Understanding Accounting for Non-Profit Organizations: A Comprehensive Guide
Dive into the fundamental principles of accounting for Non-Profit Organizations (NPOs) with this detailed guide by Kalpana S. Jadhav, Assistant Professor. Learn about the unique characteristics, types of accounts, important adjustments, and differences between NPOs and Profit Organizations. Explore everything from Receipts and Payments to Income and Expenditure Accounts, and grasp the nuances of financial management in the non-profit sector.
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Presentation Transcript
Accounts of Non-Profit Organisations Understanding the Accounting Process for NPOs BY Kalpana S. Jadhav Assistant Professor
Introduction to Non-Profit Organisations Organisations established for social, cultural, educational, or charitable purposes Do not aim to earn profits Examples: NGOs, charities, clubs, educational institutions
Features of Non-Profit Organisations Main objective is service, not profit Sources of income: Donations, subscriptions, grants Surplus is not distributed among members Governed by trustees or committees
Types of Accounts Maintained 1. Receipts and Payments Account 2. Income and Expenditure Account 3. Balance Sheet
Receipts and Payments Account Summary of all cash and bank transactions Includes both capital and revenue items Prepared on a cash basis Does not show profit or loss
Income and Expenditure Account Similar to a Profit and Loss Account Prepared on an accrual basis Shows surplus or deficit Includes only revenue items
Balance Sheet of NPOs Shows financial position at the end of the year Contains assets and liabilities Capital fund represents accumulated surplus
Important Adjustments and Concepts Depreciation on assets Outstanding expenses and incomes Prepaid expenses and advance incomes Subscription received in advance or due
NPO vs Profit Organisations Objective: Service vs Profit Accounts: Income & Expenditure vs Profit & Loss Fund Concept: Capital Fund vs Capital Account Profit Distribution: Not Distributed vs Distributed
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