Identify the account statement that a Not-for-Profit organisation is not required to prepare.

Trading and Profit & Loss Account

The correct answer is option (1) : Trading and Profit & Loss Account.

There are certain organisations which are set up for providing service to its members and the public in general. Such organisations include clubs, charitable institutions, schools, religious organisations, trade unions, welfare societies and societies for the promotion of art and culture. These organisations have service as the main objective and not the profit as is the case of organisations in business. Normally, these organisations do not undertake any business activity, and are managed by trustees who are fully accountable to their members and the society for the utilization of the funds raised for meeting the objectives of the organisation. Hence, they also have to maintain proper accounts and prepare the financial statement which take the form of Receipt and Payment Account; Income and Expenditure Account; and Balance Sheet. at the end of for every accounting period (normally a financial year).

* Trading and Profit & Loss Account is made by those organisations who undertake the business activity to know the gross profit and net profit.