. The foundation advocates education,
health, sustainability, and good health for everyone. Bill’s philanthropic funds as a whole are geared
towards helping the poor.
LEGAL PART
Company Act ,2063
S 166/167
ACCOUNTING
NPO’s use fund-based accounting on grants received.
Following aspects are to be covered.
1. Fund Based Accounting (Which is divided into asset and expenses concept)
2. Final Accounts of NPO
a) Income and Expenditure Account
b) Receipts and Payments Account
c) Balance sheet
What is Fund Based Accounting?
Fund-based accounting, or fund accounting, is a system used by nonprofit organizations and

government agencies to manage their money. Fund accounting differs in purpose from the system
used in regular for-profit businesses because the goal is to maintain accountability and track how
funding is used rather than monitor the profitability of a company.
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Who Uses Fund Accounting?
Because the purpose of fund accounting is to manage donations, funding from outside sources or
income from fundraising, organizations that do not operate for profit use this accounting method.
Some entities that might use this system include:
1. Charitable organizations
2. Churches or religious institutions
3. Government agencies or governments
4. Nonprofit nursing homes or hospitals
5. Educational institutions
6. Foundations for the arts
Concept 1
Fund Based Accounting ASSETS
Fund means Profit accumulated with specific objectives.
Example 1
An NPO received grants of Rs 500,000 for purchase of Equipment and Rs 200,000 for purchase of
furniture.
NPO incurred Rs 400,000 on Equipment and Rs 180,000 on Furniture.
NPO maintains General Fund.
Journalize
Dr Cr
1 Bank 700,000.00
Equipment Fund 500,000.00
Furniture Fund 200,000.00
(Being amount received in fund)
2 Equipment 400,000.00
Furniture 180,000.00
Bank 580,000.00
(Being Assets Purchased)
3 Equipment Fund 400,000.00

Furniture Fund 180,000.00
General Fund 580,000.00
(Being Amount Transferred)
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Summary of Fund Account

Particulars Equipment Fund Furniture Fund
Grant Received 500000 200000
Expended -400000 -180000
Closing Balance 100000 20000
Balance Sheet
Capital Fund & Liabilities Assets
General Fund 580,000 Equipment 400,000
Equipment Fund 100,000 Furniture 180,000
Furniture Fund 20,000 Cash 120,000
Total 700,000 Total 700,000
This is Accumulated Profit

without Obligation
This is Accumulated Profit with Obligation and

for the same we have assets of Rs 120,000.
These assets can be in form of cash and cash
equivalent or investment.
Example 2
Received Grants for Building from Government Rs 600,000 and Private Grant Rs 200,000.
Purchased Investment for Rs.500,000. Earned and Received income on Investment Rs 40,000.
Sold Investment of Rs 500,000 for Rs 550,000.
Purchased Building Rs 575,000.
Requirement: Journalize and Prepare necessary ledgers
Dr Cr
1 Bank 800,000.00
Building Fund 800,000.00
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(Being amount received in fund)
2 Investment 500,000
Bank 500,000
(Being Investment purchased)
3 Bank 40,000
Building Fund 40,000
(Being interest income received and trf to Building Fund)
4 Bank 550,000
Investment 500,000
Building Fund 50,000
(Being Investment sold)
5 Building 575,000.00
Bank 575,000.00
3 Building Fund 575,000.00

General Fund 575,000.00
Summary of Fund Account

Particulars Building Fund
Grant Received 800,000.00
Expended (575,000.00)
Interest Income 40,000
Gain/Loss 50,000
Closing Balance 315,000.00
Balance Sheet
C& l A
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General Fund 575,000 Building 575,000
Building Fund 315,000 Cash 315,000
Furniture Fund
Total 890,000 Total 890,000
Students Notes
Fund Based Accounting _ Journal Entries
a. On receipt of Grants with specific objectives.
Bank Ac Dr
To Specific Fund
(Being Grant Received)
b. For Purchase of Investments
Investment Ac Dr
To Bank
(Being Investment Purchased)
c. On receipt of Interest
Bank Ac Dr
To Specific Fund
Notes. All incomes of specific fund will be transferred to specific fund
d. On sale of Investment
Bank Ac Dr (Sales Proceeds)

To Investment (Book Value)
(Being Investment sold)
Note Profit/Loss on sale of investment will be transferred to fund account.
e. On Purchase of assets as per specific fund restrictions
Assets Ac Dr
To Bank
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Specific Fund Ac Dr
To General Fund
Note General Fund means grants whose restriction are not existing. It is also called capital
fund or corpus fund.
Example 3
Prepare Building Fund Account
Opening Balance of Building Fund NPR 500,000
Grant Received for Building NPR 700,000
Income from Investment NPR 80,000
Building Purchase NPR 10,00,000
Building Fund Ac
Particulars Amounts Particulars Amounts
To Balance bd By Balance bd 500,000
To General Fund 1,000,000.00 By Bank 700,000
To Balance cd 280,000.00 By Bank 80,000
Total 1,280,000.00 Total 1,280,000
Example 4
NPO have following opening Balance
Building Fund NPR 2000000 represented by Bank NPR 400,000 and 12% Investment NPR 1600,000
It received NPR 1500,000 during the year from members for Building Fund.
It was constructing Building NPR 12,00,000. Expended in last year which was unpaid in last year.
During the current year, it further incurred NPR 700,000 for construction and it paid NPR 19,00,000 to
contractors.
Building was completed at year end.
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Journalize:
Opening Balance sheet

Particulars Amounts Particulars Amounts
Balance Bank
Figure 2,000,000.00 400,000.00
Liability 12% Investment
1,200,000.00 1,600,000.00
Building Under Construction
1,200,000.00
Total Total
3,200,000.00 3,200,000.00
1. Bank ac Dr 1500,000
To Building Fund 1500,000
2. Building WIP Dr 700,000

To Contractor Liability 700,000
3. Contractor Liability Dr 1900,000

To Bank 1900,000
4. Building Dr 1900,000
To Building WIP 1900,000
5. Bank Dr 192000
To Building Fund 192000
Example 5
Jhapa School maintains separate building fund. As on 31.3.2071, balance of building fund was Rs.
1,000,000 and it was represented by fixed deposit (8% per annum) of Rs. 600,000 and current account
balance of Rs. 400,000. During the year 2071/72, the school collected as donations towards the building
fund Rs. 560,000 and transferred 40% of developmental fee collected Rs. 2,256,500 to building fund.
Capital work progress as on 31st Ashadh 2071 was Rs. 825,000 for which contractor’s bill upto 75%
was paid on 14.4.2071. The extension of building was finished on 31.12.2071 costing Rs. 725,000 for
which contractors’ bill was fully met. It was decided to transfer the cost of completed building (Rs.
1,550,000) to the corresponding asset account. You are required to pass journal entries to incorporate
the above transactions in the books of Jhapa School for the year 2071/72 and show the trial balance of
building fund ledger.
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Solution
a. Bank A/c Dr. 560,000
To Building Fund A/c 560,000
(on collection of donations)
b. Bank A/c Dr. 902,600

(40% of the development fees directly)
c. Fixed Deposit a/c Dr. 48,000

To Interest A/c 48,000
(on accrual of interest)
d. Interest A/c Dr. 48,000
(Interest accrued on fixed deposit transferred)
e. Capital work in progress a/c Dr. 725,000

