1. FAC1502 Nonprofit entities
Welcome back to all our financial accounting students.

2. Nonprofit entities:
goal of furthering certain interests of the community
not to distribute profits to the members
render a service to its members
these entities can range from informal social clubs to formal societies
revenue is membership fees, donations, fundraising projects, bequests and even government subsidies
membership and not ownership
A nonprofit organisation can be defined as an economic entity which has the legitimate goal of furthering certain interests of the community.
Its objective is not to distribute profits to the members but to use the profits in order to achieve the stated goal.
Such an entity is oriented to render a service to its members, and not to pursue financial gain.
These entities/societies can range from informal social clubs, (for example an activity club for the elderly) to formal societies (for example schools and churches).
Revenue may be acquired from a variety of sources, such as membership fees, donations, fund raising projects, bequests and even government subsidies.
Membership, and not ownership, is acquired through the payment of membership fees.

3. Nonprofit entities:
receipts and payment statement is a summary of cash transactions
Receipts and payments statement
A receipts and payment statement is an analysed and classified summary of the cash transactions.
It is the most elementary version of a statement for a club or association.
Smaller entities which have no other assets than cash will often only prepare a receipts and payments statement as the annual financial statement.
The financial information needs of a larger club or society will require more than the mere presentation of a receipts and payments statement.
An income and expenditure statement (statement of comprehensive income) as well as a statement of financial position, similar to those of an ordinary trading entity, are usually also required.

4. Nonprofit entities:
receipts and payment statement is a summary of cash transactions
income and expenditure statement is very similar to a statement of profit or loss and other comprehensive income
Income and expenditure statement
This statement is very similar to a statement of comprehensive income prepared by a trading concern.
The layout may differ from that of an statement of profit or loss and comprehensive income because all the relevant sources of income, including investment income, can be shown under the heading “Income” and all the expenses, including finance cost, can be shown under the heading “Expenses”
The income and expenditure statement is also prepared according to the accrual principle.
The difference between the revenue (credits) and expenses (debits) represents the surplus/deficit for the accounting period.

5. Nonprofit entities:
receipts and payment statement is a summary of cash transactions
income and expenditure statement is very similar to a statement of profit or loss and other comprehensive income
separate trading statement can be prepared for each operational activity
Trading statement
The majority of the bigger clubs do trade in order to generate revenue which they use to achieve their stated goals, for example, the provision of bar and refreshment facilities to their members.
If the scale on which trading takes place justifies it, a separate trading statement can be prepared for each operational activity.
Therefore it is possible to prepare more than one trading statement for a specific entity/society.
The layout of such a trading statement is similar to the trading section of a statement of comprehensive income of an ordinary trading concern.

6. Nonprofit entities:
receipts and payment statement is a summary of cash transactions
income and expenditure statement is very similar to a statement of profit or loss and other comprehensive income
separate trading statement can be prepared for each operational activity
accumulated fund is any initial donations, entrance fees , the surplus/deficit for each period and special funds donated
Accumulated fund
Any initial donation made to begin the organisation, entrance fees, the surplus/deficit for each period and special funds donated for general expenses will form part of the accumulated fund.

7. Nonprofit entities:
receipts and payment statement is a summary of cash transactions
income and expenditure statement is very similar to a statement of profit or loss and other comprehensive income
separate trading statement can be prepared for each operational activity
accumulated fund is any initial donations, entrance fees , the surplus/deficit for each period and special funds donated
special funds for specific purposes or only the income earned
Special funds
When money is donated for a special purpose, separate investment accounts must be opened for special funds.
This makes it possible to issue meaningful reports on the acquisition and utilisation of funds.
Special funds can be divided into two main sections:
Firstly, special funds can be established to save or set aside money for a specific purpose, for example to purchase specific equipment.
When sufficient funds have been accumulated or received, the equipment can be purchased with the capital amount as well as the income earned from the capital, if any.
Secondly, special funds can be established where only the income earned from the investment of the capital amount may be applied.
It is also possible that such income may only be spent on stipulated items.

8. Nonprofit entities Exercise
The membership fee of the Clayville Club was R150 for 2007 and R180 for 2008 per member per annum. On 1 January 2008, the beginning of the financial year of the Club, the membership fees of 5 members were received in advance (at the new rate for membership fees) and that of 8 members were still outstanding fro During 2008 membership fees received amounted to R21 720, including R1 200 in respect of 2007 and R1 230 in respect of The membership fees of 7 members were still outstanding on 31 December Which amount represents the amount that was credited to the income and expenditure account of the club on 31 December 2008 in respect of membership fees?
The membership fee of the Clayville Club was R150 for 2007 and R180 for 2008 per member per annum. On 1 January 2008, the
beginning of the financial year of the Club, the membership fees of 5 members were received in advance (at the new rate for membership
fees) and that of 8 members were still outstanding fro 2007.
During 2008 membership fees received amounted to R21 720,
including R1 200 in respect of 2007 and R1 230 in respect of 2009.
The membership fees of 7 members were still outstanding on 31December 2008.
Which amount represents the amount that was credited to the income and expenditure account of the club on 31 December 2008 in respect of membership fees?

9. Nonprofit entities Exercise
The membership fee of the Clayville Club was R150 for 2007 and R180 for 2008 per member per annum. On 1 January 2008, the beginning of the financial year of the Club, the membership fees of 5 members were received in advance (at the new rate for membership fees) and that of 8 members were still outstanding for During 2008 membership fees received amounted to R21 720, including R1 200 in respect of 2007 and R1 230 in respect of The membership fees of 7 members were still outstanding on 31 December Which amount represents the amount that was credited to the income and expenditure account of the club on 31 December 2008 in respect of membership fees?
Membership fee was R150 for 2007

10. Nonprofit entities 2008 Financial year 12 1 2 3 4 5 6 7 8 9 10 11
2007 Membership fees R150
2007 membership fees R150

11. