AS-L23 — Non-Profit Organisations
Understanding how clubs, societies, and non-profit organisations prepare accounting records and financial statements.
Learning Objectives
By the end of this lesson students should be able to:
• understand the nature of non-profit organisations
• distinguish between receipts and payments accounts and income and expenditure accounts
• calculate subscriptions income
• prepare income and expenditure accounts
• answer examination-style questions
Concept Framework
What are Non-Profit Organisations?
Non-profit organisations are organisations formed to provide services rather than earn profit.
Examples include:
• clubs
• societies
• charities
• sports organisations
Main Financial Statements
Receipts and Payments Account → summary of cash received and paid
Income and Expenditure Account → similar to an income statement
Statement of Financial Position → shows assets and liabilities
CORE RULES
| Item | Treatment |
|---|---|
| Receipts and Payments Account | Cash basis |
| Income and Expenditure Account | Accrual basis |
| Surplus | Excess of income over expenditure |
| Deficit | Excess of expenditure over income |
| Subscription Arrears | Current Asset |
TRANSACTION LOGIC
Receipts and payments accounts record all cash transactions regardless of accounting period.
Income and expenditure accounts apply the accruals principle to determine the actual surplus or deficit for the year.
Non-profit organisations aim to provide services rather than maximise profit.
Worked Examples
Example 1 — Subscription Income
Cash subscriptions received £8,000
Subscriptions owing £600
Subscriptions received in advance £200
Income:
£8,000 + £600 − £200
= £8,400
Example 2 — Surplus Calculation
Total Income £15,000
Total Expenditure £12,500
Surplus:
£15,000 − £12,500
= £2,500
Example 3 — Deficit
Income £7,000
Expenditure £8,200
Deficit:
£8,200 − £7,000
= £1,200
📌 Additional questions are available in the 🎯 Lesson wise resources, Module wise resources, Guess Question Papers + YouTube Explanation section.
Students should practise explanation questions regularly to improve examination performance.
Enrolled students may submit questions from recognised textbooks, past examination papers, or other academic material for expert clarification through the Student Doubt Support facility.
Structured Practice
Level 1 – Concept Check
Define surplus
Define receipts and payments account
Level 2 – Application Practice
Explain one difference between a receipts and payments account and an income and expenditure account.
Level 3 – Examination Style Question
A club provides the following information:
Cash subscriptions received £12,000
Subscriptions owing £1,000
Subscriptions received in advance £400Calculate subscription income for the year.
(3 marks)
📌 Additional structured questions are available in the 🎯 Question Papers + YouTube Explanation section.
∗ Additional structured questions are available in the Question Papers and YouTube Explanation section. Students should practise regularly and review video explanations for procedural clarity.
Enrolled students may submit questions from recognised textbooks, past examination papers or other genuine academic material for expert clarification through the Student Doubt Support facility.
Proficiency Check
Learn → Unlearn → Relearn
1. Can you distinguish between receipts and payments accounts and income and expenditure accounts?
2. Can you calculate subscription income accurately?
3. Can you identify surplus and deficit correctly?
If unsure, revise the worked examples.
Detailed Activity Solutions
Solution to Level 3 question
Level 3 Answer:
Subscription Income:
£12,000 + £1,000 − £400
= £12,600
How This Topic Appears in the Examination
This topic commonly appears as:
• subscription calculations
• preparation of income and expenditure accounts
• surplus and deficit calculations
Examiners assess:
• application of accruals adjustments
• accurate calculations
• understanding of non-profit accounting principles
Self-Assessment Checklist
I understand non-profit organisations
I understand receipts and payments accounts
I can calculate subscription income correctly
I can calculate surplus and deficit
I can answer exam questions confidently
Continue Your Preparation
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PREMIUM RESOURCES
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GUESS PAPERS
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VIDEO ON DEMAND
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