To Contractor’s a/c 725,000
(Work completed and certified during the year)
f. Contractors’ a/c Dr. 1,343,750

To Bank A/c 1,343,750
(Payments made during the year)
g. Building a/c Dr. 1,550,000

To Capital Work in progress A/c 1,550,000
(transfer to completed building to asset a/c)
h. Building Fund a/c 1,550,000

To General Fund A/c 1,550,000
(corresponding building fund transferred)
Prepare Trial Balance yourself
Concept 2
Fund Based Accounting_(Expenses Fund)
These are grants received for meeting certain expenses. These grants are to be used for payments of
certain objectives-based expenditures.
For examples
1. Prize Distribution (Prize Fund)

2. Seminar/Conference Expenses (Seminar Fund)
3. Research Expenses (Research Fund)
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4. Tournament Expenses (Tournament Fund)
Grant
Mr R ICAN NPR 100000

For Tournament
This is not assets, but

related to expenses
Journalize for Expenses Fund
1. On receipt of grant
Bank ac Dr
To Expenses Fund
(Being Amount Received)
2. On Purchase of Investment
Investment ac Dr
To Bank
(Being investment purchased)
3. On receipt of income from Investment

Bank ac Dr
To Expenses Fund
(Being interest amount received on investment)
4. On sale of Investment
Bank ac Dr
To Investment
(Being investment sold)
Note Any Profit or loss will be transferred to expenses fund)
5. On Payment of expenses
Expenses Fund ac Dr
To Bank
(Being expense fund used for expenses)
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Example 6
Following Balance are appearing on Trial Balance of ICAN
Particulars Dr Cr
Prize Fund
1,000,000.00
Prize Fund Investment
700,000.00
Interest on Prize Fund Investment
20,000.00
Prize Distributed
200,000.00
Bank (Prize Fund)
120,000.00
Total
1,020,000.00 1,020,000.00
Present the items in Balance sheet
Balance sheet
Prize Fund 1000000 820000 Prize Fund Investment 700000
Add Interest 20000 Bank 120000
Less Prize Distributed 200000
820000 820000
Here, No General Fund Concept
Concept
For General Donations
These are treated as revenue receipts and thus transferred to credit side of Income and
Expenditure account.
Concept
Subscriptions
Every NPO receive subscription from its members which is not grant but contribution by members to
NPO. In case of subscription there is no obligatory condition to NPO. These are collected to meet day
to day administrative expenses.
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These funds are without any restrictions and are paid by members annually.
Following subscription accounts is prepared.
Subscription ac
To Bal bd By Bal bd
(Outstanding) (Advance
Received)
To Income and Expenditure By Bank

To Bal cd By Bal cd
(Advance received) (Outstanding)
Example 7
Subscription received during the year 2072 170,000
Subscription outstanding at the beginning of 2072 14,000
Subscription outstanding at the end of 2072 16,000
Calculate the amount of subscription to be credited to income and expenditure account during the
year 2072
Subscription ac
To Bal bd 14000 By Bal bd
Received)
To Income and Expenditure 172000 By Bank 170,000.00

To Bal cd By Bal cd 16,000.00
Example 8
Prepare subscription account for 2022-23
Subscription received for
21/22 10,00,000
22/23 50,00,000
23/24 50,000
Opening Balance
Outstanding Subscription receivable 130,000
Advance subscription 45,000

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Subscription ac
To Bal bd 130000 By Bal bd 45000
Received)
To Income and Expenditure 5045000 By Bank 60,50,000

Here 50 lac and 45k 21/22 100,000
22/23 50,00,000
23/24 50,000
To Bal cd 50,000 By Bal cd 30, 000
Example 9
Example 10
Subscription outstanding as on 31.3.2015 NPR 9500 (including 500 for 2013-2014)
Subscription received in advance as on 31.3.2015 NPR 3000 (Including 200 for 2016/17)
Subscription received during the 2015-16 are as follows
for 2013-2014 NPR 400, For 2014-15 NPR 8900, for 2015-16 NPR 134,400, for 2016-17 NPR 4000,
for 2017-2018 NPR 1200.
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Subscription Outstanding as on 31.3.2016 NPR 7,000
Subscription of 2013-2014 written off during 2015-2016 NPR 50
Prepare Balance sheet and income and expenditure extract for the Fiscal Year ending 31 st 2016.
Assume effect of Written of has not been given in NPR 7000
Solution
An Extract of Income and Expenditure Account

Expenditure Amount Income Amount
To subscription W/off 50 By Subscription WN1 144000
An Extract of Balance Sheet

Liabilities Amount Assets Amount
Subscription outstanding
Subscriptions received in advance For 2013-2014 (500-400-50) 50
For 2016-17 (200+4000) 4200 For 2014-15 (9000-8900) 100
For 2017-18 1200 For 2015-2016 (7000-100-100) 6800
5400 6950
Subscription ac
To Bal bd 9500 By Bal bd
(Outstanding) (Advance Received) 3,000.00
To Income and 144000 By Bank

Expenditure (Balancing 148,900.00
figure)
By Income and Expenditure
50.00
To Bal cd 5400 By Bal cd
(Advance received) (Outstanding) 6,950.00
158900 158900
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Concept
Treatment of Entrance Fees/ Admission Fees
The entrance fees may be accounted for in any of the following three ways
Mix of both
Credited to I &E ac Treated as capital
receipt and
exclusively added to
capital fund
Concept
Treatment of Donation and legacies
Discussed Earlier
Legacies represent the donations which are given under a will on the death of a donor.
Concept
Treatment of Sale of Old Newspapers and Periodicals
Treated as Revenue Nature
Concept
Treatment of Sale of old Fixed Assets
The sale proceeds of old fixed assets are treated as capital receipts and thus, are credited to the
Respective Fixed Assets Accounts. However, the profit or loss on sale of fixed assets is shown in the
income and expenditure account.
Example
Furniture as on 31.3.2015 NPR 220000. Furniture (Having a Book value as
On 1.4.2015 of NPR 20000) sold at a loss of 20% on 31.12.2015, Furniture is to be depreciated @

10% p.a. Furniture costing NPR 150,000 was also purchased on 1.10. 2015.Prepare Furniture account
for the year ending on March 31,2016
Simple
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Concept
Treatment of Consumable Items consumed during the year
Sometime Not for profit organizations consume some consumable item e.g. Stationery,
Sports Materials, Medicines.
In such a case Total creditors account should be prepared to ascertain credit purchase (if missing)
A separate stock account for each of the consumable items is prepared to ascertain the amount of
consumable item consumed during the year.
Such amount consumed is debited to Income & Expenditure Account.
Particulars Opening Closing

Creditors for sports materials 2000 1200
Stock of Sports Materials 2100 500
During the year, the payment made to these creditors was 10800, Cash purchases 10% of credit
purchase.
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Concept
Treatment of Profit /loss from Trading Activities
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Summary Notes for Specific Items
ITEMS Accounting Treatment

