Class 12 Accountancy - MP
Accounting for Not-for-Profit Organisations
The chapter 'Accounting for Not-for-Profit Organisations' in Class 12 Accountancy introduces students to entities formed for service rather than profit, such as schools, hospitals, and clubs. MPBSE students learn how these organizations maintain financial records, moving away from traditional profit-seeking books. The core of this chapter covers three vital financial statements: Receipts and Payments Account, Income and Expenditure Account, and the Balance Sheet. Mastering this chapter is crucial for board exams as it forms the foundation of partnership and company accounts, consistently featuring high-weightage practical problems that test students' adjustment skills.
Start Learning FreeKey Concepts
Not-for-Profit Organisation (NPO)
An entity whose primary objective is to render service to society rather than earn profit, funded through subscriptions, donations, and grants.
Receipts and Payments Account
A summary of cash and bank transactions of an NPO during an accounting period, serving as a classified summary of the Cash Book.
Income and Expenditure Account
A nominal account prepared by NPOs to ascertain surplus or deficit for the current accounting period, following the accrual basis of accounting.
Subscription
The periodic contribution made by members of an NPO, treated as revenue income and adjusted for outstanding and advance amounts.
Fund-Based Accounting
A method where specific funds raised for a particular purpose (like a sports fund or prize fund) are kept separately and expenses related to them are deducted from that fund.
Important Formulas
Board Exam Info
In the Madhya Pradesh Board (MPBSE) Class 12 Accountancy exam, this chapter typically carries around 6 to 10 marks. Questions usually include a long-answer practical problem worth 5 or 6 marks requiring the preparation of an Income and Expenditure Account and Balance Sheet from a given Receipts and Payments Account, alongside 1-2 objective or short-answer questions.
Frequently Asked Questions
Is Receipts and Payments Account the same as Profit and Loss Account?
No. Receipts and Payments Account is a real account showing all cash inflows and outflows regardless of the period, whereas a Profit and Loss Account is a nominal account prepared on the accrual basis for a specific accounting period.
How do we treat Life Membership Fees received by an NPO?
Life membership fees are treated as a capital receipt and are directly added to the Capital Fund on the liability side of the Balance Sheet because it is a non-recurring receipt.
Are capital receipts shown in the Income and Expenditure Account?
No, only revenue items pertaining to the current accounting year are recorded in the Income and Expenditure Account. Capital receipts and payments are recorded in the Balance Sheet or Receipts and Payments Account.
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