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The revenue account to be prepared by not for profit making organisation is known as_____.
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Answer:
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Explanation:
Meaning, Characteristics, and Accounting for Non-Profit Organizations
Not-for-Profit Organisations are organisations which are set up for the welfare of the society or for the promotion of art and culture in the society. These are usually set up as a charitable institution with the service motive. The trustees manage these organisations. The members of the organisation elect the trustees. The Not-for-Profit Organisations raise funds from its members as well as from the general public for meeting their objectives.
The main motive of these organisations is to provide service. However, they may earn profits in the due course. Generally, these organisations do not manufacture, purchase or sell goods or provide services. Thus, they do not need to prepare Trading and Profit and Loss A/c. They credit the funds received to the Capital Fund or General Fund A/c.
Browse more Topics under Accounting For Not For Profit Organisations
Receipt and Payment Account
Income and Expenditure Account
Balance Sheets
Characteristics of Not-for-Profit Organizations
Service Motive: These organisations have a motive to provide service to its members or a specific group or to the general public. They provide services free of cost or at a bare minimum price as their aim is not to earn the profit. They do not discriminate among people on the basis of their caste, creed or colour. Examples of services provided by them are education, food, health care, recreation, sports facility, clothing, shelter, etc.
Members: These organisations are formed as charitable trusts or societies. The subscribers to these organisations are their members.
Management: The managing committee or the executive committee manages these organisations. The members elect the committee.
Source of Income: The major sources of income of not-for-profit organisations are subscriptions, donations, government grants, legacies, income from investments, etc.
Surplus: The surplus generated in the due course is distributed among its members.
Reputation: These organisations earn their reputation or goodwill on the basis of the good work done for the welfare of the public.
Users of accounting information: The users of the accounting information of these organisations are present and potential contributors as well as the statutory bodies.