Effective Money Receipt Example for NPOs

Money receipt example for NPOs

what are some of the common items of income or receipts in case of an income and expenditure akka subscription what a subscription subscription are like membership fees every month every quarter every year the member pays subscription fees may be a nominal amount in order to run the particular Club the Society whatever they nonprofit organization is so this item of subscription is revenue it is taken on accrual basis and taken to the income and expenditure account income and expenditure item of revenue on accrual basis that means subscriptions for the year whether received or accrued should be brought in to then income side of the income and expenditure account any subscription received in advance will become a liability and will go to the balance sheet Goodin next entrance fees entrance fees what do we do water entrance fees entrance fees is like a one-time fee which is paid when they come in any person coming into the club pays and entrance fee and thereafter he pays the subscription which may be an word now since entrance fees are a one-time payment it is often considered as capital if it is capital it is added to the capital fund on the general fund so entrance fees the logic be it is paid only once by a member and therefore such such an amount should not be treated as a revenue item it should be taken as a capital item and therefore we could add it to the capital fund or the general fund however if the entrance fees amounts are small then amount is small and regularly we get some amount of rain which could be taken though income and expenditure account ultimately it would depend on the rules of the particular nonprofit organization whether they want to treat this as capital or they want to treat it as revving him life membership fee what is a life membership fee a membership fee which is paid for life that means thereafter the person does not have to pay his subscription or membership fee he is paid in one lump sum at the beginning when he joins the particular club or society or the nonprofit organization such a life membership fund is normally capitalized usually this is capitalized what are the ways of treating it there may be usually there could be two ways of treating the life membership file one a small amount every year is transferred small amount is transferred to income and expenditure account or it remains in the life membership fund it remains the whole thing here also it is in the life membership fund but every year a small amount is recognized as being in case or alternatively this life membership file is retained as the life membership fund in lis in in the balance sheet and when the membership is terminated this amount may be transferred to the general fund or capital fund or accumulated one whatever it is called what is the capital fund on accumulated fun like we said before a nonprofit organization does not have any capital whatever money is brought in by the members is in the nature of an entrance fee or a subscription whenever the nonprofit organization makes a surplus this surplus is kept in an account which is called agent what or it's called an accumulated four or it's called that capitalism usually it members contribute money it is called the capital fun otherwise it's called the general or an accumulated fund so this life membership fee since its capitalized it is kept in an account called the light membership form and shown on the liability side of the balance sheet on termination of this membership when the person ceases to be a member the amount which he had paid as the light membership fee may be transferred to the general fund this is an alternative treatment of the life membership fee but life membership fees usually treated as a capital item and taken to the liability side of the balance sheet next we come to grants or donations donations when people donate money to the particular organization in order to promote their cause because of some interest in that particular cause in because of some interest in the service that is being provided by the nonprofit organization grants may be again some form of a donation from the government or some other public body now these grants are delicious again there could be two ways of treating them donations of a general nature general nature are often treated as an income unless the amount is very big in which case it is capitalized and may be taken to the accumulated fund so donations when they are general donations and not of a very huge amount smaller amounts and it is received every year some some donation or the other is received every year so it becomes a recurring in nature when that is the that when that event ended when donations are of a nature which is a record small in amount and for a general purpose then it is taken to income and expenditure account as income but if it is a special donation then it is capitalized and rethink as a donation fund special fund price 1 sports 1 whatever special fund for a library fund building fund you retain for the purpose of meeting the particular expense for which the fund is form we might have a building fund the building fund money comes in in through the building fund or money is donated for a building fund means this amount bank account debit the building fund is retained in the building fund till the building is made and completed on completion the fund may be released and transferred to the accumulated fund or gender if I'm so special funds are capitalized special fund would be capitalized general fund a general donation a general donation may be taken to income and expenditure unless the amount is very large the treatment of a general and a special fund or achievement particularly of a special fire we will do in a little more detail but what are the other sources of income income from investments so when there are surplus funds if there is surplus cash in it nonprofit organization such money we've used to buy investments which will earn some income this interest income is revenue and therefore taken to income and expenditure account as pink and endure my fund what is an endowment fund again it is like a donation a like a crock an endowment a sum of money is gifted to the particular nonprofit organization and domain fund is also capitalized and taken to the library of the balance sheet legacy when an amount is left to the nonprofit organization by way of the will of a person on the death of the person the person in his will we have stated that so much of the assets or so much of the money is to be given to the nonprofit organization on his death such an amount which has been left to the organization by we offer will through a width would be called that legacy and this legacy is also a capital height and is therefore taken to be balance sheet so what are the items so these are actually not all items of income strictly speaking we may say these are all items of receipts and it is for us to decide whether this is income or it is a capital item is it revenue or is it capital subscriptions are revenue and prints what did we say it could be capital or revenue depending on the rules of the organization if it is a huge amount it is normally capitalized but when the amount is small amount and if the rule specified we may take it to income and expenditure occur logically entrance fee is paid by the member only once and therefore such entrance fees are to be strictly speaking capital in nature but I will repeat despite it being little capital in nature the rules of the organization may determine how the entrance fee is to be treated very often half of it is capitalized and half of it is taken as revenue a life membership fee is capital it is the fee it is a part of the fee which is paid in a lump sum by a member as soon as he joins the club so it's a life membership fee and this is capitalized amounts of it's a part of the life I share a part of the life membership fund may be transferred to the income and explain without each year depending on the policies of the nonprofit organization then we consider grants and donations usually such donations or grants if they are recurring in nature they happen every year they are of small amount and they are for a general purpose then they are treated as income so when are they treated as income if they are recurring if they are for general purpose not specific and if they are of small amounts usually in these three cases if these three conditions are satisfied they are treated as income however you care for a special purpose then they must be capitalized and only when the purpose for which they were formed is over can these funds be transferred to what is called the accumulated or gender if either income from investments is an income and would appear in the income and expenditure atop endowment fund again a fund a kind of a gift or a grant from some body some individual or an organization endowment and normally endowment fund is also capitalized legacy is also similarly something which is bequeathed to the nonprofit organization through a will on the death of the particular person may be member or other person part of his as per the will part of his wealth part of his property part of his assets may be given to the nonprofit organization that is a legacy and it is capitalized and transferred to the capital