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2nd Puc Accountancy Chapter 1 Accounting for Not-For-Profit Organization Part – 1 Notes | ದ್ವಿತೀಯ ಪಿ.ಯು.ಸಿ ಲೆಕ್ಕಶಾಸ್ತ್ರ ಅಧ್ಯಾಯ – 1 ನೋಟ್ಸ್

ದ್ವಿತೀಯ ಪಿ.ಯು.ಸಿ ಲೆಕ್ಕಶಾಸ್ತ್ರ ಅಧ್ಯಾಯ – 1‌ ನೋಟ್ಸ್ 2nd Puc Accountancy Chapter 1 Accounting for Not-For-Profit Organization Notes Mcq Download 2nd Puc Accountancy 1st Chapter Problems And Solutions Pdf Question Answer 2nd Puc Commerce Accountancy 1st Chapter Notes Accounting For Not-For-Profit Organization One Mark Question Accounting For Not-For-Profit Organisation Class 12 Notes Accounting Not-For-Profit Organisation Problems And Solutions

2nd Puc Accountancy Chapter 1 Notes

2nd Puc Accountancy Chapter 1 Accounting for Not-For-Profit Organization Part - 1 Notes
2nd Puc Accountancy Chapter 1 Accounting for Not-For-Profit Organization Part – 1 Notes

2nd Puc Accountancy Chapter 1 Notes

Short Questions

Q1. What is Capital Fund? How is it calculated?

The scenario where value of assets of NPO are more than its liabilities, it is called as capital fund. This is similar to the concept of capital for an organisation working to earn profit. If any surplus amount is received from I & E account, it gets added to capital fund, likewise any deficit will be deducted from the same and is known as Accumulated Fund.

Calculating Capital Fund

Capital Fund at the beginning of the year**
Add: Surplus from Income and Expenditure Account**
Add: Subscription Amount (Capitalised amount)**
Add: Life membership fee.****
Less: Deficit from Income and Expenditure Account**
Capital Fund at the end of the year***

Q2. State the meaning of ‘Not-for-Profit’ Organisations.

Organizations that are established with the aim of providing services to society and not profit earning are called as Not-for-profit Organisations (NPO). Some organisations that come under NPO are hospitals, religious organisations and trade unions. An NPO earns income from life membership fees, subscriptions, grants, donations etc.

Q3. What are the features of Receipt and Payment Accounts?

The receipts and payments account has the following features:

1. It is known as cash book summary for NPO (Not-for-profit organisations) as it records all the cash and cash equivalents of the organisation.

2. This account shows cash transactions that are of revenue and capital nature

3. It does not follow the double entry bookkeeping system as it is a summary of transactions.

4. It does not include transactions that do not have cash or bank items.

5. It helps in revealing the cash position of the organisation

Q4. State the meaning of Receipt and Payment Account.

A receipts and payments account (R & P Account) is a summary of actual cash receipts and payments that is extracted from the cash book over a certain time period. All the cash received is recorded on the Receipts and all the cash payments gets recorded in Payments side of the R & P Account. All the cash and bank transactions are recorded in Cash Book and this book is created on the basis of all these transaction. All cash and bank transactions that are of revenue and capital nature gets recorded. It records all transactions i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assess cash position of a Not-for-profit organisation or NPO.

Q5.What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?

Following steps should be followed:

1. Exclude opening cash and bank balances and also do the same for closing cash and balances

2. Exclude income of the previous period and any such income that is received in advance

3. Exclude all items involving capital receipts and payments

4. Exclude expenditures that are of the previous or coming period

5. Include all incomes of the current period which are yet to be received

6. Include expenditures of current period which are yet to be paid.

7. Provision for bad debts and fixed assets depreciation should be taken into account and charged to the account (income and expenditure account)

2nd Puc Accountancy Chapter 1

Q6. What is subscription? How is it calculated?

For a not-for-profit organisation subscription acts as one of the main sources of income. It refers to money that the members pay periodically for maintaining their membership in active state. Subscription charges can be paid in flexible options like monthly, quarterly, half-yearly or yearly. It appears on the receipt side of R & P account.

For calculating subscription for current period, add subscription received in advance meant for current period during the previous year and outstanding subscription for current year to the subscription received for the current year and deducting subscription received in advance for next year and outstanding subscription from previous year from subscription received in the current year.

Calculation of Subscription

Subscription received during the year 

(+) Subscription received (in advance) during previous year

for current year

(+) Subscription outstanding at the end of the year(-) Subscription received in advance for the next year

(-) Subscription outstanding for the previous year

Subscription shown in Income and Expenditure Account


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Q7. What is Receipt and Payment Account? 

