COMPREHENSIVE PROJECT OF NOT FOR PROFIT ORGANISATIONS

COMPREHENSIVE PROJECT OF NOT FOR PROFIT ORGANISATIONS

COMPREHENSIVE PROJECT OF NOT FOR PROFIT ORGANISATIONS

GOKULNATH was a freedom fighter and a founder member of “Freedom Fighters Club”, Lalitpur, U.P. The Club is registered under the Societies Registration Act 1860 and is running a charitable dispensary.
The club was in receipt of Best NGO of the State award for the last two years.
His son RAMNATH has recently joined the club as an Honorary Accountant.
On 31st March 2022 club had a cash balance of ₹9,500 and Investments aggregating ₹ 90,000.
It also had computers and printers valued at ₹40,000 and ₹15,000 respectively.
The stock of medicine in hand on 31st March 2022 stood at ₹ 10,000.
On the same day, a sum of ₹ 1,000 was due to creditors for medicines and a sum of ₹ 1,600 was due from members on account of subscription and subscription received in advance from member amounted ₹ 500. Interest @ 5% per annum is earned on investments made by the club.

During the year 2022-23, A sum of ₹ 25,000 was received by the club as donation and the club decided to capitalise this amount.

During the year 2022-23, a sum of ₹ 47000 was received as subscription, which also included subscription received in advance ₹ 890.
A sum of ₹ 1,200 was yet to be received by the club being subscription due for the year 2022-23.

During the year club celebrated Children’s Day. A sum of ₹ 12000 was received by the club as entry fee for participation in various games and activities.
The club’s expenses on Children’s Day celebration amounted ₹ 2,500.
The interest on investment received was ₹ 4,000. Investments worth ₹ 10,000 were purchased during the year by the club.
Investments were made in 5% Govt. securities on 1.10.2022.
It also purchased a Fax Machine for  ₹ 11,000 on 1-10-2022. Payments made during the year for medicine amounted to ₹18,000.
The value of medicines remaining unused and lying in the godown was valued at ₹15,000 on 31st March 2023. Subscriptions for the year 2021-22 are still in arrears.
A sum of ₹ 22,000 was paid by the club as salary to its employees.
Miscellaneous expenses paid during the year amounted to ₹ 2,000, however, a sum of ₹ 500 was still due for payment of miscellaneous expenses.

It was decided that depreciation @ 10% per annum is to be charged on Computers, Printers, and Fax Machines.

On 25th March 2023, the club again received the ‘Best NGO of the state’ award for the third consecutive year.

COMPREHENSIVE PROJECT OF NOT-FOR-PROFIT ORGANISATIONS

You are required to prepare:

• Receipt & Payment Account for the year ending 31st March 2023.
• Income & Expenditure Account for the year ending 31st March 2023.
• Balance Sheet as at 1st April 2022.
• Balance Sheet as at 31st March 2023.

Receipts and Payments Account

 

Income and Expenditure Account

COMPREHENSIVE PROJECT OF NOT FOR PROFIT ORGANISATIONS

COMPREHENSIVE PROJECT OF NOT FOR PROFIT ORGANISATIONS

Bill of Exchange: Meaning and Types

 

Admission of a partner-Important Questions-1

Important questions of fundamentals of partnership-3

Format of Profit and loss Appropriation Account

COMPREHENSIVE PROJECT OF NOT FOR PROFIT ORGANISATIONS

Hidden Goodwill at the time of Admission of A New Partner

Important questions of fundamentals of partnership

Important questions of fundamentals of partnership-2

Goodwill questions for practice Class 12 ISC & CBSE

Important questions of fundamentals of partnership-5

ACCOUNTING TREATMENT OF GOODWILL AT THE TIME OF ADMISSION OF A NEW PARTNER

Admission of a partner-Important Questions-3

Admission of a partner-Important Questions-5

Admission of a partner-Important Questions-4

COMPREHENSIVE PROJECT OF NOT FOR PROFIT ORGANISATIONS

Trading organizations:
Trading organizations can refer to a variety of entities engaged in buying and selling goods, services, or financial instruments.

Non-trading organizations:
Non-trading organizations, also known as non-profit organizations or not-for-profit organizations, are entities that operate for purposes other than making a profit. These organizations typically exist to serve a specific mission or purpose, often related to social, cultural, educational, religious, or charitable activities.

