Advanced Financial Accounting FIN611 Main Ahmad Farhan Lecture6

Advanced Financial Accounting FIN-611 Main Ahmad Farhan Lecture-6 Non-Profit organizations

Non-Profit Organizations 1. 2. Which is maintaining proper books of accounts and follows double entry accounting system. Which is not maintaining proper books of accounts and not follow double entry accounting system.

Organizations that follows no proper Accounting system Small Size Medium Size

Library Receipt and payment Account For the year ended 31 st Dec, 2008 Receipts Cash Bank Payments Opening balance Subscription received Membership fee Donations Loan received Any other income xxx xxx ---xxx xxx Telephone bill Rent Salaries Entertainment expenses News paper & Periodicals Any other expenses Closing balance Cash Bank xxx ---xxx ---- xxx xxx ---xxx xxx

Preparation of Income Statement 1. 2. Function of expense method Nature of expense method

Income statement under Function of expense method Sales Less Cost of goods sold xxx Gross profit Less Operating expenses Administrative Selling and marketing xxx Profit from operations Add other income Profit before tax Less Income Tax Profit after tax xxx xxx

Function of Expenses 1. 2. 3. 4. 5. Cost of goods sold Administrative expenses Selling and Distribution expenses Financial expenses Income tax expenses

Income & Expenses Account Income Subscription income xxx Membership fee Entrance fee xxx Total income xxx Expenses Salaries xxx Entrance fee xxx Electricity bill xxx Building rent xxx Total expenses xxx Excess of Income over Expenditure/surplus xxx

Income & Expenses Account Income Amount Expenditure Subscription income xxx Membership fee xxx Entrance fee xxx xxx Amount Salaries Entrance fee Electricity bill Building rent xxx xxx Excess of Income Over Expenditure /surplus xxx