A receipts and payments account is a summary of actual cash receipts and payments that is extracted from the cash book over a certain time period. All the cash received is recorded on the Receipts and all cash payments are recorded in Payments side of the Receipts and Payments Account. This account is prepared on the basis of all the cash and bank transactions that are recorded in Cash Book. It records all cash and bank transactions that are of revenue and capital nature. It records all transactions i.e. bank receipts and cash receipts.

Karnataka 2nd PUC Accountancy Chapter 1 Accounting For Not-for-Profit Organisation

Twelve Marks Qs

Q1. “Income and Expenditure Account of a Not-for-Profit Organisation is akin to Profit and Loss Account of a business concern”. Explain the statement.

The account containing all expenses and losses for current accounting period prepared by a Not-for-profit organisation is called as Income and Expenditure (I & E) account, while a similar account prepared by profit earning organisation is called as Profit and Loss Account (P & L).

Here are some of the similarities between I & E and P & L accounts:

1. Accrual basis is followed for the preparation of both accounts.

2. Expenses and losses are recorded on Expenditure (debit) side and gains and income are recorded on Income (credit) side.

3. Records only revenue items related to current accounting period.

4. Both exhibit nature similar to nominal accounts

Therefore, it can be said that from the above statements that Income and Expenditure account of a Not-for-Profit Organisation is akin to Profit and Loss Account of a business concern.

Q2. Distinguish between Receipts and Payments Account and Income and Expenditure Account.

Basis of ComparisonReceipts and Payments AccountIncome and Expenditure Account
NatureContains bank and cash transaction summary.Contains summary of income and expenses of current year
Revenue and CapitalBoth revenue and capital transactions are recordedOnly revenue transactions are recorded
Debit SideRecords cash and bank receipts are recordedRecords expenses and losses incurred for the current accounting year
Credit sideRecords payments received in form of cash and chequesRecords incomes and gains during the current accounting year
Account TypeReal AccountNominal Account
Accounting PeriodRecords receipts and payments made during the year which may be related to current, previous or next accounting yearRecords only the expenditure and income made during the current accounting year
ObjectShows the cash position of NPOShows the net results in terms of deficits or surplus
DepreciationNon-cash items like depreciation is not includedIncludes non-cash items like depreciation, bad-debts for determining net profit or loss.
AdjustmentBefore preparing financial statements the Payments and Receipts received during the year can be adjusted.Cash and non-cash transactions can be adjusted
SystemCash basisAccrual Basis

Q3. Explain the basic features of Income and Expenditure Account and of Receipt and Payment Account.

Income and Expenditure account is similar to the P & L account (Profit and Loss Account). In an income and expenditure account surplus and deficit is determined during the accounting period while in a P& L account the net profit or loss is determined during an accounting period. It is a nominal account and records transactions that are of revenue nature. The closing balance is called deficit or surplus based.

Basic Features of I & E Account are:

1. It is a nominal account

2. Prepared on the basis of R & P (Receipt and Payment Account). All revenue items irrespective of income or expenditure get transferred.

3. Transactions that are of capital nature are not included in the account.

4. It is similar to P & L account

5. Records only current accounting year items and excludes any other transactions

6. Items like prepaid expenses, depreciation, income received in advance can be adjusted.

7. Balancing figure is expressed as surplus or deficit based on the status of expenses and income.

A receipts and payments account is a summary of actual cash receipts and payments that is extracted from the cash book over a certain time period. All the cash received is recorded on the Receipts and all cash payments are recorded in Payments side of the Receipts and Payments Account. This account is prepared on the basis of all the cash and bank transactions that are recorded in Cash Book. It records all cash and bank transactions that are of revenue and capital nature. It records all transactions i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assess cash position of an NPO.

Basic Features of R & P Account are:

1. It is a real account also known as summarised version of Cash Book

2. It records only bank and cash transactions.

3. Non-cash transactions like depreciation is not recorded

4. It begins with an opening balance of cash and bank and ends with closing balance of cash and bank.

5. Helps in assessing the cash position of an organisation

6. It does not distinguish between capital and revenue items

Kseeb Solutions For Class 12 Accountancy Chapter 1

Q4. Explain the statement: “Receipt and Payment Account is a summarised version of Cash Book”.

A receipts and payments account (R & P Account) is a summary of actual cash receipts and payments that is extracted from the cash book over a certain time period. All the cash received is recorded on the Receipts and all cash payments are recorded in Payments side of the R & P Account. All the cash and bank transactions are recorded in Cash Book and this book is created on the basis of all these transaction. All cash and bank transactions that are of revenue and capital nature gets recorded. It records all transactions i.e. bank receipts and cash receipts.

