Accounting for Not-for-Profit Organisations

Receipt and Payment Account

It is a summary of cash and bank transactions of a not-for-profit organisation prepared at the end of the accounting year, serving as a real account and starting with opening cash/bank balances.

Income and Expenditure Account

It is a nominal account equivalent to the Profit and Loss Account, prepared to ascertain the surplus or deficit of incomes over expenditures for the current accounting period on an accrual basis.

Subscription

It is the main recurring source of income for a not-for-profit organisation, collected periodically from its members, requiring adjustment for outstanding and advance amounts pertaining to the current year.

Fund-Based Accounting

A method of accounting where specific funds (like prize fund or match fund) are maintained separately, and all related incomes and expenses are credited or debited directly to that specific fund rather than the Income and Expenditure Account.

Capital Fund

Also known as the General Fund or Accumulated Fund, it represents the excess of assets over liabilities of the organisation and is computed by preparing an opening balance sheet if not directly given.