Class 11 Accountancy - ISC
Non-Trading Organisation
The chapter on Non-Trading Organisations (NTOs) or Not-for-Profit Organisations introduces Class 11 ISC students to accounting for entities whose primary objective is service rather than profit, such as clubs, hospitals, and libraries. Students learn how these organizations maintain books of accounts, specifically transitioning from cash-based to accrual-based accounting through the preparation of Receipts and Payments Account, Income and Expenditure Account, and Balance Sheet. This chapter is vital for board exams as it tests both theoretical understanding and practical problem-solving skills, frequently featuring long-answer questions that carry significant weight in the final ISC Accountancy paper.
Start Learning FreeKey Concepts
Receipts and Payments Account
A summary of cash and bank transactions over an accounting period, acting as a classified summary of the Cash Book and including both capital and revenue items.
Income and Expenditure Account
A nominal account prepared on the accrual basis to show surplus or deficit of an NTO for the accounting period, including only revenue items of the current year.
Subscription
The periodic contribution made by members to keep their membership active, treated as revenue income and adjusted for outstanding and advance amounts.
Fund-Based Accounting
A method where specific funds (like prize fund or tournament fund) are maintained separately, and all related incomes and expenses are adjusted directly to that fund.
Capital Fund
Equivalent to Capital in a profit-making business, representing the excess of assets over liabilities in an NTO, calculated through an opening Balance Sheet.
Important Formulas
Board Exam Info
In the ISC Class 11 Accountancy examination, the Non-Trading Organisation chapter typically carries around 8 to 12 marks. Questions usually include a comprehensive 6-to-8-mark practical problem involving the preparation of an Income and Expenditure Account and Balance Sheet from a given Receipts and Payments Account, along with short-answer questions on specific items like subscriptions or consumable goods.
Frequently Asked Questions
What is the difference between Receipts and Payments Account and Income and Expenditure Account?
Receipts and Payments Account is a real account acting as a summary of cash transactions (capital and revenue, of any period), whereas Income and Expenditure Account is a nominal account prepared on the accrual basis for current-year revenue items only to find surplus or deficit.
Are capital receipts and capital payments shown in the Income and Expenditure Account?
No, capital receipts and capital payments are never shown in the Income and Expenditure Account; they appear only in the Receipts and Payments Account and the Balance Sheet.
How is life membership fee treated in accounts?
Life membership fee is a capital receipt because it is a non-recurring item received from a member, and it is directly added to the Capital Fund on the liability side of the Balance Sheet.
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