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Question
State the meaning of 'Not-for-Profit' Organisations.
Solution
Not-for-Profit Organisations (NPO) are set up with the prime objective of providing services and not to earn profit thereby enhancing the welfare of society. Such organisations include schools, hospitals, trade unions, religious organisations, etc. The person/s or the groups of individuals who govern and manage the working of an NPO are known as trustees. NPO's main sources of income are donations, subscriptions, life membership fees, grants etc. As these organisations are not set up with profit motive, they do not prepare Trading and Profit and Loss Account. Instead, they maintain Receipt and Payments Account, Income and Expenditure Account and Balance Sheet.
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RELATED QUESTIONS
Answer the following question:
How are specific donations treated while preparing final accounts of a 'Not-For-Profit Organisation'?
From the following details provided by Kumud Ltd., prepare a Comparative Statement of Profit & Loss for the year ended 31st March 2021:
| Particulars | 31.03.20 (₹) | 31.03.21 (₹) |
| Revenue from operations | 30,00,000 | 35,00,000 |
| Other Income | 3,00,000 | 4,50,000 |
| Cost of materials Consumed | 20,00,000 | 23,00,000 |
| Other Expenses | 1,00,000 | 1,20,000 |
| Tax rate | 40% | 40% |
Consider the following statements
Statement 1 - "Receipt and Payment Account is equivalent to profit and loss account".
Statement 2 - Receipt and Payment Account is prepared at the end of the accounting year.
Subscription received in advance during the current year is ______.
The following information below is related to an NPO:
| Dr. | Receipts and Payments Ne [An Extract] | Cr. | |
| Receipts | Amount (₹) | Payments | Amount (₹) |
| To Interest on Investments |
Nil | By 8% Investments [01-10-18] |
60,000 |
If the firm closes its accounts on 31st March every year, what amount of accrued interest on investments will be shown on the Balance Sheet of the firm on 31-03-19?
Source of income for a not-for-profit organisation a/an ______.
Not-for-profit organisations prepare ______.
Accounts generally prepared by all the Non-Profit organisations are ______.
Final Accounts which constitute the financial statements of a not-for-profit organisation at the end of the year:
