Final Accounts of Non-Trading Concerns:
Non-trading concerns usually maintain their
accounts by the
double entry system and periodically prepare their final
accounts for the submission to their members and subscribers.
The method of preparing final accounts by non
trading concerns is different than trading concerns. As these concerns do
not deal in any goods like trading concerns, so they cannot prepare a
trading and profit and loss account. At the end of the year they make out an
account called an
Income and expenditure account and balance sheet. The
Income and expenditure account serve the same purpose as the profit and loss
account in the case of trading concerns and is made out exactly in the same
manner.
Usually the non-profit making institutions do
not maintain a full set of books but merely a
cash book in which all
receipts and payments are entered. At the end of the year the cash book is
summarized under suitable heads and the summary thus prepared is called a
Receipt and Payment Account. In order to know the result of the year's
working it should be converted into
Income and expenditure account.
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