Class 12 Accountancy - TAMILNADU
Accounting for Not-for-Profit Organisations
This chapter introduces accounting principles for Not-for-Profit Organisations (NPOs) such as libraries, hospitals, and educational institutions whose primary aim is service, not profit. Unlike business entities that prepare Profit and Loss Accounts, NPOs prepare Receipts and Payments Account, Income and Expenditure Account, and Balance Sheet. For Tamil Nadu Samacheer Kalvi Class 12 board exams, this chapter is crucial as it forms the basis for long-answer practical problems. Students will learn how to treat specific items like subscription, legacy, life membership fees, and fund accounting, making accuracy in financial statements essential for scoring high marks.
Start Learning FreeKey Concepts
Receipts and Payments Account
A summary of cash and bank transactions of an NPO during an accounting year, serving as a classified summary of the Cash Book.
Income and Expenditure Account
A nominal account prepared to find out the surplus or deficit of incomes over expenditures for a particular accounting period, similar to a Profit and Loss Account.
Subscription
The regular periodic contribution made by members to keep their membership alive, treated as revenue income for the current year.
Capital Fund
Represented as the excess of assets over liabilities in an NPO, similar to capital in a profit-seeking business entity.
Legacy
The amount received by an NPO according to the will of a deceased person, normally capitalized and shown on the liability side of the Balance Sheet.
Important Formulas
Board Exam Info
In the Tamil Nadu (Samacheer Kalvi) Class 12 Accountancy board exam, this chapter typically carries around 10 to 15 marks. Questions commonly include 1-mark objective questions, 3-mark short answers, and a major 10-mark practical problem involving the preparation of Income and Expenditure Account and Balance Sheet from a given Receipts and Payments Account.
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 receipts and payments of both capital and revenue nature, whereas Profit and Loss Account (or Income and Expenditure Account) is a nominal account showing only revenue items for the current period.
How is 'Life Membership Fee' treated in accounting?
Life membership fee is considered a capital receipt because it is a non-recurring item received from a member. Therefore, it is added directly to the Capital Fund on the liability side of the Balance Sheet.
What happens if a subscription is received in advance?
Subscription received in advance for the next accounting period is treated as a liability (Income received in advance) and is shown on the liability side of the Balance Sheet.
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