In every society, some organizations or associations are found which are operated for the benefit of society. These organizations are established for some social, educational, religious or charitable purposes. Their aim is not to earn profit rather serve their members or a community or the entire population of a certain city or locality and sometimes the whole state or nation. These organizations are found in the form of clubs, societies and charitable bodies. Many government institutions also fall into this category, such as hospitals, schools, colleges and libraries etc.
Thus from the above discussion, we conceive that Non- Trading Concerns or Non-Profit Organizations are those organizations which are not engaged in profit-making activities. They are operated for the benefit of their members or the society as a whole. Such as Clubs, Libraries, Hospitals and Dispensaries etc
There are some special items which are used in the accounts of non-trading concerns or non-profit organizations. which are as under. 1. SUBSCRIPTIONS It is an amount paid by the members of non-trading concerns at regular intervals to keep their membership alive. It is the main and regular source of income of non-profit organizations. The …
Read moreAccounting treatment of some special items of Non-trading concerns
Non-Trading Concerns or Non-Profit Organizations have the following features. 1. Non-Profit Motivation: Non-Trading Concerns are not operated with the objectives of earning the profit. Their main objectives are to serve their members or the whole society. 2. Entity: The entity concept is also applied to non-trading concerns, as these organizations do not have owners. 3. Forms …
Concerns or organization may be classified as: Profit making or Trading Concerns Non-trading concerns or Non-profit making organizations Profit making organizations: Profit making organizations deal in buying and selling merchandise with the expectation of earning profit. Examples of trading or profit making organizations are commercial banks, insurance companies, textile mills etc. Non-trading concerns or non-profit …
The main points of difference between trading and non-trading concerns may be summarized as follows: Objective: Trading Concerns: The main objective of these concerns is to earn profit. Non-trading Concerns: The main objective of these concerns is to provide goods and services that fulfill a social need. Source of Income: Trading Concerns: The main sources of income …
Read moreDifferences between trading and non-trading concerns
Definition A receipts and payments account is a summary of actual cash receipts and payments extracted from the cash book over a certain period. All cash received and paid during the period whether capital or revenue is included in this account. The receipts are entered on the debit side, that in on the same side …
Definition Income and expenditure account can be defined as an account that reveals surplus or deficit of a non-trading concern by matching incomes and expenses of a specified accounting period. Explanation An income end expenditure account is merely another name for the expense and revenue summary of non-trading concern. This is prepared on the lines of …
The main points of difference between receipt and payment account and Income and expenditure account may be described as under: Nature: Receipt and payment account: It is a summary of cash transactions. Income and expenditure account: It is another name of income and expenses summary as adopted in non-trading concern. Commencement Receipt and payment account: It …
Read moreDifference between receipt and payment account and income and expenditure account
If the points of difference between receipt and payment account and income and expenditure account have been understood, it should be a simple matter to convert a receipt and payment account into an income and expenditure account. As a general guide, the following steps should be carefully followed to convert the receipt and payment account to …
Read morePreparation of income and expenditure account from receipt and payment account
The balance sheet is prepared in ‘the manner similar to what is followed in the case of trading concern. it can be prepared in Account Form or Report Form. If only the receipt and payment account is available, it is not possible to have a balance sheet, since complete information regarding the assets and liabilities …
Take a quick Multiple Choice Questions (MCQs) test about Non-trading concerns. These MCQs can help you to prepare for your exams, interviews and different tests. Just click the “start quiz” button and start Non-trading Concerns MCQs quiz. If you find difficulty in answering these questions, read ‘Non-trading Concerns‘ chapter thoroughly from the explanation section of the …