Accounting records of not-for-profit organisations - class-XI

Subscription is the amount that is paid by members of NPO every year. It is the primary source of income of NPO. It is generally paid every month. It is the amount paid by members to keep their membership alive. An advance receipt of subscription from a member is an income received in advance. It is liability for NPO. So it is recorded on credit side of Subscription Account. 

When any kind of income is due and has to be received by company in future it is known as accrued income and this type of income is an asset for firm.

Legacy is the amount received by a non-profit organisation when a person has mentioned about transferring his property value to such organisation on his or her death. Hence, on death of that person, his property will be taken by the non-profit organisation.

When the balance sheet is prepared for any company set up to earn profit, the owner's equity is mentioned because it is funded by the owner to start the business.

Legacy is an amount of property or money left to someone in a will.  It refers to property received by virtue of a will of a deceased person. Acquisition of such property by an institution is a capital receipt because these are not received on a regular basis. Hence, it will not appear in income and expenditure account. It is shown in liabilities side of balance sheet. 

Closing balance for the capital fund can be calculated using the formula given below:

The deficit as per Income and Expenditure Account is deducted from capital fund. Capital fund is the excess over assets over liabilities. Any addition or reduction in the fund is adjusted through the capital fund account. 

Not-for-profit organisation prepare balance sheet for ascertaining the financial position of the organisation. There will be capital fund or general fund in place of the capital, and surplus or deficit ascertained from income and expenditure account is added to/ deducted to the capital fund account.

b"Donation received for specific purpose is capital receipt. Specific donation can't be used for any other purpose than the purpose for which it is given. It creates a liability for Not for Profit Organisation. That's why It is shown on the liabilities side of the balance sheet. "

Subscription is a annual charge paid by the members of the organisation to receive or avail service or information. It is an income for the organisation and if income is outstanding or say yet to be received it will be an asset for the company hence, will be shown under the head current assets.

True. Specific donations is a donation received for a specific purpose say for constructing a building. Specific donations are not charged to income and expenditure account rather capitalised and shown on the liabilities side and any expenses of the same are deducted from the fund.