Accounting Treatment of Special Items of Non-trading Concerns

Several special items are used in the accounts of non-trading concerns (i.e., non-profit organizations). This article highlights the main special items and provides brief explanations. 1. Subscriptions A subscription is an amount paid by the members of non-trading concerns at regular intervals to keep their memberships active. It is the main and regular source of … Read more

Features of Non-Trading Concerns

Non-trading concerns, also known as non-profit organizations, are characterized by the following features. 1. Non-Profit Motivation Non-trading concerns do not seek to earn profit. Instead, their main objectives are to serve their members or society as a whole. 2. Entity The entity concept is also applied to non-trading concerns because these organizations do not have … Read more

Non-Trading Concerns

Organizations (also known as concerns) may be classified as follows: Profit-making or trading concerns Non-trading concerns or non-profit making organizations Profit-Making Organizations Profit-making organizations buy and sell merchandise with the expectation of earning profit. Examples of profit-making organizations are commercial banks, insurance companies, and textile mills. Non-Profit Making Organizations Non-profit making organizations (or non-trading concerns) … Read more

Differences Between Trading and Non-trading Concerns

The primary points of difference between trading and non-trading concerns may be summarized as follows: Objectives Trading Concerns: The main objective is to earn profit. Non-trading Concerns: The main objective is to provide goods and services that fulfill a social need. Source of Income Trading Concerns: The primary sources of income are merchandise sales and services rendered to … Read more

Receipts and Payments Account

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. Receipts are entered on the debit side of the receipts and payments account. This … Read more

Income and Expenditure Account

Definition An income and expenditure account is an account revealing the surplus or deficit of a non-trading concern, which involves matching incomes and expenses over a specified accounting period. Explanation An income end expenditure account is simply another name for the expense and revenue summary of a non-trading concern. This is prepared on the lines … Read more

Difference Between Receipt and Payment Account and Income and Expenditure Account

There are several points of difference between a receipt and payment account and an income and expenditure account. These differences fall under the following categories: Nature Commencement Items included Capital and revenue items Placing of items Balance of account Outstanding items Carrying of balance Balance sheet In the rest of this article, an overview is … Read more

Preparation of Income and Expenditure Account From Receipts and Payment Account

When you understand the difference between a receipts and payments account and an income and expenditure account, it should be a simple matter to convert the former into the latter. As a general guide, this article shows a series of steps you can follow to convert a receipts and payments account into an income and … Read more