SS2 First Term Financial Accounting Lesson Note – Accounts of Non-Profit Making Organization

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WEEK 6                                                                                

TOPIC:          ACCOUNTS OF NON-PROFIT MAKING ORGANIZATION

CONTENTS:

1. Introduction
2. Receipt and payment accounts
3. Income and expenditure
4. Differences between receipt and payment and income and expenditure
5. Accumulated fund
6. Subscription

Sub-topic 1: INTRODUCTION

There are several organizations that are established and run for the purposes of meeting the social, cultural, health and at times educational needs of the citizens. Such organizations are not set up for the purpose of making profits from their activities and are thus called non-profit making organizations.

These organizations even though are not for profit making, but to prepare accounts so as to be able to tell their stakeholders and other donors how they have utilized the contributed funds.

Usually, the account of non-profit organizations consists of the following:

1. Receipt and Payment
2. Income and Expenditure
3. Balance sheet

Receipt and payment

This is a summarized cash book of i.e. (it incorporates the cash and bank transactions of a non-profit making organization).

In other words, it is a statement of cash actually received and paid during a given period. Here, capital receipts and payments, revenue receipts and payments are included and it follows the same principle as the cash book.

Features

1. Items are treated in the same way as cash book

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