FINANCIAL ACCOUNTING N 4 MODULE 4 NONPROFIT ORGANISATIONS

FINANCIAL ACCOUNTING N 4 MODULE 4: NON-PROFIT ORGANISATIONS NOTES BY: MRS MOTAUNG M. R.

PURPOSE OF A NON-PROFIT ORGANISATION • A non-profit organization is started to render a sports, culture or recreational services not to make profit. The incomes from members, donations and events held for fund raising purposes (www. futuremanagers. com ). • The profit of non-profit organization is called surplus • The loss is deficit. • There is no capital in the non-profit organization, the Accumulated fund is opened instead • (Strydom & Grooenewald, 2013)

RECEIPTS, PAYMENTS, INCOME AND EXPENSES • All money receipts in a non-profit organization will be deposited into the bank account of the organization. • The income will be used for operations of the organization. • The term expense is used for payments. • The following accounts are used: • Membership fees (paid by all members, it is an income). This is the main account of the non-profit organization. • Entrance fees are debited to the membership fees(income to the organization) • Affiliation fees (expense to the organization) • Honorarium fees (expense) paid to members who assist with certain duties. • Donations (income to the organization if received from outside/ expense if paid out to other organizations • (Strydom & Groenewald, 2013) • STUDENTS ARE EXPECTED TO DRAW THESE ACCOUNTS IN THE GENERAL LEDGER.

FINANCIAL STATEMENTS OF A NONPROFIT ORGANISATION • The statement of income and expenditure is used to determine whether the non-profit organization is making a surplus or deficit. See page 323 in the text-book. • The balance sheet is done the same way as that of the sole trader (see page 336). • The students are expected to draw up the Trading Account of the non-profit organization. • (Strydom & Groenewald, 2013)