Class 12 Accountancy - RAJASTHAN
Accounting for Not-for-Profit Organisations
The chapter 'Accounting for Not-for-Profit Organisations' in Class 12 RBSE Accountancy introduces students to entities whose primary objective is service rather than profit, such as schools, hospitals, and clubs. You will learn how these organizations maintain financial records, moving away from traditional profit-seeking books. The core of this chapter involves preparing three vital financial statements: the Receipt and Payment Account, the Income and Expenditure Account, and the Balance Sheet. Mastering these concepts is crucial for the Rajasthan Board exams as it forms the foundational long-answer question in your paper.
Start Learning FreeKey Concepts
Not-for-Profit Organisation (NPO)
An organization set up with the aim of providing service to society rather than earning a profit, such as libraries, charitable trusts, and sports clubs.
Receipt and Payment Account
A summary of cash and bank transactions of an NPO over an accounting period, acting essentially as a classified cash book summary.
Income and Expenditure Account
A nominal account prepared on an accrual basis to show the surplus or deficit of an NPO during an accounting year, similar to a Profit and Loss Account.
Subscription
The main periodic contribution made by members of an NPO, treated as revenue receipt and credited to the Income and Expenditure Account.
Fund-Based Accounting
A method of accounting where specific funds raised for specific purposes (like sports or prizes) are kept separately and all related expenses are deducted from that fund.
Important Formulas
Board Exam Info
In the Rajasthan (RBSE) Class 12 Accountancy board exam, this chapter typically carries around 6 to 10 marks. Questions usually include a comprehensive 6-mark practical problem involving the preparation of an Income and Expenditure Account and Balance Sheet from a given Receipt and Payment Account, alongside 1-mark objective questions.
Frequently Asked Questions
Is Receipt and Payment Account the same as Profit and Loss Account?
No. 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 is prepared on an accrual basis showing all incomes and expenses of the current period.
How do we treat Life Membership Fees in NPO accounts?
Life membership fee is a capital receipt because it is non-recurring in nature. It is directly added to the Capital Fund or General Fund on the liability side of the Balance Sheet.
Are capital receipts shown in the Income and Expenditure Account?
No, only revenue receipts and revenue expenses relating to the current accounting period are recorded in the Income and Expenditure Account.
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