Lesson Notes By Weeks and Term - Senior Secondary 2
Account for non-profit making organization
Account for non-profit making organization
Term: 1st Term
Week: 8
Class: Senior Secondary School 2
Age: 16 years
Duration: 40 minutes of 2 periods each
Date:
Subject: Financial accounting
Topic:- Account for non-profit making organization
SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to
INSTRUCTIONAL TECHNIQUES: Identification, explanation, questions and answers, demonstration, videos from source
INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures
INSTRUCTIONAL PROCEDURES
PERIOD 1-2
|
PRESENTATION |
TEACHER’S ACTIVITY |
STUDENT’S ACTIVITY |
|
STEP 1 INTRODUCTION |
The teacher reviews the previous lesson on manufacturing account |
Students pay attention |
|
STEP 2 EXPLANATION |
She explains balance sheet and outlines its features, limitations and format
|
Students pay attention and participates |
|
STEP 3 DEMONSTRATION |
She shows the learners how to prepare a balance sheet |
Students pay attention and participate |
|
STEP 4 NOTE TAKING |
The teacher writes a summarized note on the board |
The students copy the note in their books |
NOTE
ACCOUNT FOR NON-PROFIT MAKING ORGANIZATION
BALANCE SHEET
The Balance Sheet of an organisation is a statement showing its financial
position on a particular date. The Balance Sheet prepared by Not-for-Profit
organisations is similar to a business firm. The Balance Sheet shows the
value of assets, liabilities, and capital funds at the end of the accounting
year of the organisation on a particular date. It is prepared at the end of the
accounting year after preparing the Income and Expenditure Account.
The Balance Sheet shows the actual value of Assets, Liabilities, and
Capital Funds of the organisation. The surplus/deficit ascertained from
Income and Expenditure A/c is added/deducted from the Capital Fund as
the case may be. Other items added to Capital Fund are the capitalized
events or transactions like Legacies, Entrance fees, and Membership fees.
Some funds may be created other than Capital Fund, like Sports Fund,
Building Fund, etc., to meet the specific requirement or the requirements of
donors/contributors.
STEPS IN PREPARING BALANCE SHEET:
Step 1: When the opening balance of the Capital Fund is not given, it is
arrived at by preparing the Opening Balance Sheet. Opening Capital Fund
is an excess of assets over the liabilities in the beginning. The
surplus/deficit ascertained from Income & Expenditure A/c is
added/deducted, as the case may be.
Step 2: The net amount of the liabilities is shown in the liabilities side of the
Balance Sheet. Liabilities already appearing in the previous year’s Balance
Sheet should be seen as to whether any payment has been made against
them.
Step 3: Assets appearing in the previous year’s Balance Sheet are
adjusted for any sale, purchase during the year and depreciation. If any
part of the asset is sold, then the book value of an asset is deducted from
the concerned asset. The difference between the book value and the actual
sale proceeds is treated as profit or loss, which is shown in the Income &
Expenditure A/c. On purchase of the new asset, the payment is shown on
the payment side of the Receipts and Payment A/c.
Step 4: The adjusted value of the advance given is shown on the assets
side of the Balance Sheet.
Step 5: The adjusted value of the expenses made in Income & Expenditure
A/c will also appear on the Balance Sheet, i.e., Outstanding Expenses will
appear on the liability side and Prepaid Expenses will appear on the assets
side of the Balance Sheet.
FORMAT OF BALANCE SHEET:
Name of the organisation
Balance Sheet
(as on …)
Illustration: From the following additional information and Receipt &
Payment Account, prepare Income & Expenditure A/c and Balance Sheet
of Geeks Foundation for the year ended on 31st March 2021.
Additional Information:
Assets: Furniture ₹30,000, Books ₹17,000, Investment ₹5000, Arrears in
Subscription ₹4,900, and
Liabilities: Capital Fund ₹40,400, ₹1,700 Rent is still unpaid, General Fund
₹18,300, Building Fund ₹11,600 and Sports Fund ₹10,400.
Solution:
EVALUATION: 1. Define balance sheet in non-profit making organization
Following is the Receipt and Payment Account of GFG Foundation for the
year ending 31st March 2021:
On 1st April 2020, the club owned land and building worth ₹80,000 and
Furniture worth ₹21,000. There were 300 members on that date and annual
subscription fee was ₹200 per person. The Book Value of the car was
₹50,000. Subscriptions due on 31.3.2020 and on 31.3.2021 were ₹6,800
and ₹4,000 respectively. Interest on Investment accrued at the beginning
and at the end of the year was ₹1,600 and ₹ 2,000 respectively.
Prepare Income and Expenditure Account and Balance Sheet for the year
ending 31st March, 2021.
Prepare Income and Expenditure Account and Balance Sheet for the year
ending 31st March, 2021 from the following the Receipt and Payment
Account of Geeks Club.
Additional Information:
was ₹1,250.
CLASSWORK: As in evaluation
CONCLUSION: The teacher commends the students positively