Subscriptions These are treated as Revenue Receipts and hence are credited to
Income & Expenditure Accounts
Life Membership These are treated as capital receipts and hence are added to the
Subscriptions capital fund in the Balance Sheet
Entrance Fees If Treated as revenue receipts and is credited to income and
expenditure accounts
If Treated as a capital receipts and is added to the capital fund in the
Balance sheet
Amount of Consumable Such Amount is debited to income and expenditure account
Profit on sale of Assets It is credited to income and expenditure account
Sale of old newspapers It is credited to income and expenditure account
and periodicals
Sale of sports materials It is credited to income and expenditure account
Depreciation It is debited to income and expenditure account
Donation /Grants Discussed in detail
Interest on General Fund It is treated as Revenue Receipts and hence is credited to Income
and Expenditure account
Interest on Specific Fund It is added to Respective Fund
Concept
How to Prepare Final Account Of Not For Profit Organization?
Final Accounts of NPO include
1. Income and Expenditure account

2. Balance Sheet Opening and Closing
3. Receipts and Payments accounts
Notes 1 All Balances given in tallied account should be posted once. All adjustments should be adjusted
twice.
Notes 2 Receipts and Payments account should be prepared only if required in question.
Notes 3 IF NPO has any trading activity, then such trading activities should be reported in separate
trading accounts. (Discussed earlier)
Such profit will be transferred to Income and Expenditure accounts
Notes 4 Entrance fees can be either transferred to Income and Expenditure account or shown in
Balance sheet as per nature.
Notes 5 Entrance fees payable by member only once, at the time of becoming member should be
treated as capital receipts and credited to capital fund account, where the amount is small, just to cover
the expenses of admission, it should be treated as revenue receipts and credited to income and
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expenditure account. When a specific direction has been in the rules and regulation of Organization, it
should be treated accordingly
Notes 6 Assets account will be prepared if it has necessary adjustment
Notes 7 Expenses account need to be prepared in case of difficulty
Expenses ac
To Bal bd By Bal bd
(Advance) (Outstanding)
To Bank By Income
and
expenditure
account
To Bal cd By Bal cd
(Outstanding) (Advance)
Question No 1
From the following Trial Balance and the necessary information given below for a public school,
prepare income and Expenditure Account for the year 20X2, and a BaIance Sheet as at March 31,
20X2.
Debit Balances Rs Credit Balances Rs

Buildings 2,50,000 Admission fees 5,000
Furnitures and Fittings 40,000 Tuition and other tees received 2,00,000
Library books 60,000 Creditors for supplies 6,000
9% investments 2,00,000 Rent for the Hall 4,000
Salaries 2,00,000 Miscellaneous Receipts 12,000
Stationery 15,000 Govt. Grant 1,40,000
General expenses 8,000 General Fund 4,00,000
Annual Sports-—Expenses 6,000 Donation received for purchase
Cash at bank 20,000 of library books 25,000
Cash in hand 1,000 Sale of Old Furniture 8,000
8,00,000 8,00,000
Fees yet to be received for the year Rs 10,000. Salaries yet to be paid amount to Rs 12,000. Furniture
costing Rs 15,000 was purchased on 1.10.20X1. The book value of the Furniture sold (on 30.9.20X1)
was Rs 20,000 on 1.4.20X1. Depreciation is to be charged @ 10% per annum on Furniture and
Fittings; 15% on Library Books and 5% on Buildings
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Question No 2
The following is the Receipts and Payments Account of the Social Club in respect of the year
ended 31st March, 20X3:
Receipts Rs Payments Rs
To BaIance b/d 10,250 By Salaries 20,800
To Subscriptions: By Stationery 4,000
20X1-20X2 450 By Rates 6,000
20X2-20X3 21,100 By Telephone 1,000
20X3-20X4 750 22,300 By Investment 12,500
To Profit on sports meet 15,500 By Sundry expenses 9,250
To Income from 10,000 By Balance c/d 4,500
investments
58,050 58,050
The following additional information is provided to you:
(i) There are 450 members each paying an annual subscription of Rs 50; Rs 500 were in
arrears for 20X1—20X2 as on 1st April, 20X2.
(ii) On 31st March, 20X3, the rates were prepaid to 30th June, 20X3; the charge paid every
year being Rs 6,000.
(iii) There was an outstanding telephone bill tor Rs 350 on 31st March, 20X3.
(iv) Outstanding sundry expenses as on 31st March, 20X2 totaled Rs 700.
(v) Stock of stationery on 31st March, 20X2 was Rs 500; on 31st March, 20X3 it was Rs 900.
(vi) On 31st March, 20X2, building stood in the books at Rs 1,00,000 and it was subject to
depreciation at 5% per annum.
(vii) Investments on 31st March, 20X2 stood at Rs 2,00,000.
(viii) On 31st March, 20X3 income accrued on investments purchased during the year
amounted Rs 375. Required: Prepare an income and Expenditure Account for the year
ended 31st March, 20X3 and the Balance Sheet as at that date.
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Question No 3
Following is the Receipts and Payments Account of Mayur Club for the year ended 31st March,
2008:
Receipts Rs Payments Rs.

Opening Balances (1.4.2007) Sports materials 3,04,500
Cash on hand 39,100 Salaries 3,15,000
Cash at bank 50,000 Equipment purchased on 60,000
1.10.07
Receipts: Bank fixed deposits on 1,50,000
31.3.2008
Subscriptions Rent 1,48,500
For the year 2006-07 18,000 Ground maintenance 22,120
For the year 2007-08 9,63,000 Insurance 38,400
For the year 2008-09 4,500 Stationery 3,450
Interest on bank Sundry 5,880
expenses
Fixed deposits @10% 45,000 Closing Balances as on
31.3.08
Cash on hand 31,750
Cash at bank 40,000
11,19,600 1,19,600
Following additional information is provided to you:
(i) The club has 220 members. The annual subscription is Rs. 4,500 per member.
(ii) Depreciation to be provided on furniture at 10% p.a. and on sports equipment at 15% p.a.
(iii) On 31st March, 2008, stock of sports material in hand (after members use during the year)
is valued at Rs.78,000 and stock of stationery at Rs.3,150. Rent for 1 month is outstanding.
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Unexpired insurance amounts to Rs.9,600.
(iv) On 31st March, 2007 the club had the following
assets: Furniture Rs. 2,70,000
Sports equipment Rs. 1,80,000
Bank fixed deposit Rs.
4,50,000 Stock of stationery
Rs. 1,500 Stock of sports
material Rs. 73,500 Unexpired
insurance Rs. 8,400
Subscription in arrear Rs.
22,500
Note: There was no liability on 31.3.2007.
You are required to prepare:
(i) Income and Expenditure Account; and
(ii) Balance Sheet as at 31st March, 2008.
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Question No 4
Modern (India) Citizens Club was registered in a city and the accountant prepared the following
Receipts and Payments Account for the year ended on March 31, 20X2 and showed a deficit of Rs
14,520:
Subscriptions 62,130 Premises 30,000
Fair Receipts 7,200 Honorarium to Secretary 12,000
Variety Show Receipts (Net) 12,810 Rent 2,400
Interest 690 Rates and Taxes 3,780
Bar Collections 22,350 Printing and Stationery 1,410
Cash Spent More 1,000 Wages 2,520
Deficit 14,520 Sundry Expenses 5,350
Fair Expenses 7,170
Bar Purchases Payments 17,310
Repairs 960
New Car (Less proceeds
of old Car Rs 9,000) 37,800
120,700 0 1,20,700
Information:
1.4.20X1 31.3.20X2
Rs Rs
Cash in hand 450 —
Bank Balance as per Pass Book 24,690 10,440
Cheque issued not presented for sundry expenses 270 90
Subscriptions Due 3,600 2,940
Premises at Cost 87,000 1,17,000
Accumulated Depreciation on Premises 56,400 ?
Car at Cost 36,570 46,800
Accumulated Depreciation—Car 30,870 ?
Bar Stock 2,130 2,610
Creditors for Bar Purchases 1,770 1,290
(a) Cash overspent represents honorarium to Secretary not withdrawn due to cash deficit.
His annual honorarium is Rs 12,000.
(b) Depreciation on Premises and Car is to be provided at 5% and 20% on written down value.
Required: Prepare the Correct Receipts and Payments Accounts, Income and Expenditure
Account for the year 20X1-20X2 and Balance Sheet as on 31st March 20X2.
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Question No 5
Prepare Income and Expenditure Account and Balance Sheet of Kathmandu College Sports
Club, Kathmandu from the following information:
Receipts and Payments Account of Kathmandu College Sports Club, Kathmandu for the year ended
on 31st March, 20X3
To Balance b/d: 500 By Rent 9,750
Cash
Bank 4,000 By Miscellaneous Expenses 28,800
Stamps 300 By Postage Expenses 1,200
To Subscription By Furniture 8,000
20X1-20X2 4,650 By Creditors for Sports Material 12,200
20X2-20X3 67,200 By Cost of prizes (to be awarded) 4,150
20X3-20X4 2,600 74,450 By Cash purchase of Sports 2,000
Materials
To Entrance Fees 8,000 By Match Expenses 7,030
To General 4,050 By Balance c/d:
Donations
To Donations for Prize Fund 2,800 Cash 545

