(1) Meaning: An organization whose purpose is not to make profit; But for social service, upliftment of the members of the organization, promotion of interest of the members, promotion of sports and education, development of cultural activities is called non-commercial organization. Such organizations derive income from, and incur expenses from, their activities; But they do not aim to earn money.
Such organizations include sports clubs, Rotary-Lions clubs, trade associations like chambers of commerce, political associations, labor unions, medical associations, public hospitals, paramedic institutions, libraries, educational institutions, associations for cultural activities, orphanages, religious institutions, etc. .
(2) Characteristics: The characteristics of a non-commercial organization are as follows:
(i) Service : The main purpose of these organizations is not profit; But it is of service.
(ii) Trading Account : Since these institutions do not have the purpose of trading, they do not prepare a trading account. However, sports clubs or other organizations trade certain items for the convenience of members.
(iii) Income-expenditure account : As its objective is not to make profit, it does not create a profit-and-loss account at the end of the year; But to know the position of production-cost prepares production-cost account. So are cash transactions
(iv) Income-disbursement account: In such an organization, an income-disbursement account is usually prepared in place of a cash balance to record more cash transactions.
(v) Balance Sheet : Such organizations prepare balance sheet to know the financial position at the end of the year.
(vi) Capital Fund : The capital of a non-commercial organization is known as capital fund or capital fund or permanent fund.
(vii) Dues : The main income of this type of organization is the dues of members. Apart from that, donations, government assistance, investments Earns income through interest income, dividend income, charity etc.
- Accounts of Non-Trading Concerns Visayas
Generally there are two main methods of keeping accounts:
(1) Mercantile System: In this method accounts are prepared by taking into account the expenses paid and the income received during the year as well as the unpaid expenses and income not received. merchant Organizations maintain accounts using this method.
(2) Cash System: In this system, accounts are prepared considering only the expenses paid in cash and the income received during the year.
Non-profit organizations prepare their accounts mainly as follows:
(i) Receipt and Payment Account: This account is similar to a cash account, it records cash and bank balances as well as cash receipts and cash outflows.
(ii) Income and Expenditure Account: This account is similar to the profit and loss account of a business organization. An expense account is prepared based on the same rules as the profit and loss account is prepared. It shows current year only revenue receipts and current year only revenue expenditure. The result of this account is ‘excess of output over expenditure’ added to capital stock in the mature aggregate, ‘excess of expenditure over output’ is deducted from capital stock in the mature aggregate. Alternatively, the output-expenditure account balance (increase in output or increase in cost) is shown separately in the balance sheet.
(iii) Balance Sheet: A non-profit organization prepares a balance sheet to know the financial position of the organization at the end of the year. Capital in this organization is known as capital fund or capital fund or permanent fund. The rest of the details are similar to the Paka Sarvaiya of the trading organization. E.g., assets, accrued income, accrued income, prepaid expenses, payable expenses, debts and liabilities etc. The liability side is added to capital in the “excess of output over expenditure” balance sheet obtained from the income-expenditure account and the liability side in the ‘excess of expenditure over output’ balance sheet.
