Identify the accounts related to a Not for Profit Organisation.

(A) Profit and Loss Appropriation Account
(B) Receipt and Payment Account
(C) Subscription Account
(D) Income and Expenditure Account
(E) Trading and Profit and Loss Account

Choose the correct answer from the options given below.

(B), (C) and (D) only

The correct answer is Option (2) → (B), (C) and (D) only

(A) Profit and Loss Appropriation Account: This account is typically associated with profit-making organizations and is not relevant to a Not for Profit Organization. Profit and Loss Appropriation Account is merely an extension of the Profit and Loss Account of the firm. It shows how the profits are appropriated or distributed among the partners. All adjustments in respect of partner’s salary, partner’s commission, interest on capital, interest on drawings, etc. are made through this account. It starts with the net profit/net loss as per Profit and Loss Account.

(B) Receipt and Payment Account: This account is used to record all cash receipts and payments during a specific period and is commonly used in Not for Profit Organizations. It is prepared at the end of the accounting year on the basis of cash receipts and cash payments recorded in the cash book. It is a summary of cash and bank transactions under various heads.

(C) Subscription Account: Not for Profit Organizations often receive subscriptions from their members. Subscription is a membership fee paid by the member on annual basis. This is the main source of income of such organisations. Subscription paid by the members is shown as receipt in the Receipt and Payment Account and as income in the Income and Expenditure Account.

(D) Income and Expenditure Account: It is the summary of income and expenditure for the accounting year. It is just like a profit and loss account prepared on accrual basis in case of the business organisations. It includes only revenue items and the balance at the end represents surplus or deficit.

(E) Trading and Profit and Loss Account: This account is prepared by profit-making organizations not by the Not for Profit Organization.