To Sale of old Sports Materials 5,200 Bank 26,000
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To Interest on Prize Fund 300 Stamps 150 26,695
Investments
To Miscellaneous Receipts 225
99,825 99,825
Information:
1.4.20X2 31.3.20X3
Particulars Rs Rs
Sports Materials 4,00 5,000
0
Furniture 40,000 ?
5% Prize Fund investments (Face Value Rs 11,700 ?
12,000)
Creditors for Sports Materials 1,40 2,950
0
Subscription in arrears 4,75 ?
0
Subscription in advance 1,40 ?
0
Prize Fund 12,000 ?
Rent paid in advance — 750
Outstanding Bent 750 —
Outstanding Miscellaneous Expenses 2,28 4,020
0
Miscellaneous Expenses paid in advance 750 850
Book Value of Sports Materials sold was Rs 4,000. Depreciation on furniture is to be provided
@ 10%. Half of entrance fees to be capitalised. There are 720 members, each paying an annual
subscription of Rs 100.
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Question No 6
Mahaveer Sports Club gives the following Receipts & Payments Account for the year ended
March 31, 20x2.
Receipts and Payments Account
To Opening Cash & Bank Balances 5,200 By Salaries 15,000
To Subscriptions 34,800 By Rent & Taxes 5,400
To Donations 10,000 By Electricity Charges 600
To interest on investments 1,200 By Sports Goods 2,000
To Sundry Receipts 300 By Library Books 10,000
By Newspapers & Periodicals 1,080
By Misc. Expenses 5,400
By Closing Cash & Bank
Balances 12,020
51,500 51,500
Liabilities As on 31.3.20X1 As on 31.3.20X2

Rs Rs
Outstanding Expenses:
Salaries 1,000 2,000
Newspapers & Periodicals 400 500
Rent & Taxes 600 600
Electricity Charges 800 1,000
Assets:
Library Books 10,000
Scotts Goods 8,000
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Furniture and Fixtures 10,000
Subscriptions Receivable 5,000 12,000
Investment-Govt. Securities 50,000
Accrued Interest 600 600
Provide Depreciation on:
Furniture & Fixtures @ 10% p.a.
Sports Goods @ 20% p.a.
Library Books @ 10% p.a.
You are required to prepare CIub’s opening Balance Sheet as on 01.04.20X1, Income and
Expenditure Account for the year ended on 31.3.20X2 and the Balance Sheet as on that date.
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Question No 7
The foIIowing is the Receipts and Payments Account of Sydney Club for the year ended on 31st
March, 20X2:
Opening Balances: Salaries 1,20,000
Cash 10,000 Creditors 15,20,000
Bank 3,850 Printing and Stationery 70,000
Subscription Received 2,02,750 Postage 40,000
Entrance Donation 1,00,000 Telephones and Telex 52,000
Interest Received 58,000 Repairs and Maintenance 48,000
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Sale of Assets 8,000 Glass and Table Linen 12,000
Miscellaneous income 9,000 Crockery and Cutlery 14,000
Receipts at: Garden Upkeep 8,000
Coffee Room 10,70,000 Membership Fees 4,000
Wines and Spirits 5,10,000 Insurance 5,000
Swimming Pool 80,000 Electricity 28,000
Tennis Court 1,02,000 Closing Balances:
Cash 8,000
Bank 2,24,600
21,53,600 21,53,600
The Assets and Liabilities as on 1.4.20X1 were as follows:

Fixed Assets (net): Rs 5,00,000; Stock: Rs 3,80,000; investment in 12% Tax free Government
Securities: Rs 5,00,000; Outstanding Subscription: Rs 12,000; Prepaid Insurance:
Rs 1,000; Sundry Creditors: Rs 1,12,000; Subscription received in advance: Rs 15,000,
Entrance Donation Received pending membership: Rs 1,00,000; Gratuity Fund: Rs
1,50,000.
The following adjustments are to be made while drawing up the Accounts:
(a) Subscription received in advance as on 31 st March, 20X2 was Rs 18,000.
(b) Outstanding Subscription as on 31st March, 20X2 was Rs 7,000.
(c) Outstanding Expenses are: Salaries: Rs 8,000 and Electricity: Rs 15,000.
(d) 50% of the Entrance Donation was to be capitalised. There was no pending membership
as on 31st March, 20X2.
(e) The cost of assets sold net as on 1.4.20X1 was Rs 10,000.
(f) Depreciation is to be provided at the rate of 10% on assets.
(g) A sum of Rs 20,000 received in October 20X1 as Entrance Donation from an applicant was
to be refunded as he had not fulfilled the requisite membership qualifications. The refund was
made on 3.6.20X2.
(h) Purchases made during the year amounted to Rs 15,00,000.
(i) The value of closing stock was Rs 2,10,000.
(j) The club as a matter of policy charges off to income and Expenditure Account all
purchases made on Account of crockery, cutlery, glass and linen in the year of purchase.
You are required to prepare an Income and Expenditure Account for the year ended on 31st
March, 20X2 and the Balance Sheet as on 31st March, 20X2 along with necessary workings.
39
40
41
42
43
44
Question No 8
Prepare lncome and Expenditure Account and Balance Sheet of Nepal Sports Club, Kathmandu
from the following information:
Receipts and Payments Account of Nepal Sports Club, Kathmandu

