Accounting for Not-for-Profit Organisations Test 14

Profit on sale of fixed assets is an income in NPO which is to be recorded in Income and Expenditure account.

Entrance Fee is an recurring item which is to be treated as revenue receipt.

Temporarily restricted contributions are those that are subject to a time period condition.

Temporarily restricted assets are those that are donated subject to restrictions that are limited to a specific period of time hence it is a temporarily restricted asset.

Permanently Restricted Assets are Assets of a not-for-profit organization that come with certain restrictions. Permanently restricted assets are any assets that are given to a not-for-profit by an outside individual or agency with restrictions on their use or purpose and the prinicpal portion of endowment fund is classified as Permanently restricted net assets.

Honorarium is a payment given for professional services that are rendered nominally without charge. so,we can say it is a kind of remuneration paid to a person who is not the employee of a non-profit organization which is a revenue expenditure. It is shown in the Income and expenditure account on the expenditure side.

By selling old newspapers, NPO will receive revenue hence it will be an income for NPO which is to shown in Income and expenditure account on income side.

Assets funds are used to account for the construction or acquisition of fixed assets such as buildings, equipment and roads.These are also called Capital project funds.

NPO make only Receipt and Payment account, income and expenditure and Balance sheet but income statement is prepared by profit making entity.

Any NPO if have its seprate trading activity then they need to know activity wise profit and loss which is to then transferred to income and expenditure account of that NPO to make consolidated Accounts. Hence, profit/loss of Trading activity of club is to be presented in income and expenditure A/c.