Balbharati solutions for Book-keeping and Accountancy 12th Standard Hsc Maharashtra State Board
Chapter 2 - Accounts of ‘Not for Profit’ Concerns [Latest edition]
Fill in the blank:
Not for Profit Organization never is engaged in trading activities.
Not for Profit organization is called service organization.
Receipts and Payments Account falls under the category of Real Account.
In Receipts and Payments Account the summary of Cash transactions are recorded.
Income and Expenditure Account is similar to the Profit and loss account of Trading Concern.
Credit side of Receipts and Payments Account shows cash payments.
Income and Expenditure Account is a Nominal Account.
Mumbai University prepares Income and expenditure Account instead of a Profit and Loss account.
Subscription received from the members is considered as revenue receipts.
The transactions recorded in Income and Expenditure Account are related only to the Current year.
Difficult Words & Meanings:
- Concerns: In this context, it refers to organizations or businesses.
- Not for Profit Organization (NPO): An organization that does not earn profits for its owners. All of the money earned through pursuing business activities or donations is used in pursuing the organization's objectives.
- Trading Activities: Activities related to buying and selling goods with the primary aim of making a profit.
- Receipts and Payments Account: A summary of all cash and bank transactions (money received and money paid out) during an accounting period, prepared by NPOs. It's similar to a cash book.
- Real Account: In accounting, accounts relating to assets and properties. They are not closed at the end of the accounting year and their balances are carried forward. (e.g., Cash, Buildings, Machinery).
- Income and Expenditure Account: An account prepared by NPOs to find out the surplus (profit) or deficit (loss) from its operations during an accounting period. It's similar to a Profit and Loss Account for businesses.
- Trading Concern: A business organization whose main objective is to earn profit by buying and selling goods.
- Nominal Account: Accounts relating to expenses, losses, incomes, and gains. These are closed at the end of the accounting year by transferring them to the Trading and Profit & Loss Account (or Income and Expenditure Account for NPOs).
- Subscription: A regular payment made by members to an organization (like a club or society) to support its activities.
- Revenue Receipts: Receipts (income) that are recurring in nature and are related to the normal activities of an organization. They are generally available for meeting day-to-day expenses.
- Current Year: The specific accounting period for which financial statements are being prepared.