Dr for the year ending on 31st March, 20X2 Cr
Receipts Rs '000 Payments Rs
'000
To Balance Cash 150 By Balance b/d (Bank Overdraft) 3,000
b/d:
Stamp 50 200 By Insurance (paid up to 300
s 30.6.20X2)
To Subscriptions 7,000 By Miscellaneous Expenses 3,875
To Entrance fees 200 By Postage Expenses 200
To Life Membership 500 By Refreshment Room 2,100
Subscription Expenditure
To General Donations 2,000 By Furniture (Purchased on 600
To Cricket Fees 250 1.10.20X1)
To Refreshment Room 3,100 By Honorarium to Cricket coach 600
Receipts
To Sale of Old periodicals 72 By Sports Equipments 2,200
To Interest on Govt. Securities 144 (on 1.10.20X1)
(T.D.S. @ 20%) By 10% NRB Tax Free Bonds

To Donation for Club Pavilion (on 1.1 .20X2) (Pavilion) 10,000
(on 1.1 .20X2) 10,000 By Balance c/d:
Cash in hand 52
Cash at bank 514
Stamps 25 591
23,466 23,466
Information:
Particulars 1.4.20X1 31.3.20X2
Rs '000 Rs '000
Club 'Pavilion fund 5,000 ?
Sports Equipments 4,500 ?
Furniture 3,200 ?
Stock of Foodstuff 120 80
6% Government Securities (Face Value Rs 2,580 ?
45
30,00,000)
Subscription Outstanding 600 250
Subscription ln Advance — 300
Outstanding Miscellaneous Expenses 200 250
Accounting policies followed by Nepal Sports Club, are, provide as under:
(a) The sports equipments and furniture are to be depreciated @ 25% and 19% p.a. respectively.
(b) One halt of the entrance fees and life membership fee are to be treated as income.
Question No 9
Following is the Income and Expenditure Account of Victoria Club for the year ending 31st March,
2006:
Expenditure Rs Income Rs
To Salaries & Wages 19,000 By Subscription 30,000
To Misc. Expenses By Entrance Fees received 1,000
(including Insurance) 2,000 By Annual Sports Income
To Audit fees 1,000 Receipts 6,000
To Chief Executives‘ Honorarium 4,000 Less: Expenses 3,000 3,000
To Printing & Stationery 1,800
To Annual day
Celebration Exp. 6,000
Less: Donation 4,000 2,000
To Interest on Bank loan 600
To Depreciation on Sports Equipment 1,200
To Excess of Income over 2,400
Expenditure
34,000 34,000
Additional Information:
31.03.2005 31.03.200
6
Rs Rs
(i) Subscription outstanding 2,400 3,000
(ii) Subscription received in advance 1,800 1,080
(iii) Salaries outstanding 1,600 1,800
(iv) Sports equipment (after deducting depreciation) 10,400 10,800
(v) Prepaid Insurance – 240
(vi) Cash in Hand ? 6,400
(vi) The Club owned a Sports’ ground of Rs 40,000
(vii) The Club took a loan of Rs 8,000 from a bank during the year 2004-05, which was not
paid in 2005- 06.
46
(viii) Audit fee of 2005-06 was outstanding, but Audit fees of Rs 800 for 2004-05 was paid in
2005-06. Prepare Receipts and Payments Account for the year ending 31st March, 2006 and
a Balance Sheet on that date.
47
Question No 10
The following is the Income and Expenditure Account of the Red Roses club for the year ended
on March, 31 20X2.
To Salaries 24,000 By Subscriptions 72,000
To Rent 10,800 By Entrance fees 8,000
To Rates and Taxes 600 By Surplus on Publication of
To Postage and Telephones 720 brochure 4,500
To Affiliation fees to the AlI—India By Profit on sale of old
sports
Lawn Tennis Association 1,200 as sets 1,200
To Sports Materials 15,750 By Interest on 4% 600
investments
To Electricity Charges 1,200 By Miscellaneous Income 225
To Repairs and Maintenance to
tennis court 9,600
To Depreciation on assets at 10%
of
gross book value at end of year 4,800
To Surplus carried to Capital Fund 17,855
86,525 86,525
The following further information is made

available: Balances Balances as
on
31.3.20X1 at 31.3.20X2
Rs Rs
(a) Sunday assets 44,000 ?
Bank Balance 4,800 ?
Subscriptions in arrear 4,750 3,500
Subscription received in advance 1,400 2,600

4% Investments [Face value Rs 15,000] 12,000 12,00
48
0
(b) Expenses Outstanding:
Salaries 600 1,200
Rent 900 1,800
Rates & Taxes Nil 600
Tennis court maintenance 780 320
(c) Outstanding for purchase of sports materials 1,400 2,950
(d) Prize Fund 4,600 3,250
(e) The book value, as on 1.4.20X1 of sports goods sold in the year was Rs 4,000.
(f) Prize Fund is separately maintained. All receipts are credited to it separately and
expenditure is met out of the fund directly. During the year, credits to the account amounted
to Rs 2,800.
(g) Interest received this year was only for two quarters.
(h) The club was admitted as a member of the All India Lawn Tennis Federation on
1.10.20X1 when it paid subscription till 30.9.20X2.
(i) Advertisement charges on brochure-yet to be collected-Rs 450.
(j) A fixed deposit of Rs 25,000 was made on 31st March, 20X2.
Prepare the Receipts and Payments Account for the year ended on March 31, 20X2 and the
Balance- Sheet as on that date of the Red Roses Club.
49
50
51
Question No 11
Jalan Cricket Club provides you the following formation:

Income & Expenditure Account
Dr. for the year ended 31st March, 20X2 Cr.
To Remuneration to coach 18,000 By Donation and Subscription 1,00,000
To Salaries and Wages 24,000 By Bar Room:
To Rent 23,000 Receipts 24,000
To Miscellaneous expenses 7,000 Less: Expenses 20,000 4,000
To Honorarium to Secretary 18,000 By Bank Interest 2,000
To Depreciation on 5,000 By Hire-Club-Hall 14,000
Equipment
To Surplus 25,000
1,20,000 1,20,000
Balance
Sheets
Liabilities 31.03.X 30.3.X2 Assets 30.3.X 30.3.X2
1 1
Rs Rs Rs Rs
Capital Fund 48,000 48,000 Equipment 25,00
0
20,000
Add: Entrance Fees 10,000 Outstanding 6,000 6,000
subscription
Add: Surplus 25,000 Cash in hand 4,000 2,000

Subscription in advance 4,000 3,000 Cash at bank 2,500
10,000
Miscellaneous expenses 5,500 5,000 Fixed Deposit 20,000
50,000
Salaries & Wages — 1,000 Accrued Hire charges - 2,000
Honorarium to Secretary 1,000 — of Club Hall — 2,000
Prepaid Rent 1,000 2,000
58,500 92,000 58,500 92,00
0
52
Required: Prepare the Receipts & Payments Account of the Club for the year ended March 31, 20X2
53
Question No 12
The following particulars relate to Hanuman Sports Club:
Income & Expenditure Account
Dr. for the year ending on 31st Dec., 20X2 Cr.
To Secretary’s Salary 1,500 By Entrance Fees 10,500
To Printing & Stationery 2,200 By Subscriptions 15,600
To Advertising 1,600 By rent 2,800
To Audit Fees 500 By Interest on Investments 1,200
To Fire Insurance 1,000
To Depreciation:
—Sports Equipments 9,000
—Furniture 500
To Surplus 13,800
30,100 30,100
54
Receipts & Payments Account

