FS of Non Profit Organisation Test - 2

Classifying the expense on the basis of Programme and supporting activity is called functional basis. Since, Programme Exp. are the expense incurred to carry out programme of NPO and supporting expense are incurred for raising funds and For management.

Sale of grass will be revenue for NPO which is to be shown on income and expenditure side of NPO hence it is an income.

All revenue and expense of NPO are recorded in statement of activity which is income and expenditure account.

NPO doesn't have any owners equity , they can take debt.

The receipt and payment account is Summary of cash book on that basis it is a real account.

Any amount invested outside is treated as investment so sport fund if invested outside it will be investment.

A nonprofit's statement of activities is issued instead of the income statement which is issued by a for-profit business which shows revenue such as contributions, program fees, membership dues, grants, investment income, and amounts released from restrictions.All these contribution are shows under the head revenues in the statement of activity.

NPO are those which have service motive and don't have any profit motive. examples - School, Hospital ,charitable organisation etc.

It is a primary source of income of a non-profit organisation. It is usually collected every month from all the ordinary members. Subscription is the amount paid by the members to keep their mem­bership alive.But if it is received in advance it creates liability . hence, Subscription received in advance is a liability for NPO which is to be shown in balance sheet.

It is like donation. It is the amount given to a non-trading concern as per the will of deceased person. It is taken to the Receipts and Payments Account as Capital Receipts. This will appear in Balance Sheet on liability side.