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Non-Profit Organizations
(Accounts of clubs and societies)
 Non-profit organizations provide facilities for their members. Making a profit is not their main
purpose.
 Sports and Social Clubs, Dramatic Societies, Music Clubs, NGOs etc.

SPECIAL TERMS:
Capital Accumulated Fund
Bank Account Receipt and Payment Account
Income Statement Income and Expenditure Account
Sales (Revenue) Subscription, Sale of Ticket etc., or any other activity
Profit for the year Surplus of income over expenditure
Loss for the year Excess of expenditure over income / Deficit

Entrance fee When they first join a club, in addition to the membership fee for
that year, new members often have to pay an entrance fee.
Life Membership Amount paid by a member for lifetime.
Donations / Legacy Money given freely to an organization. (Balance listed under
accumulated fund in Statement of financial position)

ACCOUNTS TO BE PREPARED:
Subscription Account Amount paid by members to be part of the club or society. It is
the main source of income for NPOs.
Income Statement (Trading Acc) 1. Only for an activity that is in the nature of trading and carried
on to increase the club’s fund i.e. café, shop etc.)
2. Where an income statement is prepared for a particular
activity, the profit or loss on that activity must be transferred from
the income statement to the income and expenditure account.
Income and Expenditure Account To find out the surplus / deficit. (Total Income – Total
Expenditures).
Statement of Financial Position 1. Total of assets, Liabilities and net amount of accumulated
fund.
2. The accumulated fund consists of the surpluses (less any
deficits) which have accumulated over the life of the
organisation. It replaces capital in the statement of financial
position of a club or society.
Receipt and Payment Account 1. Transactions done through bank i.e. Receiving/Payments of
club.
2. A receipts and payments account is regarded as a summary
of the cash book for the financial year. All money received is
debited and all money paid is credited. The account is balanced
and the balance carried down to become the opening balance
for the following financial year.
3. A receipts and payments account includes all money paid and
received, ignoring the year to which it relates, and includes both
capital and revenue items.

Non-Profit Organizations (NPOs) O-Level/A-Level By: Qaisar Latif (SPS)

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Subscription Account
Date Details Amount Date Details Amount
Balance b/d (Arrears) ++++ Balance b/d (Advance) ++++
Receipt & Payments Account
Income & Expenditure Acc.
++++ / Bank Account ++++
(Total Actual Income)
(Subscription Received)
Irrecoverable Debts
++++
(Written off)
Balance c/d (Advance) ++++ Balance c/d (Arrears) ++++

++++ ++++
Balance b/d (Arrears) ++++ Balance b/d (Advance) ++++

Note: Irrecoverable Debts will be treated as an expense in the income & expenditure account.

 Subscription in arrears and subscriptions in advance should normally be treated as

accruals and prepayments.
 Arrears Closing (Current Asset)
 Advance Closing (Current Liability)

Calculation of accumulated fund

It is sometimes necessary to calculate the accumulated fund of a club or society. This can be
calculated by applying the same formula used to calculate the capital of a business.

In a business Assets = Liabilities + Capital

In a club or society Assets = Liabilities + Accumulated fund

Calculating the Accumulated Fund

$ $
Accumulated fund at the start ++++
Surplus / (Deficit) ++++
Donations ++++
Life membership fee ++++
Accumulated fund at the end +++++

Donations:
At the end of the year, the balance on the donations or legacy account is listed under the
accumulated fund in the statement of financial position.

Calculation of sales and purchases

It is oft en necessary to calculate credit purchases (and sometimes credit sales if goods are sold on
credit) before the preparation of the income statement.

Adjustments:
 Expenses Paid + Accrued exp Closing – Accrued exp Opening
 Expenses Paid – Prepaid exp Closing + Prepaid exp Opening

Non-Profit Organizations (NPOs) O-Level/A-Level By: Qaisar Latif (SPS)

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Income Statement (Trading Acc) - Shop/ Café/ Refreshment/Food etc

$ $
Revenue/ Takings +++++
Less: Cost of Sales (COS)
Opening Inventory ++++
Purchases
++++
(Acc. Payables Opening + Purchase – Payments – Acc. Payables Closing)
Closing Inventory (-----) (-----)
Gross Profit +++++

Expenses: not all, (only related to specified activity i.e. shop/café etc.)
Depreciation ++++
Rent ++++
Insurance ++++
Wages / Salaries ++++ (-----)
Profit / (Loss) from the shop/ cafe +++++

Income & Expenditure Account

Incomes: $ $
Annual Subscriptions (from subscription account) ++++
Profit from shop/ café/ Refreshment / Food (from trading account) ++++
Sale of Tickets/ Dance Tickets ++++
Gain on sale of equipment/ Non-Current Assets ++++
Rent Received / Receivables ++++
Any other income…... ++++ +++++

Expenditures:
Depreciation ++++
Rent ++++
Subscription – Written off (Irrecoverable) ++++
Loss on club shop / café ++++
Wages / Salaries ++++
Interest Payments ++++
Repairs and Maintenance ++++
Other operating expense etc ++++ (-----)
Surplus of Income over expenditure/ (Deficit) +++++

Non-Profit Organizations (NPOs) O-Level/A-Level By: Qaisar Latif (SPS)