Class 12 Accountancy - ANDHRA-PRADESH
Accounting for Not-for-Profit Organisations
The chapter 'Accounting for Not-for-Profit Organisations' in Class 12 Accountancy for Andhra Pradesh (BSEAP) students introduces the accounting principles for entities formed with service motives rather than profit, such as libraries, hospitals, and schools. You will learn to prepare three essential financial statements: the Receipt and Payment Account, the Income and Expenditure Account, and the Balance Sheet. Mastering this chapter is crucial for board exams as it carries significant weightage through practical adjustment problems, teaching you how to handle subscriptions, donations, and fund-based accounting systematically.
Start Learning FreeKey Concepts
Not-for-Profit Organisation (NPO)
An entity whose primary objective is to provide service to society rather than earn profit, maintaining accounts primarily to prevent misuse of funds.
Receipt and Payment Account
A summary of cash and bank transactions of a given period, serving as a classified summary of the Cash Book on a cash basis of accounting.
Income and Expenditure Account
A nominal account prepared on an accrual basis to show the surplus or deficit of incomes over expenditures for the current accounting period.
Fund-Based Accounting
A method of accounting where specific funds raised for a particular purpose (like a sports fund or prize fund) are kept separate, and all related incomes and expenses are adjusted directly against that fund.
Subscription
The periodic contribution made by members to keep their membership active, treated as revenue income and adjusted for outstanding and advance amounts.
Important Formulas
Board Exam Info
In the Andhra Pradesh (BSEAP) Class 12 Accountancy board exam, this chapter typically carries around 10 to 15 marks. Common question types include short-answer questions defining key terms and a major 10-mark or 6-mark practical problem requiring the preparation of an Income and Expenditure Account and Balance Sheet from a given Receipt and Payment Account with adjustments.
Frequently Asked Questions
Is Receipt and Payment Account the same as Profit and Loss Account?
No. A Receipt and Payment Account is essentially a summary of cash transactions (like a cash book), whereas a Profit and Loss (or Income and Expenditure) Account records all revenues and expenses of a specific period on an accrual basis.
How do we treat 'Life Membership Fees' in NPO accounts?
Life membership fees are considered a capital receipt because they are non-recurring in nature. Therefore, they are added directly to the Capital Fund on the liabilities side of the Balance Sheet.
What happens to a legacy received by an NPO?
General legacies are treated as revenue income, while specific legacies (meant for a particular purpose) are capitalized and shown as a liability in the Balance Sheet.
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