how to treat subscription written off in receipts and payment account
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Accounts of Non-Profit Organisation (An Overview)
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ADVERTISEMENTS:
The Final Accounts of non-trading concerns consists of:
1. Receipts and Payments Account
2. Income and Expenditure Account, and
ADVERTISEMENTS:
3. Balance Sheet.
1. Receipts and Payments Account:
It is a Real Account. It is a consolidated summary of Cash Book. It is prepared at the end of the accounting period. All cash receipts are recorded on the debit side and all cash payments are recorded on the credit side.
Cash Book consisting of entries of receipts and payments in a chronological order while the Receipts and payments is a summary of total cash receipts and cash payments.
It starts with opening balance of Cash and Bank and ends with closing balance of Cash and Bank. It does not take into account outstanding amounts of receipts and payments. Receipts and Payments may be of Capital or Revenue nature; they may relate to the current or previous year or subsequent year; so long as they are actually received or paid, they must appear in this account.
Features of Receipts and Payment Account, In Brief:
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1. It starts with opening balance and ends with closing balance
2. It is the summary of cash and bank transactions.
3. Actual cash transactions are entered.
4. It includes capital as well as revenue items.
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5. It follows cash system of accounting
6. It shows cash position and excludes all non-cash items.
7. It is a real account.
8. It does not take any income/expense outstanding at the beginning or at the end.
2. Income and Expenditure Account:
ADVERTISEMENTS:
It is a Nominal Account. It is in the form of Profit and Loss Account. It is concerned with only revenue items—expenses and incomes. It records all losses and expenses on its debit side and all incomes and gains on its credit side.
Of the incomes and expenses of revenue nature, only the portion pertaining to the current year is shown in the Income and Expenditure Account i.e. amount relating to the previous year or future year are excluded. Again, the incomes and expenses of current year, whether received or not, must be shown.
In other words, incomes and expenses have to be adjusted for both out-standing and pre-payments. All non-cash items, Depreciation, Bad Debts, Provision for Doubtful Debts etc. are taken into account.
The difference between the debit side and the credit side is either surplus or deficit for the year concerned and the difference will be transferred to the Capital Fund (also called General Fund or Accumulated Fund) appearing in Balance Sheet.
Features of Income and Expenditure Account, In Brief:
ADVERTISEMENTS:
1. It is prepared in lieu of Profit and Loss Account.
2. It is a nominal account.
3. It is based on mercantile system of accounting.
4. There is no opening balance.
5. It ends with Surplus or Deficit.
6. It excludes all capital income and capital expenses.
7. It includes only revenue items.
8. It records all expenses whether paid or not, and all incomes whether received or not.
Distinction between Receipts and Payments Account and Income and Expenditure Account.