What are Non – Trading Concern?

The concerns whose main objectives are not to earn profit but render valuable

services to its member and to the society are known as non-trading concerns.

Examble : Schools , Colleges, Library, Sports, Clubs, Social Clubls, Hospitals

etc

Non – trading concern prepare the following books of accounts

 Recepits and payment a/c

 Income and expenditure a/c
 Balance sheet

RECEPITS AND PAYMENT

Recepits and Payments accounts summarizes receipts and payment made by a non
trading concern during a particular period of time.

Format

 Debit side to record all receipts

 Credit side to record all payments
Receipts and payment a/c for the year ended 31st March 2005

Date Receipts Rs Date Payment Rs

1.4.2005 To Balance b/d XXX By Honorarium XXX
Cash XXX By Rent XXX
Bank XXX By Interest XXX
31.3.200 To subscription XXX By Sports XXX
5 To Entrance fees XXX Expenses
To sale of old 31.3.2005
 newspaper XXX By Balance c/c
Cash XXX
Bank XXX

INCOME AND EXPENDITURE A/C

Income and expenditure account like profit and loss account

Format

Debit Side – All Expenses and Losses

Credit Side – All Incomes and Gains

Expenditure Rs Income Rs
To Revenue Payment : To Revenue Receipt : XXX
[Salaries, Rent, Interest etc] XXX [ Subscription , Rent, Interest ,
- Pertaining to previous XXX Entrance fees etc]
year XXX - Relating to previous XXX
period
XXX
- Pertaining to future XXX
XXX
period XXX - Relating to future period
XXX
+ Out standing Expenses XXX + Out standing income XXX
By other reccipts XXX
XXX By Profit on sale of assets XXX
To Bad debts By Deficit [B.F] XXX
To depreciation XXX
To loss on sale of asset XXX
To surplus [B.F] XXX
XXX
XXX XXX
BALANCE SHEET

Balance sheet of a non trading concern is similar to Balance sheet of a trading

concern

Liabilities Rs Assets Rs
Outstanding Expenses XXX Cash in hand XXX
Subscription received in advance XXX Cash at Bank XXX
Bank loan XXX Fixed deposits XXX
Special Funds XXX Investments XXX
Outstanding
Such as tournament fund etc subscriptions XXX
Add: income from Tournament XXX Interest outstanding XXX
Less: Tournament Expenses XXX Rent receivable XXX
XXX Prepaid expenses XXX
Special Donations Stock of stamps and
[for building etc] XXX stationery XXX
Stock of sports
XXX
Capital Fund Meterials XXX
XXX
Add: Surplus [or] Stock of medicines XXX
XXX
Less: Deficit Library Books XXX
XXX Furniture and Fixtures XXX
Add: General donations XXX Land and buildings XXX
Entrance fees XXX Ground and pavilion XXX
Legacies XXX XXX

XXX XXX

Difference between Receipts and Payments a/c and Income and Expenditure a/c

S.N Receipts and Payments a/c Income and Expenditure

o
1 It is summary of cash transaction It is summary of Income ad
 Expenditure
2 It is a Real A/c It is a Nominal a/c
3 It is like a cash book It is like a Profit and loss a/c
4 It starts with opening balance of It does not start with opening Balance
cash and bank
5 All receipts are entered on the debit All income are entered on the credit
side side
6 All payment are entered on the All expenses are entered on the debit
credit side side
7 It takes into account both revenue It takes into account only revenue
and capital receipt income
8 It takes into account the receipts It takes into account the incomes
relating to previous, current and relating to current year only whether
subsequent years received or not
9 It takes into account the payment It takes into account the expenditure
relating to previous, current and relating to previous year only whether
subsequent year paid or not
10 The purpose is to find either the The purpose is to find either surplus
opening or closing balance of cash/ or deficit
bank
11 It ends with the closing balance of It does not end with closing balance
cash and bank
12 It takes into account both revenue It takes into account only the revenue
and capital expenditure expenditure

CHOOSE THE BEST ANSWER

1. The account current method in which the days are calculated from the date
of transaction to the commencement date is known as
a) Forward method b) Backward Method c) Daily Balance method
d) Product Method
2. The number of days are calculated from the date of the transaction to the date
Of settlement in case of
a) Forward Method b) Epoque Method c) Daily Balance Method d) Index
Method
2. The method of account current usually employed by the banker is known as
 a) Daily balance method b) Red ink interest c) current account
d) Epoque method
4. The method of account current usually employed by the banker is known as
a) Daily Balance method b) Red ink interest c) Current account d) Epoque
method
5. Red ink interests is associated with
a) Total sales b) Account current c) Nominal a/c d) Average due date
FILL IN THE BLANKS

1. Under Product method the amount of each item is multiplied with number
of days.
2. Forward method is also called Interest table method.
3. Red inked products are deducted from the total products of the same side.
4. Red ink interest adjustment are not applicable to Epoque method