NPO accounting DOUBTS???

Others 1565 views 5 replies

Difference Between

1. Entrace fees and Membership subscripttion

2. Funds ad reserves

Replies (5)

Take an example of a Gym.

If you join a gym you have to pay first admission fees that is one time and monthly fees.

Similar is the admission fees which is paid first and the last time to get the membership and subscripttion as and when demanded.

Admission fees is capitalized in the sense it is credited to reserves and not to P&L a/c

However subscripttion are credited to P&L a/c and utilized for expenses

Entrance fees is the amount recieved by NPO from a person to activate his membership in NPO.

Membership subscripttion is the periodic amount which is recieved by NPO from its members to maintain their membership....

 

Entrance fees are generally capitalised but you have to look upon materiality of entrance fees recieved to treat it as capital item or revenue item....

 

Membership subscripttion are generally treated as revenue item whereas lifetime membership is treated practically as deffered revenue income because the benefit from that will accrue in future years also.. In case of treating it as deffered revenue income , the amount pertaining to current year is shown as revenue and the balance remains as capital amount by adding to capital fund... In future years revenue amount is subtracted from that capital fund and shown in P&l..

There is not much difference between Fund and Reserves.  The only main difference is in its use.. Use of Funds is restricted to a particular purpose, whereas reserves can be used for many purposes....

Both are shown on liabilities side.

@ faiz.. @ kaushik

 

Thanks buddies for so prompt reply

Accounting of NPO (Educational Society) and  related income tax


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