This account helps in determining the closing balance of bank and cash receipts and thereby assess cash position of a Not-for-profit organisation or NPO.

Here are some similarities between Cash Book and Receipts and Payments Account:

1. Both are real accounts.

2. Only transactions of cash and bank are recorded

3. There is no distinction between Revenue and Capital Items

4. Helps in assessing the cash position of an organisation

5. Starts with an opening balance consisting of cash and bank and concludes with closing balance of cash and bank.

Therefore, it can be said that Receipt and Payments Account is a summarised version of cash book.

 Show the treatment of items of Income and Expenditure Account when there is a specific fund for those items.

A NPO (Not-for-Profit organisation) has different sources of receipts in the form of subscriptions, donations, government grants etc. Of these some receipts are general while some are specific. Specific receipts are used only for the purpose for which it is received while general receipts can be used for any purpose. The specific receipts are not considered as revenue income for the Not-for-Profit organisation and therefore are reflected in I & E account.

In a way, specific receipts are considered as liabilities to the Not-for-Profit organisation as these amounts are received for specific purpose and cannot be used elsewhere. These are reflected in Liabilities side of Balance Sheet, until and unless it is completely used for the purpose it was received. If such amount is invested in the form of shares or debentures, then it is known as funds such as prize funds, match funds etc. The interest earned on such investment are not credited to I & E Account, instead it is credited to the respective fund account.

Similarly, any expense that is incurred for such funds gets debited from respective fund account. Such funds are shown in the liabilities side of Balance Sheet. If the expenses exceed the receipts of the fund, the difference gets reflected in I & E Account.

Treatment for items received for specific purpose

(Tournament/Match/Prize, etc.) Fund Account

Dr. Cr.

DateParticularsL.F.AmountDateParticularsL.F.Amount
Expenses(expenses incurred like, match expenses, tournament expenses)Balance b/d
Incomes(Income or interest earned on funds invested in the form of donation, interests, dividends, etc.)
Balance c/d(see explanation)(a)Income and Expenditure A/c (see explanation)(b)

Explanation (a)

When receipts are more than expenses meant for specific purpose, that time the difference between receipts and expenses is shown on balance sheet in the liabilities side.

Balance Sheet

Specific Fund (i.e. Tournament, Match, Prize Fund, etc.)Tournament Fund Investment

Explanation (b)

When expenses are more than receipts meant for specific purpose, that time the difference between expenses and receipts is shown in I & E account at the expenditure side.

Income and Expenditure A/c

ExpenditureAmountIncomeAmount
Expenses(I.e. Tournament, Match, Prize Expenses etc. except capital expenditures like, i.e.  expenses on construction of a building)

Q5. Show the treatment of the following items by a Not-for-Profit Organisation:

(i)Annual subscription
(ii)Specific donation
(iii)Sale of fixed assets
(iv)Sale of old periodicals
(v)Sale of sports materials
(vi)Life membership fee

i) Annual Subscription

1. Subscriptions that are obtained during an accounting year (it may be related to current, previous or upcoming year) are reflected on the debit side of R & P Account.

2. Subscriptions related to the present year whether yet to be received or already received reflects on the credit side of I & E account (Income and Expenditure)

3. Advance subscriptions received for the following year are reflected on Liabilities side of balance sheet.

4. Subscriptions which are due but yet to be received are shown on Assets part of Balance Sheet.

5. Subscriptions that are due but yet to receive are reflected on asset side of balance sheet.

ii) Specific donation

1. Specific donation amount is reflected on Debit side of R & P Accounts.

2. Specific donation amount is shown on Liabilities side of Balance Sheet. Because it is used for that specific purpose for which it is received.

iii) Sale of fixed assets

1. Amount received recorded on debit side of R & P Account.

2. Profit/Loss is credited/debited to I & E Account.

3. Book value of asset deducted from the respective asset on Asset side of Balance Sheet

iv) Sale of old periodicals

1. Amount received reflects on the debit side of R & P Account.

2. Sale of old periodical is counted as revenue receipts, hence reflects on credit side of I & E Account.

v) Sale of sport Materials

1. Amount received is debited to R & P Account

2. Sport material sale is revenue earned, hence reflects on credit side of I & E Account.

vi) Life Membership Fees

1. It is considered as a receipt for a NPO. Hence, debited to R & P Account

2. It is one-time fee and hence treated as Capital receipts, hence, added to Capital Fund on liabilities side of Balance Sheet

Q6. From the following particulars taken from the Cash Book of a health club, prepare a Receipts and Payments Account.