A not-for-profit organization (NPO) is a type of entity that is dedicated to pursuing a mission or purpose for the benefit of the public or a specific group, without the primary goal of making a profit. These organizations are also commonly referred to as nonprofits or charitable organizations. The main characteristics of not-for-profit organizations include:

1. Mission-driven: NPOs are established to achieve specific social, environmental, educational, religious, or charitable objectives rather than to generate profits for shareholders.
2. Non-profit distribution: Any surplus funds generated by the organization are reinvested in the pursuit of its mission rather than distributed to individuals or shareholders.
3. Tax-exempt status: NPOs often seek and maintain tax-exempt status, meaning they are not required to pay income taxes on the funds they receive. Donors to these organizations may also be eligible for tax deductions.
4. Governance: NPOs are governed by a board of directors or trustees, and their operations are generally transparent to the public. They must comply with relevant laws and regulations.
5. Volunteerism: Many NPOs rely on volunteers to help achieve their goals. Volunteers may serve on the board, contribute their time and expertise, or participate in various activities organized by the organization.
6. Fundraising: Since NPOs do not aim to generate profits, they often rely on fundraising activities, grants, donations, and other forms of financial support to fund their operations.

Examples of not-for-profit organizations include charities, educational institutions, religious organizations, healthcare organizations, and various advocacy groups. These organizations play a crucial role in addressing societal needs, promoting social justice, and making positive contributions to communities.

COMPREHENSIVE PROJECT OF NOT FOR PROFIT ORGANISATIONS

Not-for-profit organizations (NPOs) prepare financial statements to communicate their financial position and performance to stakeholders, such as donors, members, and regulatory authorities.

Reasons for Maintaining Books of accounts by Not for profit organizations

Not-for-profit organizations, like any other entity, are required to maintain books of accounts for various reasons. Here are some key reasons why not-for-profit organizations should maintain proper financial records:

1. Legal Compliance:
   • Many countries have legal requirements that mandate organizations, including not-for-profits, to maintain accurate and up-to-date financial records. Compliance with these regulations is essential to avoid legal issues.
2. Transparency and Accountability:
   • Proper bookkeeping helps in maintaining transparency in financial transactions. This transparency is crucial for building trust among donors, members, stakeholders, and the general public. It demonstrates accountability for the organization’s financial activities.
3. Reporting to Stakeholders:
   • Not-for-profit organizations often have stakeholders such as donors, members, government agencies, and the public who have a vested interest in the organization’s financial health. Regular financial reports based on accurate books of accounts help in keeping these stakeholders informed about the organization’s financial position.
4. Grant Compliance:
   • Many not-for-profits receive grants and donations from various sources. Grantors often have specific reporting requirements to ensure that funds are being used as intended. Proper bookkeeping helps in meeting these compliance requirements and maintaining a good relationship with donors.
5. Budgeting and Planning:
   • Accurate financial records provide the necessary data for budgeting and financial planning. Organizations can analyze past financial performance to make informed decisions about future activities, projects, and fundraising goals.
6. Internal Control:
   • Maintaining books of accounts helps in establishing internal controls to prevent fraud and mismanagement. It enables organizations to track expenses, monitor cash flows, and implement checks and balances within their financial systems.
7. Decision-Making:
   • Financial records provide valuable information for making informed decisions. Board members, executives, and other decision-makers within the organization can use financial data to assess the impact of various initiatives and allocate resources effectively.
8. Tax Compliance:
   • Even though not-for-profits are exempt from income tax in many jurisdictions, they may still be subject to other taxes or have reporting obligations. Proper bookkeeping ensures compliance with tax regulations and facilitates the preparation of necessary tax filings.
9. Credibility and Fundraising:
   • A well-maintained set of financial records enhances the credibility of an organization. Donors and grantors are more likely to contribute to an organization that demonstrates sound financial management and accountability.
10. Success Measurement:
    • Financial records serve as a basis for evaluating the success and effectiveness of the organization’s programs and projects. By tracking income and expenses, not-for-profits can assess their financial sustainability and mission impact.

In summary, maintaining books of accounts is essential for not-for-profit organizations to meet legal requirements, foster transparency, build trust among stakeholders, make informed decisions, and ensure effective financial management.