Class 12 Accountancy - BIHAR
Accounting for Not-for-Profit Organisations
The chapter 'Accounting for Not-for-Profit Organisations' introduces Class 12 students to the accounting practices of entities formed for charitable, educational, or cultural purposes rather than earning profit. Unlike commercial businesses, these organisations maintain a Receipt and Payment Account, an Income and Expenditure Account, and a Balance Sheet. Mastering this chapter is crucial for Bihar (BSEB) board exams as it tests your ability to convert cash-based summaries into accrual-based financial statements, frequently featuring in long-answer numerical problems carrying substantial weightage.
Start Learning FreeKey Concepts
Not-for-Profit Organisation (NPO)
An entity whose primary objective is service rather than profit, such as schools, hospitals, and sports clubs.
Receipt and Payment Account
A summary of cash and bank transactions of an NPO, acting essentially as a classified cash book prepared at the end of the accounting year.
Income and Expenditure Account
A nominal account equivalent to a Profit and Loss Account, prepared on an accrual basis to show the surplus or deficit for the period.
Fund-Based Accounting
Accounting method where specific funds (like prize fund or match fund) are maintained separately, and related incomes and expenses are adjusted directly against those funds.
Subscriptions
The periodic contribution made by members, treated as revenue income and adjusted for outstanding and advance amounts pertaining to the current year.
Important Formulas
Board Exam Info
In the Bihar (BSEB) Class 12 Accountancy board exam, this chapter typically carries around 10 to 15 marks. Questions usually include objective-type questions (MCQs), short-answer conceptual questions, and a major 6-mark or 15-mark long numerical question requiring the preparation of an Income and Expenditure Account and Balance Sheet from a given Receipt and Payment Account.
Frequently Asked Questions
Is Receipt and Payment Account a real account?
Yes, Receipt and Payment Account is a real account because it records cash and bank receipts (debit what comes in) and payments (credit what goes out).
What is the difference between a legacy and a donation?
A donation is a voluntary gift of money (treated as revenue unless specified as specific), whereas a legacy is an amount received as per the will of a deceased person and is always capitalized in the Balance Sheet.
Does Income and Expenditure Account show opening and closing cash balances?
No, the Income and Expenditure Account only shows revenue expenses and incomes of the current year. Cash balances are shown in the Balance Sheet.
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