Particulars
Opening balance:
Cash in Hand5,000
Cash at Bank25,000
Subscriptions1,65,000
Donations35,000
Investment Purchased80,000
Rent Paid20,000
General Expenses21,500
Postage and stationery2,000
Courier charges1,000
Sundry Expenses2,500
Closing Cash in Hand12,000

The solution for this question is as follows:

Books of Health ClubReceipt and Payment Account

Dr. Cr.

ReceiptsAmountPaymentsAmount
Balance b/dInvestment80,000
Cash in Hand 5,000
Cash at Bank 25,000
30,000Rent20,000
General Expenses21,500
Subscriptions1,65,000Postage and Stationery2,000
Donations35,000Courier Charges1,000
Sundry Expenses2,500
Balance c/d
Cash in Hand 12,000
Cast at Bank 91,000
1,03,000
(Balancing figure)
2,30,0002,30,000

Q7. The Receipt and Payment Account of Harimohan charitable institution is given:

Receipt and Payment Account for the year ending March 31, 2015

ReceiptsAmount PaymentsAmount
Balance b/d:Furniture3,000
Cash at Bank22,000Investments55,000
Cash in Hand 8,800Advance for building20,000
Donations32,000Charities 60,000
Subscriptions50,200Salaries10,400
Endowment Fund 60,000Rent and Taxes4,000
Legacies24,000Printing1,000
Interest on Investment 3,800Postage300
Interest on Deposits 800Advertisements1,100
Sale of old newspapers500Insurance4,800
Balance c/d:
Cash at Bank32,000
Cash in Hand10,500
2,02,1002,02,100

Prepare the Income and Expenditure Account for the Year ended on March 31, 2015 after considering the following:

(i)It was decided to treat Fifty per cent of the amount received on account of Legacies and Donations as income.
(ii)Liabilities to be provided for are:
 Rent ₹ 800; Salaries ₹ 1,200; advertisement ₹ 200.
(iii)₹ 2,000 due for interest on investment was not actually received.

 The solution for this question is as follows

Books of Harimohan Charitable InstitutionIncome and Expenditure Account

Dr. Cr.

ExpenditureAmountIncomeAmount
Rent and Taxes 4,000Donations16,000
Add: Outstanding 8004,800Legacies12,000
Subscriptions50,200
Salaries10,400Interest on
Investment 3,800
 Add: Outstanding1,200Add: Accrued
Interest 2,000
5,800
Advertisement 1,100Interest on Deposits800
Add: Outstanding 2001,300Sale of Old Newspapers500
Charities60,000
Printing1,000
Postage300
Insurance4,800
Surplus (Excess of Income over Expenditure)1,500
85,30085,300

 Q8. From the following particulars, prepare Income and Expenditure account:

DetailsAmount ₹
Fees collected, including ₹ 80,000 on account of the previous year5,20,000
Fees for the year outstanding30,000
Salary paid, including ₹ 5,000 on account of the previous year68,000
Salary outstanding at the end of the year3,000
Entertainment expenses8,000
Tournament expenses25,000
Meeting Expenses18,000
Traveling Expenses7,000
Purchase of Books and Periodicals, including ₹ 31,000 for purchase of Books40,000
Rent15,000
Postage, telegrams and telephones6,000
Printing and Stationery18,000
Donations received25,000

 The solution for this question is as follows

Income and Expenditure Account

Dr. Cr.

ExpenditureAmount₹IncomeAmount₹
Salaries68,000Fees Collected5,20,000
Less: Previous year’s Outstanding(5,000)Less: Previous year’s Outstanding(80,000)
63,0004,40,000
Add: Current year’s Outstanding3,00066,000Add: Current year’s Outstanding30,0004,70,000
Entertainment Expenses8,000Donations25,000
Tournament Expenses25,000
Meeting Expenses18,000
Traveling Expenses7,000
Purchases of Periodicals (40,000 – 31,000)9,000
Postage, Telegrams and Telephone’s6,000
Rent15.000
Printing and Stationery18,000
Surplus (Excess of Income over Expenditure)3,23,000
4,95,0004,95,000

NOTE: As per the solution, Excess of Income over Expenditure is ₹ 3, 23,000; however, as per the book, it is ₹ 3, 07,000.

Q9. Following is the information given in respect of certain items of a Sports Club. Show these items in the Income and Expenditure Account and the Balance Sheet of the Club:

Particulars
Sports Fund as on 1.4.2015 35,000
Sports Fund Investments35,000
Interest on Sports Fund4,000
Donations for Sports Fund15,000
Sports Prizes awarded10,000
Expenses on Sports Events4,000
General Fund80,000
General Fund Investments80,000
Interest on General Fund Investments8,000

 The solution for this question is as follows

Books of Sports Club

Income and Expenditure Account

Dr. Cr.

