Class 12 Accountancy - CBSE
Accounting for Not-for-Profit Organisations
The chapter 'Accounting for Not-for-Profit Organisations' focuses on maintaining financial records for entities formed for service rather than profit, such as schools, hospitals, and trusts. Unlike commercial businesses, these organizations do not prepare Trading and Profit and Loss Accounts; instead, they prepare Receipts and Payments Accounts, Income and Expenditure Accounts, and Balance Sheets. This chapter is vital for CBSE Class 12 Accountancy as it tests your ability to convert cash-based summaries into accrual-based accounting statements, often carrying 6 to 10 marks in the board examination through comprehensive long-answer questions.
Start Learning FreeKey Concepts
Not-for-Profit Organisation (NPO)
Entities whose primary objective is rendering service to society rather than earning profit, such as libraries, clubs, and charitable hospitals.
Receipts and Payments Account
A summary of cash and bank transactions categorized under various heads, acting as a classified cash book and covering both capital and revenue items.
Income and Expenditure Account
A nominal account prepared on an accrual basis to show surplus or deficit of an NPO, similar to a business's Profit and Loss Account.
Fund-Based Accounting
A system where specific funds (like a prize fund or match fund) are maintained separately, and all related incomes and expenses are adjusted directly to that fund.
Subscription
The periodic membership fee received from members, treated as revenue income and adjusted for outstanding and prepaid amounts of current and previous years.
Important Formulas
Board Exam Info
This chapter typically carries around 6 to 10 marks in the CBSE Class 12 Accountancy board exam. Common question types include 3-mark short questions on calculating subscription or consumables used, and a 6-mark long question requiring the preparation of an Income and Expenditure Account and Balance Sheet from a given Receipts and Payments Account with additional adjustments.
Frequently Asked Questions
Is Receipts and Payments Account a capital or revenue account?
It is a real account that records all cash and bank receipts and payments of a capital or revenue nature, relating to past, current, or future periods.
How do we treat the sale of old sports materials or newspapers?
Sale of old newspapers or sports materials is treated as revenue income and is credited to the Income and Expenditure Account.
What is the difference between a legacy and a donation?
A donation is a gift of money given voluntarily and is usually treated as income unless specified for a specific purpose. A legacy is an amount received as per the will of a deceased person and is normally capitalized in the balance sheet.
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