Dr. for the year ending on 31st Dec., 20X2 Cr.
To Balance b/d 4,200 By Secretary’s Salary 1,000
To Entrance Fee 20X1 1,000 By Printing & stationery 2,600
-do- 20X2 10,000 By Advertising 1,600
To subscriptions 20X1 600 By Fire Insurance 1,200
To Subscription 20X2 15,000 By 12% Investments
-do- 20X3 400 (purchased on 1.7.20X2) 20,000
To Rent received 2,400 By Furniture 2,000
To Interest received 600 By Balance c/d 5,800
34,200 34,200
The assets on 1 January, 20X2 included Club Grounds & Pavilion Rs 44,000, Sports
Equipments Rs 25,000 and Furniture and Fixtures Rs 4,000. Subscriptions in arrear on that
date were Rs 800 Subscriptions received in advance on that date were Rs 200. Creditors for
Printing & Stationery on that date were Rs 500.
Requirements: Prepare the Balance Sheet as at 1.1.20X2 and 31.12.20X2.
55
Question No 13
Income and expenditure account for the year ending on 31 st March ,20x2
Salaries 23,500 Subscriptions 25,000
Surgery & Dispensary 3,000 Interest 9,000
Rent and Taxes 500 Donations 4,000
Insurance 200 Miscellaneous Receipts 300
Office expenses 800
Depreciatio
n: Building 3,750
Furniture 120
Instruments 100 3,970
Surplus 6,330
38,300 38,300
Information:
31.3.20X1 31.3.20X2
Rs Rs
Cash in hand and at bank ? 18,700
4.5% Tax free Government securities (Face value Rs 1,80,000 1,80,000
2,00,000)
Subscription outstanding 7,000 10,000
Subscription received in advance 200 600
Salaries unpaid 1,000 1,500
Furniture 2,000 1,980
Land & Buildings 1,00,000 96,250
Instruments 3,500 3,900

Surgery expenses due 200 300
Stock of medicines 300 100
Prepare Receipts and Payments Account for 20X1-20X2 and also the Balance Sheet
Professional Firm Accouting

Question No 14
Old and New are in partnership, practising as Chartered Accountants under the name and
style style Oldnew & Co., sharing profits in the manner stated below. They close their accounts
on 31st March. The following was their Balance Sheet as on 31st March, 20X1.
Liabilities Rs Assets Rs
Partners' Capitals: Motor Car 20,000
Old 26,000 Office Machinery 3,000
New 18,000 44,000 Furniture 8,000
Audit Fees Collected in 1,000 Outstanding Audit
Fees:
Advance (old clients) OId’s clients 4,000
Client Accounts 2,000 New’s clients 5,000 9,000
Liabilities for Cash at bank 12,500
Establishment
expenses 500 Cash in hand 1,500
Provision against Library Books 2,500
Outstanding
Audit Fees 9,000
56,500 56,500
The following is the summary of their Cash Transactions for the year ended on 31st March
20X2.
Receipts Rs Disbursements Rs
Opening Cash and Establishment charges 24,000
Bank Balance 14,000 Motor car expenses 10,000
Audit Fees: Printing and Stationery 700
Old clients 90,000 Postage and Telegrams 300
New clients 50,000 1,40,000 Subscription for journals 600
Fees for other service: Library Books 1,500
Old’s Account 40,000 Calculating Machine 7,500
New’s Account 20,000 60,000 Travelling and 2,500
Conveyance
Miscellaneous income 500 Member Fees 400
Drawings:
Old 50,000
New 40,00 90,000
0
Disbursement on Clients 1,500
Cash in hand 2,500
Cash in bank 73,000
2,14,500 2,14,500
The following particulars are further available:
(a) Depreciation to be provided on: Books @ 10%, Motor Cars @ 20% p.a., Furniture
@ 10% p.a., Office Machine @ 15%.
(b) Audit Fees Receivable: New’s clients: Rs 2,000, Old’s clients: Rs 6,000.
(c) Outstanding liability for establishment expenses on 31st March, 20X2: Bs 1,000.
(d) lt has been agreed that 40% of Audit Fees and 20% of Fees for other services should be
transferred to Income and Expenditure Account in respect of each partner’s account, the
balance being credited directly to the Capital Accounts, Profits and Losses are to be
divided between the partners in the ratio at 2:1.
Required: Prepare the Income and Expenditure Account for the year 20X1-20X2 and a
Balance Sheet as on 31st March, 20X2.
Question No 15
Dr Arun Gupta’s Receipts and Payments for the year ending on 31st March 20x2 was as follows:
To Balance b/d 66,100 By Rent (for 18 months to 45,000
30.6.20X2)
To Fees 2,14,200 By Telephone Charges 4,500
To Miscellaneous Receipts 200 By Salaries to assistants 33,000
To Sale of old Equipment 4,000 By Journals etc. 1,000
By Library Books
(Purchased on 1.7.20X1) 5,000
By Medical Equipments 8,000
By Furniture
(Purchased on 1.10.20X1) 7,000
By Purchases of Medicines 43,000
By Conveyance Expenses 50,000
By Drawings 60,000
By Misc. Expenses 1,000
By Balance c/d 27,000
2,84,500 2,84,500
Information:
(a) Fees outstanding: on 31 .3.20X1 Rs 2,000, on 31.3.20X2 Rs 5,000
(b) Stock of Medicines: on 31.3.20X1 Rs 10,000, on 31.3.20X2 Rs 18,600
(c) Creditors for Medicines: on 31 .3.20X1 Rs 100, on 31.3.20X2 Rs 300
(d) Medical Equipment on 31.3.20X1 Rs 50,000. Medical Equipment was sold as well as
purchased on 1st Jan. 20X2. The book value of the equipment sold being Rs 6,000 as on
1.4.20X1. Equipment is subject to depreciation @ 20% p.a.
(e) Furniture on 31.3.20X1 Rs 5,000, Library Books on 31.3.20X1 Rs 1,000 Depreciate
furniture by 10% and Library Books by 20%.
(f) Salary to assistant still payable is Rs 3,000.
(g) 40% of conveyance is for domestic purposes.
Required: Prepare the Receipts and Expenditure Account of Dr. Arun for the year 20X1-20X2
and the Balance Sheet as at 31.3.20X2.
Extra Question
Question 1
Smith Library Society showed the following position on 31st March, 2010:
Balance Sheet as on 31st March, 2010
Liabilities ` Assets `
Capital fund 7,93,000 Electrical fittings 1,50,000
Expenses payable 7,000 Furniture 50,000
Books 4,00,000
Investment in securities 1,50,000
Cash at bank 25,000
Cash in hand 25,000
8,00,000 8,00,000
The receipts and payment account for the year ended on 31st March, 2011 is given below:
` `
To Balance b/d By Electric charges 7,200
Cash at bank 25,000 By Postage and stationary 5,000
Cash in hand 25,000 50,000 By Telephone charges 5,000
To Entrance fee 30,000 By Books purchased 60,000
To Membership subscription 2,00,000 By Outstanding expenses paid 7,000
To Sale proceeds of old papers 1,500 By Rent 88,000
To Hire of lecture hall 20,000 By Investment in securities 40,000

