Clubs, Associations and other non-profit making organization do not
have trading and profit and loss accounts drawn up for them, as
their main purpose is not trading or profit making. They are run so
that members can do things such as play football or chess.
the kind of final account prepared by these organizations are either
receipts and payments or income and expenditure accounts.
receipts and payments.
receipts and payments accounts are summary of the cash book for
income and expenditure accounts.
When assets are owned, and there are liabilities, the receipts and
payments accounts is not a good way of drawing up final accounts.
Other than the cash received and paid out, it shows only the cash
balances . the other assets and liabilities are not shown at all. What
is required is :
1. a balance sheet, and
2. an account showing whether the association's capital
In a profit-making firm, 2 would be a trading and profit and loss
account. In a non-profit organization, 2 would be an income and
An income and expenditure account follows the same rules as
trading and profit and loss accounts. The only differences are the
terms used. A comparison now follows:
Profit making firm Non-profit organization
A trading and profit and loss Income and expenditure accounts.
Net profit Surplus of income over expenditure
Net loss Excess of expenditure over income
A sole ore a partnership would have capital account. A non-profit
making organization would instead have accumulated fund. It is
effect the same as a capital account, as it is the difference between
assets and liabilities.
In sole trader or partnership
Capital + liabilities = assets
liabilities+ Accumulated fund = assets
so far we have treated subscriptions owing as being an asset.
However, any treasurer of club would tell you, most subscriptions
that have been owing for along time are
any donations received are usually shown as in come in the year
that they are received. It is transferred to the credit of income and
new member often have to pay an entrance fee in the year that
they join, in addition to the membership fee for that year. entrance
fees are normally included as income in the year that they are
received. It is transferred to the credit of income and expense
subscription, in an ordinary course, is a regular revenue receipt. It
is transferred to the credit of income and expense account
Accumulated fund : A form of capital account for non-profit making
income and expenditure accounts an account for non-profit making
organization to find the surplus or loss made during a period
Receipts and payments.
Receipts and payments accounts : a summary of the cash book of a
non-profit making organization
Main point to remember
1. a receipt and payments account dose not show full financial
position of an organization, except for one where they only
asset is cash.
2. income and expenditure account is drawn up to show either
the surplus of income over expenditure or the excess of
expenditure over income. These are the same as 'profit' or
'lose, in a profit-base organization.
3. Accumulated fund is basically the same as a capital account.
4. Although the main object of the organization is non-profit
making, certain activities may be run at a profit ( or may lose
money ) in order to help finance the main objects.
5. in an examination you should treat subscription owing at the
end of a period in the same way as debtors, unless told
6. Donation are usually treated as income in the period in which
they are received
7. entrance fees are usually treated as income in the year in
which they are received
8. the treatment of life membership fees is purely at the
discretion of the organization
1/1 the association received in cash20000 NIS donation from Ali
2/1 company deposited 19000 NIS in bank of Palestine
More than 1000NIS must not be kept in the society's hand (cash)
The society must open an account or more in the bank
3/1 subscriptions paid by Khaled member amounted to 50NIS
4/1subscriptions paid by Salem member amounted to 50NIS
5/1 the company bought furniture from supplier Al nour at 3000
NIS including vat, invoice number 195 and the invoice paid in
cheque no. due date 7/1
7/1the bank of Palestine deducted the cheque no.97 from current
9/1the association paid the telephone expense invoice no 434 to
Etisalat company by cash 367 NIS, price included VAT
10/1 the association paid the rent expense of 4000NIS by cheque
no. 45 due date 13/1
record closing entry by electronic way
set up surplus account
choose accounting menu
from report choose "balance sheet", select accounts tab folder
in field profit and loss account type surplus account number
click "closing accounting period" button
Asseal show the message "A new accounting dated will be
open a new group with copy a chart of accounts by
electronic way from previous year to a new year
Set up a new group until Asseal display the window titled
"new group and select the option " A group from a existing
group", then click continue
Asseal will display the window tiled "select group to copy
Move to group you want copy a chart of account from
and stand on it , to continue setting up your company
select the " continue " button or press " enter "
Asseal display the company properties group window,
modify the accounting period , to continue setting up your
company select the "continue" button or press "enter"
record opening accounting entry and stock opening
storage transaction by electronic way
click the utilities menu at the top window
from the pull-down window select " copy accounts and
items from other groups "
Asseal will display warning message click " continue "
Asseal will display the window titled " copy accounts and
items from other groups "
Click " select" button, and choose the group related the
previous year and click " select
Then click the option " copy account" then click the option
" create a journal to copy acc. Balance"
To record stock opening storage transaction in electronic
way click copy items from " copy accounts and items from
other groups " window , Then click the option " copy
Items" then click the option " create a transaction to copy
Click the button "continue"