Theory question 103
Not-for-Profit Organisations(a) Explain the following terms: (i) Accumulated Fund; (ii) Statement of Affairs.
(b) List five sources of income for a not-for-profit-making organization.
(c) State three differences between Receipts and Payments Account and Income and Expenditure Account.
Show the model answer
(a)(i) Accumulated fund: the capital of a not-for-profit organisation – total assets less total liabilities, built up from past surpluses.
(ii) Statement of affairs: a statement of assets and liabilities at a date, prepared when full records are not kept, to find the capital or accumulated fund.
(b) Any five: subscriptions; entrance fees; life membership fees; donations and gifts; grants; interest on investments; bar/canteen profit; proceeds of dances, raffles and other fund-raising; fines on members.
(c) Any three: R&P is a summary of cash (real account), I&E is a nominal account like profit and loss; R&P is on a cash basis, I&E on an accruals basis; R&P includes capital and revenue items, I&E only revenue items; R&P balance is cash or overdraft, I&E balance is a surplus or deficit; R&P starts with an opening balance, I&E does not.
Explain both terms, list incomes, then contrast cash basis with accruals basis.