To Interest on securities. 8,000 By Salaries 66,000
By Balance c/d
Cash at bank 20,000
Cash in hand 11,300
3,09,500 3,09,500
You are required to prepare income and expenditure account for the year ended 31st March, 2011 and a
balance sheet as at 31s, March, 2011 after making the following adjustments:
Membership subscription included ` 10,000 received in advance. Provide for
outstanding rent ` 4,000 and salaries ` 3,000.
Books to be depreciated @ 10% including additions. Electrical fittings and furniture are also to be depreciated at
the same rate.
75% of the entrance fees is to be capitalized.
Interest on securities is to be calculated @ 5% p.a. including purchases made on 1.10.2010 for
` 40,000.
Answer
Smith Library Society Income and

Expenditure Account for the year
ended 31st March, 2011
Dr. Cr.
Expenditure ` ` Income `
To Electric charges 7,200 By Entrance fee (25% of 7,500
To Postage and stationary 5,000 ` 30,000)
To Telephone charges To 5,000 By Membership 2,00,000
Rent 88,000 subscription 10,000 1,90,000
Add: Outstanding Less: Received in advance
4,000 92,000
To Salaries By Sale proceeds of old
66,000 1,500
Add: Outstanding papers
3,000 69,000 By Hire of lecture hall By
To Depreciation (W.N.1)
Interest on securities 20,000
Electrical fittings
Furniture 15,000 (W.N.2) 8,000
Books 5,000 Add: Receivable
46,000 66,000 By Deficit- excess of 500 8,500
expenditure over 16,700
income
2,44,200 2,44,200
Balance Sheet of Smith Library Societyas on 31st March, 2011
Liabilities ` ` Asset ` `
Capital fund 7,93,000 Electrical fittings 1,50,000

Add: Entrance fees _22,500 Less: Depreciation (15,000) 1,35,000
8,15,500 Furniture 50,000
Less: Excess of expenditure Less: Depreciation (5,000) 45,000
over income (16,700) 7,98,800 Books 4,60,000
Outstanding expenses: Less Depreciation (46,000) 4,14,000
Rent 4,000 Investment:
Salaries 3,000 7,000 Securities 1,90,000
Membership subscription Accrued interest 500 1,90,500
in advance 10,000 Cash at bank 20,000
Cash in hand 11,300
8,15,800 8,15,800
Working Notes:
`
1. Depreciation
Electrical fittings 10% of ` 1,50,000 15,000
Furniture 10% of ` 50,000 5,000
Books 10% of ` 4,60,000 46,000
2. Interest on Securities
Interest @ 5% p.a. on ` 1,50,000 for full year 7,500
Interest @ 5% p.a. on ` 40,000 for half year 1,000 8,500
Less: Received (8,000)
Receivable 500
The following is the Receipt and Payment Account of Park View Club in respect of the yearended 31st
March, 2012.
Receipt Amount (`) Payments Amount (`)

To Balance b/d 1,02,500 By Salaries 2,08,000
To Subscriptions By Stationery 40,000
2010-11 4,500 By Rent 60,000
2011-12 2,11,000 By Telephone expenses 10,000
2012-13 7,500 2,23,000 By Investment 1,25,000
To Profit on sports meet 1,55,000 By Sundry expenses 92,500
To Income from investments 1,00,000 By Balance c/d 45,000
5,80,500 5,80,500
Additional information:
(1) There are 450 members each paying an annual subscription of ` 500. On 1st April, 2011
outstanding subscription was ` 5,000.
(2) There was an outstanding telephone bill for ` 3,500 on 31st March, 2012.
(3) Outstanding sundry expenses as on 31st March, 2011 totalled ` 7,000.
(4) Stock of stationery:
On 31st March, 2011 ` 5,000
On 31st March, 2012 ` 9,000
(5) On 31st March, 2011 building stood in the books at ` 10,00,000 and it was subject to
depreciation @ 5% per annum.
(6) Investment on 31st March, 2011 stood at ` 20,00,000.
(7) On 31st March, 2012, income accrued on the investments purchased during the year
amounted to ` 3,750.
Prepare an Income and Expenditure Account for the year ended 31 st March, 2012 and theBalance Sheet
as at that date.
Answer
Park View Club
Income and Expenditure Account for the

year ending on 31st March 2012
Expenditure Amount Income Amount (`)
(`)
To Salaries 2,08,000 By Subscriptions (W.N. 2) 2,25,000
To Stationery consumed (W.N.3) 36,000 By Profit on sports meet 1,55,000
To Rent 60,000 By Income on investments 1,00,000
To Telephone expenses 10,000 Add: Income accrued 3,750 1,03,750
Add: Outstanding on 31.3.12 3,500 13,500
To Sundry expenses 92,500
Less: Outstanding on 31.3.11 (7,000) 85,500
To Depreciation of building 50,000
To Surplus (excess of income over
expenditure) 30,750
4,83,750 4,83,750
Balance Sheet as at 31st March 2012
Liabilities Amount Assets Amount (`)

(`)
Capital fund (W.N.1) 31,05,500 Outstanding subscriptions 14,500
Add: Surplus 30,750 31,36,250 Investment
Subscriptions received in (20,00,000+1,25,000) 21,25,000
advance 7,500 Add: Interest accrued on
Outstanding telephone bills 3,500 investments 3,750 21,28,750
Building 10,00,000
Less: Depreciation (50,000)Stock 9,50,000
of stationery 9,000
Cash balance 45,000
31,47,250 31,47,250
Working Notes:
(1) Balance Sheet as at 31st March 2011
Liabilities Amount Assets Amount (`)

(`)
Outstanding sundry expenses 7,000 Building 10,00,000
Capital fund (Bal.fig.) 31,05,500 Investments 20,00,000
Stock of stationery 5,000

Cash balance 1,02,500
Outstanding subscriptions 5,000
31,12,500 31,12,500
(2) Calculation of subscriptions accrued during the year

Subscription A/c
Particulars Amount Particulars Amount

(`) (`)
To Outstanding Subscriptions 5,000 By Cash A/c By 2,23,000
(as on 1.4.11) Outstanding
subscriptions 14,500
(as on 31.3.12) (Bal.fig.)
To Income & Expenditure A/c 2,25,000
To Subscriptions received in
advance for 2012-13 7,500
2,37,500 2,37,500
(3) Calculation of stationery consumed during the year
`
Stock of stationery as on 31 March, 2011 5,000
Add: Purchased during the year 2011-12 40,000
45,000
Less: Stock of stationery as on 31st March, 2012 (9,000)
Stationery consumed 36,000
Question 12
City Bar club was registered in a city and the accountant prepared the following Receipts andPayments
Account for the year ended 31st March, 2012 and showed a deficit of ` 14,520.
Receipts Amount Payments Amount

` `
Subscriptions 62,130 Premises 30,000
Fair receipts 7,200 Honorarium to Secretary 12,000
Variety show receipt (net) 12,810 Rent 2,400
Interest 690 Rates & taxes 3,780
Bar collection 22,350 Printing & stationary 1,410
Excess cash spent 1,000 Sundry expenses 5,350