ExpenditureAmountIncomeAmount
Interest on General Fund Investments8,000

Balance Sheet

LiabilitiesAmountAmount₹AssetsAmount₹
Sports Fund35,000Sports Fund Investments35,000
Add: Interest on Sports Fund4,000General Fund Investments80,000
Add: Donations for Sports Fund15,000Cash (b/f)5000
54,000
Less: Expenses on Sports Event(4,000)
Less: Prize Awarded(10,000)40,000
General Fund80,000
1,20,0001,20,000

Q10. How will you deal with the following items while preparing for the Bombay Women Cricket Club its income and expenditure account for the year ending 31.3.2017 and its Balance Sheet as on 31.3.2017?

(a)Donation received during the year for the construction of a permanent Pavilion12,25,000
Expenditure incurred up to 31.3.2017 on its construction10,80,000
The total estimated expenditure on construction of Pavilion being25,00,000
(b)Tournament Fund:
Balance as on 1.4.201610,700
Subscriptions for tournament received during the year65,800
Expenditure incurred during the year on conducting tournaments72,400
(c)Life Membership fee received during the year28,000

Give reasons for your answers

The solution for this question is as follows

(a)

Books of Bombay Women Cricket ClubBalance Sheet as on March 31, 2017

LiabilitiesAmountAssetsAmount₹
Donation for Pavilion12,25,000Construction of Pavilion in Progress10,80,000
Less: Exp. on construction of Pavilion(10,80,000)
Add: Pavilion Construction1,45,000

Reason:

Donation for the construction of Pavilion is a donation for a specific purpose.

Expenses on construction on Pavilion is a capital expenditure.

(b)

Balance Sheet as on March 31, 2017

LiabilitiesAmountAssetsAmount
Tournament Fund 10,700
Add: Subscription for Tournament 65,800
76,500
Less: Tournament Expenses (72,400)4,100

Reason

All funds received are treated as capital receipts and expenses related to any fund are deduced from the concerned funds.

(c)

Balance Sheet as on March 31, 2017

LiabilitiesAmountAssetsAmount
Life Membership Fees28,000

Reason

When there is no specific information on treatment of Life Membership fees, it is shown on liabilities side of Balance sheet as it is considered as capital receipt. On treated as revenue, it is shown in credit side of I & E Account.

Q11. From the following receipts and payments and information given below, Prepare Income and Expenditure Account and opening Balance Sheet of Adult Literacy Organisation as on December 31, 2017.

Receipt and Payment Account for the year ending as on December 31, 2017

ReceiptsAmountPaymentsAmount₹
Balance b/dGeneral Expenses3,200
Cash in hand4,000Newspaper1,850
Cash at Bank 15,550Electricity3,000
SubscriptionsFixed deposit with bank(on 31.06.2017) @ 10% p.a.18,000
20161,200
201726,500Books7,000
201850028,200Salary3,600
Sale of old newspapers1,250Rent6,500
Govt. grant12,000Postage charges300
Sale of old furniture (book value ₹ 5, 000) 3,700Furniture (purchased)10,500
Interest received on FD 450Balance c/d
Cash in Hand3,000
Cash at Bank8,200
65,15065,150

Information:

(i)    Subscription outstanding as on 31.12.2016 ₹ 2,000 and on December 31, 2017 ₹ 1,500.

(ii)   On December 31, 2017 Salary outstanding ₹ 600, and one month Rent paid in advance.

(iii)  On Jan. 01, 2016 organisation owned Furniture ₹ 12,000, Books ₹ 5,000.

The solution for this question is as follows:

Books of Adult Literacy OrganisationIncome and Expenditure Account as on Dec. 31, 2017

Dr. Cr.

ExpenditureIncome
Loss on Sale of Old FurnitureSubscription26,500
General ExpensesAdd: Outstanding for 20171,500
NewspapersSale of Old Newspapers
ElectricityGovernment Grant
Salary3,600Interest received on F.D.450
Add: Outstanding for 2017600Add: Accrued Interest450
Rent6,500
Less: Prepaid for 2018 {6,500×(1/13)}(500)
Postages Charges
Surplus (Excess of Income over Expenditure)
Balance Sheet as on Dec. 31, 2016
LiabilitiesAmountAssetsAmount
Capital Fund on Dec. 31, 2016 (Balancing Figure)38,550Subscription Outstanding2,000
Cash in Hand4,000
Cash at Bank15,550
Furniture12,000
Books5,000
38,55038,550

 Balance Sheet as on Dec. 31, 2017

LiabilitiesAmount ₹AssetsAmount ₹
Capital38,550Prepaid Rent500
Add: Surplus22,30060,850Books5,000
Add: Purchases7,00012,000
Salary Outstanding600
Subscription  Received in Advance for 2018 500Furniture12,000

