PPT - Accounting for Not-for-Profit Organisation | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year PDF Download

 Page 1


CHAPTER #2
Accounting for
Non-Profit Organizations
Prepared by: Asadullah Sharifi
Lecturer at Maiwand University, Kabul
Page 2


CHAPTER #2
Accounting for
Non-Profit Organizations
Prepared by: Asadullah Sharifi
Lecturer at Maiwand University, Kabul
Definition and Explanation
? What is non-profit organization?
? There are certain organizations which are
formed not to earn profits but to render
services to their members and to the public.
Such organizations are clubs, hospitals,
libraries, colleges, charitable/religious
institutions, literary societies etc.
? These non-profit seeking entities exist with a
primary motive of providing service.
Page 3


CHAPTER #2
Accounting for
Non-Profit Organizations
Prepared by: Asadullah Sharifi
Lecturer at Maiwand University, Kabul
Definition and Explanation
? What is non-profit organization?
? There are certain organizations which are
formed not to earn profits but to render
services to their members and to the public.
Such organizations are clubs, hospitals,
libraries, colleges, charitable/religious
institutions, literary societies etc.
? These non-profit seeking entities exist with a
primary motive of providing service.
Conti…
? Services such as a club provides sports and
recreational facilities; a hospital renders medical
services; a literary society promotes art and
culture; and an association may also be formed to
protect the rights of its members.
? Though the main source of income of such
organizations is membership subscriptions,
donations and grants etc., they may also
undertake trading activities in order to earn
some profit which is also used for the furtherance
of the goals of the organization.
Page 4


CHAPTER #2
Accounting for
Non-Profit Organizations
Prepared by: Asadullah Sharifi
Lecturer at Maiwand University, Kabul
Definition and Explanation
? What is non-profit organization?
? There are certain organizations which are
formed not to earn profits but to render
services to their members and to the public.
Such organizations are clubs, hospitals,
libraries, colleges, charitable/religious
institutions, literary societies etc.
? These non-profit seeking entities exist with a
primary motive of providing service.
Conti…
? Services such as a club provides sports and
recreational facilities; a hospital renders medical
services; a literary society promotes art and
culture; and an association may also be formed to
protect the rights of its members.
? Though the main source of income of such
organizations is membership subscriptions,
donations and grants etc., they may also
undertake trading activities in order to earn
some profit which is also used for the furtherance
of the goals of the organization.
Conti…
? As the main aim of these organizations is not
to earn profits, they do not prepare Trading
and Profit and Loss A/c. But still they would
like to know whether their current incomes are
sufficient to meet their current expenses. For
this purpose they prepare an Income and
Expenditure Account which is similar to a
Profit and Loss A/c of profit seeking entity.
? A Balance Sheet is also prepared in order to
show the financial position of the non-profit
organization.
Page 5


CHAPTER #2
Accounting for
Non-Profit Organizations
Prepared by: Asadullah Sharifi
Lecturer at Maiwand University, Kabul
Definition and Explanation
? What is non-profit organization?
? There are certain organizations which are
formed not to earn profits but to render
services to their members and to the public.
Such organizations are clubs, hospitals,
libraries, colleges, charitable/religious
institutions, literary societies etc.
? These non-profit seeking entities exist with a
primary motive of providing service.
Conti…
? Services such as a club provides sports and
recreational facilities; a hospital renders medical
services; a literary society promotes art and
culture; and an association may also be formed to
protect the rights of its members.
? Though the main source of income of such
organizations is membership subscriptions,
donations and grants etc., they may also
undertake trading activities in order to earn
some profit which is also used for the furtherance
of the goals of the organization.
Conti…
? As the main aim of these organizations is not
to earn profits, they do not prepare Trading
and Profit and Loss A/c. But still they would
like to know whether their current incomes are
sufficient to meet their current expenses. For
this purpose they prepare an Income and
Expenditure Account which is similar to a
Profit and Loss A/c of profit seeking entity.
? A Balance Sheet is also prepared in order to
show the financial position of the non-profit
organization.
Final Accounts of non-profit 
organizations
? Non-Profit Organizations also prepare their
final accounts more or less on the lines of the
profit seeking organizations, which include the
following statements:
1. The Receipts and Payments Account
2. The Income and Expenditure Account
3. The Balance Sheet