Deficit 14,520 Wages 2,520
Fair expenses 7,170
Bar purchases payments 17,310
Repair 960
New car (less proceeds of old car
` 9,000) 37,800
1,20,700 1,20,700
The following additional information are:
01-04-2011 31-03-2012
Cash in hand 450 -

Bank balances as per pass book 24,690 10,440
Cheque issued but not presented - for sundry expenses 270 90
Subscriptions due 3,600 2,940
Premises at cost 87,000 1,17,000
Accumulated depreciation on premises 56,400 -
Car at cost 36,570 46,800
Accumulated depreciation on car 30,870 -
Bar stock 2,130 2,610
Creditors for the bar purchases 1,770 1,290
Cash excess spent represent honorarium to secretary not withdrawn due to cash deficit. Hisannual
honorarium is ` 12,000.
Depreciation on premises and car is to be provided at 5% and 20% on written down valuemethod.
You are required to prepare the correct Receipts and Payments Account, Income andExpenditure
Account and Balance Sheet as on 31st March, 2012.
Answer
In the books of Bear Bar Club
Receipts & Payments Account for the year ended 31.03.2012

Receipts Amount Payments Amount
` `
To Balance b/d By Honorarium to Secretary 11,000
Cash in hand 450 (12,000 – 1,000)

Bank (W.N.6) 24,420 24,870 By Rent 2,400
To Subscriptions 62,130 By Rates & taxes 3,780
To Fair receipts 7,200 By Printing & stationeryBy 1,410
To Variety show receipts 12,810 Sundry expenses By 5,350
Wages
To Interest 690 2,520
By Fair expenses By
To Bar collection 22,350 7,170
Bar purchases By
To Car sold (old) 9,000 17,310
Repairs
By Premises 960
By Car (37,800 + 9,000) 30,000

By Balance c/d Bank 46,800
(W.N.6)
10,350
1,39,050 1,39,050
Income & Expenditure Accountfor

the year ended 31.03.2012
Expenditure Amount Income Amount
` `
To Honorarium to secretaryTo 12,000 By Subscription 62,130
Rent 2,400 Less: Outstanding as on 1.4.11 (3,600)
To Rates & taxes 3,780 Add: Outstanding as on 1.3.12By 2,940 61,470
To Printing & stationery 1,410 Fair receipts 7,200
To Sundry expenses To Less: Fair expenses
5,350 (7,170) 30
Wages By Variety showBy
2,520 12,810
To Repairs Interest
960 690
To Depreciation on: Premises By Profit from bar (W.N.3)
6,000
(1,530+1,500)Car By Profit on sale of car (W.N.5)
To Surplus (excess of income 3,030 3,300
over expenditure) 9,360
43,490
84,300 84,300
Balance Sheet as on 31.03.2012

` `
Capital fund Premises 87,000
Opening balance (W.N.1) 65,130 Add: Addition in the year 30,000
Add: Surplus 43,490 1,08,620 1,17,000
Less: Accumulated
Sundry creditors 1,290 depreciation (W.N.4) (59,430)
Outstanding Honorarium 1,000 57,570
Car 36,570
Add: Addition in the year 46,800
83,370
Less: Book value of thecar
sold (36,570)
Less: Depreciation ofnew
car (9,360)
Bar stock Subscription 37,440
due Cash at bank
2,610
(W.N.6)
2,940
10,350
1,10,910 1,10,910
Working Notes:
1. Balance Sheet as on 31.03.2011

` `
Capital fund (bal. fig.) 65,130 Premises 87,000
Sundry creditors for bar 1,770 Car 36,570
Accumulated depreciation on Bar stock 2,130
Premises 56,400 Subscription due 3,600
Car 30,870 87,270 Cash at bank (W.N.6) 24,420
Cash in hand 450
1,54,170 1,54,170
2. Creditors for Bar Purchases
` `
To Bank 17,310 By Balance b/d 1,770
To Balance c/d 1,290 By Purchases (Bal. fig.) 16,830
18,600 18,600
3. Trading Account (of Bar)

` `
To Opening stock 2,130 By Bar collections(Cash) 22,350
To Purchases (W.N.2) 16,830 By Closing stock
To Profit (Bal. fig.) 6,000 2,610
24,960 24,960
4. Accumulated Depreciation on Premises
`
Opening Balance 56,400
Add: Depreciation on old premises [(87,000 – 56,400) × 5%] 1,530
Depreciation on new premises (30,000 × 5%) 1,500
59,430
5. Profit on sale of car
` `
Sales price of a car 9,000
Less: Book value of old car sold 36,570
Less: Accumulated depreciation (30,870) (5,700)
Profit on sale 3,300
6 Bank balance as per cash book
1.4.2011 31.3.2012
` `
Bank balance as per Pass book 24,690 10,440
Less: Cheque issued but not presented for payment (270) (90)
Bank balance as per cash book 24,420 10,350

Not For Profit Organization

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Compiled by Ronish Nepal

NPO- Not for Profit Organization

Such organizations have objective to serve society at large.

1.Bill & Milenda Gates Foundation (Bill Gates)

Company Act ,2063

NPO’s use fund-based accounting on grants received.

Following aspects are to be covered.

What is Fund Based Accounting?

Fund-based accounting, or fund accounting, is a system used by nonprofit organizations and

Fund Based Accounting ASSETS

Fund means Profit accumulated with specific objectives.

NPO incurred Rs 400,000 on Equipment and Rs 180,000 on Furniture.

NPO maintains General Fund.

3 Equipment Fund 400,000.00

Summary of Fund Account

This is Accumulated Profit

This is Accumulated Profit with Obligation and

Sold Investment of Rs 500,000 for Rs 550,000.

Purchased Building Rs 575,000.

Requirement: Journalize and Prepare necessary ledgers

3 Building Fund 575,000.00

Summary of Fund Account

Fund Based Accounting _ Journal Entries

a. On receipt of Grants with specific objectives.

(Being Grant Received)

b. For Purchase of Investments

(Being Investment Purchased)

(Being Amount Transferred)

Notes. All incomes of specific fund will be transferred to specific fund

Bank Ac Dr (Sales Proceeds)

(Being Investment sold)

Note Profit/Loss on sale of investment will be transferred to fund account.

e. On Purchase of assets as per specific fund restrictions

(Being Assets Purchased)

(Being Amount Transferred)

Prepare Building Fund Account

Opening Balance of Building Fund NPR 500,000

Grant Received for Building NPR 700,000

Income from Investment NPR 80,000

Building Purchase NPR 10,00,000

NPO have following opening Balance

Building was completed at year end.

Opening Balance sheet

2. Building WIP Dr 700,000

3. Contractor Liability Dr 1900,000

b. Bank A/c Dr. 902,600

c. Fixed Deposit a/c Dr. 48,000

e. Capital work in progress a/c Dr. 725,000

f. Contractors’ a/c Dr. 1,343,750

g. Building a/c Dr. 1,550,000

h. Building Fund a/c 1,550,000

Prepare Trial Balance yourself

Fund Based Accounting_(Expenses Fund)

1. Prize Distribution (Prize Fund)

Mr R ICAN NPR 100000

This is not assets, but

Journalize for Expenses Fund

3. On receipt of income from Investment

Note Any Profit or loss will be transferred to expenses fund)