 
Add: Purchases10,500
22,500
Less: Sale(5,000)17,500
Fixed Deposit18,000
Add: Accrued Interest45018,450
Cash in Hand3,000
Cash at Bank8,200
Subscription Outstanding for 20171,500
Add: Outstanding for 20168002,300
61,95061,950

Q12. Following is the Receipt and Payment Account of Indian Sports Club, prepared Income and Expenditure Account, Balance Sheet as on December 31, 2017:

Receipt and Payment Account for the year ending December 31, 2017

ReceiptsAmountPaymentsAmount
Balance b/d7,890Salary11,000
Subscriptions52,000Electric charges5,500
Life membership fee2,200Billiard Table17,500
Entrance fee3,200Office expenses4,100
Tournament fund26,000Printing and Stationery 2,300
Locker Rent 1,250Tournament expenses18,500
Sale of old sports goods (Costing ₹ 2,200)2,500Repair of ground 2,000
Sale of Old Newspaper 750Furniture purchased 7,700
Legacy37,500Sports equipment’s12,000
Cash in Hand12,690
Cash at Bank 10,000
Fixed Deposit (on 1.10.17 for 10% p.a)30,000
1,33,2901,33,290

Other Information:

Subscription outstanding was on December 31, 2016 ₹ 1,200 and ₹ 3,200 on December 31, 2017. Locker rent outstanding on December 31, 2017 ₹ 250. Salary outstanding on December 31, 2017 ₹ 1,000.

On January 1, 2017, club has Building ₹ 36,000, furniture ₹ 12,000, and Sports equipment’s ₹ 17,500. Depreciation charged on these items @ 10% (including Purchase).

The solution for this question is as follows:

Indian Sports ClubIncome and Expenditure Account as on Dec. 31, 2017

Dr. Cr.

ExpenditureAmountAmount₹IncomeAmountAmount₹
Salary11,000Subscriptions52,000
Add: Outstanding for 20171,00012,000Add: Outstanding for 20173,200
Electric Charges5,50055,200
Office Expenses4,100Less: Outstanding for 2016(1,200)54,000
Printing and Stationery 2,300
Repair of Ground 2,000Locker Rent1,250
Depreciation on:Add: Outstanding for 20172501,500
Furniture1,970
Building3,600Entrance Fees3,200
Sports Equipments2,7308,300Profit on Sale of Sports
Surplus26,300Equipments (₹ 2,500 – ₹ 2,200)300
Sale of Old Newspapers750
Accrued Interest750
60,50060,500

Balance Sheet as on January 01, 2016

LiabilitiesAmountAssetsAmount
Capital Fund (Balancing Figure)74,590Subscription Outstanding1,200
Building36,000
Furniture12,000
Sports Equipments17,500
Cash and Bank7,890
74,59074,590
Balance Sheet as on Dec. 31, 2017
LiabilitiesAmount₹AssetsAmount₹
Salary Outstanding 1,000Subscripting Outstanding3,200
Tournament Fund26,000Locker Rent Outstanding250
Less: Tournament Expenses18,5007,500Building
36,000
Less: 10% Depreciation(3,600)32,400
Capital fund74,590
Add: Life Membership Fee2,200Furniture12,000
Add: Legacy37,500Add: Purchases7,700
Add: Surplus26,3001,40,59019,700
Less: 10% Depreciation(1,970)17,730
Sports Equipments17,500
Add: Purchases12,000
29,500
Less: Sales(2,200)
27,300
Less: 10% Depreciation(2,730)24,570
Billiard Table 17,500
Cash in hand12,690
Cash at Bank10,000
Fixed Deposit30,000
Add: Accrued Interest75030,750
1,49,0901,49,090

2nd Puc Accountancy Chapter 1 Notes

Q13. As at March 31, 2017 the following balances have been extracted from the books of the Indian Chartered Accountants Recreation Club and you are asked to prepare (1) Trading Account for ascertaining gross profit derived from running restaurant and dining room and (2) Income and Expenditure Account for the year ended March 31, 2017 (3) and a Balance Sheet as at that date.

Debit BalancesCredit Balances
Stock-in-hand1170Receipts Dining Room87,660
Purchases24,660Subscriptions9,450
Dining Room32,370Billiard’s Receipts7,300
Rent10,470Sunday Receipts410
Wages18,690Interest on Fixed Deposit270
Repairs and Renewals5,400Sundry Creditors 5310
Fuel and Light5,280Grant from Institute (permanent)42,000
Misc. Expenses4,050Income and Exp. A/c (1.4.16)1,380
Cash in hand560Suspense A/c (See note)60
Cash at bank2,760
Fixed Deposit8,500
Sundry Debtors2,250
China glass, cutlery and linen600
Billiard Table2,070
Fixtures and Fittings870
Furniture4,140
Club Premises30,000
1,53,8401,53,840

On March 31, 2016 stock of restaurant consisted of ₹ 900 and ₹ 60 respectively. Provide depreciations ₹ 60 on fixtures and fittings, ₹ 390 on billiard table and ₹ 560 on furniture.

The solution for this question is as follows:

Books of Indian Chartered Accountants Recreation ClubRestaurant Trading Account

Dr. Cr.

ParticularsAmountParticularsAmount
Opening Stock1,170Receipts from Dining Room87,660
Purchases24,660Closing Stock960
Dining Room Exp.32,370
Profit from Restaurant30,420
88,62088,620
Income and Expenditure Account as on March 31, 2017
Dr.Cr.
ExpenditureAmount ₹IncomeAmount
Rent10,470Subscriptions9,450
Wages18,690Sundry Receipts410
Repairs an Renewals5,400Interest on Fixed Deposits270
Fuel and Light5,280Profit from Restaurant30,420
Misc. Expenses4,050Billiards Receipts7,300
Depreciation on
Fixtures and Fittings 60
Billiards Table 390
Furniture 5601,010
Surplus (Excess of Income over Expenditure)2,950
47,85047,850

Balance Sheet as on March 31, 2017

LiabilitiesAmountAssetsAmount
Sundry Creditors5,310Cash in Hand560
Grant from Institute42,000Cash at Bank2,760
Suspense60Fixed Deposit8,500
Capital Fund (Income and Exp. A/cas on Apr.01, 2016)1,380Sundry Debtors2,250
Add: Surplus2,9504,330China Glass, Cutlery and Linen600
Billiards Table2,070
Less: Depreciation(390)1,680
Fixture and Fittings870
Less: Depreciation(60)
Furniture4,140
Less: Depreciation(560)3,580
Club Premises30,000
Stock of Restaurant960
51,70051,700

Q14. Following is the Receipt and Payment Account of Women’s Welfare Club for the year ended December 31, 2017:

The solution for this question is as follows:

Receipt and Payment Account for the year ending December 31, 2017

ReceiptsAmountPaymentsAmount
Balance b/d7,250Salary12,500
Subscriptions81,750Stationery1,700
Donations 3,000Electricity charges9,550
Grant from Government15,000Insurance7,500
Sale of newspapers300Equipment30,000
Proceeds of charity show16,500Petty expenses500
Interest on investments @ 10% for full year7,000Expenses on a charity show12,900
Sundries income400Newspapers1,000
Lectures fee16,500
Honorarium to Secretary12,000
Balance c/d27,050
1,31,2001,31,200

Additional Information:

01.01.201731.12.2017
Outstanding salaries1,2001,800
Insurance prepaid700300
Subscription outstanding3,7502,500
Subscription received in advanced1,7501,000
Electricity charges outstanding1,250
Stock of stationery2,250 700
Equipments25,60050,200
Building1,20,0001,14,000

Prepare Income and Expenditure Account for the year ended December 31, 2017 and Balance Sheet as on that date.

The solution for this question is as follows:

Books of Women Welfare Club Income and Expenditure as on December 31, 2017

Dr. Cr.

ExpenditureAmountIncomeAmount ₹
Salary12,500Subscriptions81,750
Add: O/s on Dec. 31, 20171,800Add: O/s on Dec. 31, 20172,500
14,30084,250
Less: O/s on Dec. 31, 2016(1,200)13,100Less: O/s on Dec. 31, 2016(3,750)
80,500
Stationery1,700Add: Advance on Dec. 31, 20161,750
Add: Opening Stock2,25082,250
3,950Less: Advance on Dec.31, 2017(1,000)81,250
Less: Closing Stock(700)3,250
Donations3,000
Electric Charges9,550Grant from Government15,000
Add: O/s on Dec. 31, 20171,25010,800Sale of Newspapers300
Profit from Charity show (16,500–12,900)3,600
Insurance7,500
Interest on Investments7,000
Add: Prepaid in 2016700Sundries Income400
8,200
Less: Prepaid in 2017(300)7,900
Depreciation on Equipments5,400
Petty Expenses500
Newspapers1,000
Lectures Fee16,500
Honorarium to Secretary12,000
Depreciation on Building6,000
Surplus (Balancing Figure)34,100
1,10,5501,10,550

Balance Sheet as on December 31, 2016

LiabilitiesAmountAssetsAmount
Outstanding Salaries1,200Insurance Prepaid700
Subscription in Advance1,750Subscription Outstanding3,750
Stock of Stationery2,250
Capital Fund (Balancing Figure)2,26,600Equipments25,600
Building1,20,000
Cash and Bank7,250
Investments {7,000 × (100/10)}70,000
2,29,5502,29,550

Balance Sheet as on December 31, 2016

LiabilitiesAmountAssetsAmount
Outstanding Salaries1,800Equipments25,600
Subscription in Advance1,000Add: Purchases30,000
Electricity Charges Outstanding1,25055,600
Capital Fund2,26,600Less: Depreciation(5,400)50,200
Add: Surplus34,1002,60,700
Insurance Prepaid300
Subscription Outstanding2,500
Stock of Stationery700
Building1,20,000
Less: Depreciation(6,000)1,14,000
Cash and Bank27,050
Investments70,000
2,64,7502,64,750

Q15. Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2017

Receipt and Payment Account for the year ending December 31, 2017

ReceiptsAmountPaymentsAmount
Balance b/dCharity11,500
Cash in hand11,500Rent and taxes3,200
Cash at bank12,600Salary6,000
Donation9,000Printing600
Subscription42,800Postage300
Legacies18,000Advertisements4,500
Interest on investment4,500Insurances2,000
Sale of old newspapers200Furniture21,600
Investment23,000
Balance c/d:
Cash in hand9,900
Cash at bank16,000
98,60098,600

Prepare Income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that date after the following adjustments:

(a)It was decided to treat one-third of the amount received on account of donation as income.
(b)Insurance premium was paid in advance for three months.
(c)Interest on investment ₹1,100 accrued was not received.
(d)Rent ₹600: salary ₹900 and advertisement expenses ₹1,000 outstanding as on December 31, 2017.

The solution for this question is as follows:

Books of Delhi Charitable TrustIncome and Expenditure Account as on December 31, 2017

Dr. Cr.

ExpenditureAmount ₹IncomeAmount ₹
Insurance2,000Donation {9,000 × (1/3)}3,000
Less: Prepaid {2,000 × (3/15)}(400)1,600Interest on Investments4,500
Add: Accrued Interest1,1005,600
Charity11,500
Rent and Taxes3,200Subscription42,800
Add: Outstanding600Sale of Old Newspapers200
Salary6,000
Add: Outstanding9006,900
Printing600
Postage300
Advertisements4,500
Add: Outstanding1,0005,500
Surplus (Balancing figure)21,400
51,60051,600
Balance Sheet as on December 31, 2016
LiabilitiesAmountAssetsAmount
Capital Fund (Balancing figure)24,100Cash in Hand11,500
Cash at Bank12,600
24,10024,100

Balance Sheet as on December 31, 2017

LiabilitiesAmount₹AssetsAmount
Capital Fund24,100Prepaid Insurance {2,000 × (3/15)}400
Add: Donation {9,000 × (2/3)6,000Investment23,000
Add: Legacies18,000Add: Accrued Interest1,10024,100
Add: Surplus21,40069,500Furniture21,600
Rent Outstanding600Cash in Hand9,900
Salary Outstanding900Cash at Bank16,000
Advertisement Expenses Outstanding1,000
72,00072,000

Q16. Receipt and Payment Account of Maitrey Sports Club showed that ₹ 68,500 were received by way of subscriptions for the year ended on March 31, 2017.

The additional information was as under:

1. Subscription Outstanding as on March 31, 2016 were ₹ 6,500,

2. Subscription received in advance as on March 31, 2016 were ₹ 4,100,

3. Subscription Outstanding as on March 31, 2017 were ₹ 5,400,

4. Subscription received in advance as on March 31, 2017 were ₹ 2,500.

Show how that above information would appear in the final accounts for the year ended on March 31, 2017 of Maitrey Sports Club.

The solution for this question is as follows:

Books of Maitrey Sports ClubIncome and Expenditure Account as on March 31, 2017

Dr. Cr.

ExpenditureAmount ₹IncomeAmount₹
Subscription68,500
Less: O/s on Mar. 31, 2016(6,500)
62,000
Add: Advance on Mar. 31, 20164,100
Add: O/s on Mar. 31, 20175,400
71,500
Less: Advance on Mar. 31, 2017(2,500)69,000
Balance Sheet as on  March 31, 2016
LiabilitiesAmountAssetsAmount
Subscription in Advance4,100Subscription Outstanding6,500

FAQ:

1. Which of the following is an example of a Non-Profit organisation?

A: Public Hospitals.

2.  An Income and Expenditure Account is based on ——

A: Accrual Basis of Accounting.

3. In the Income and Expenditure Account, all revenue receipts are entered on the ______.

A:  Right-hand side.

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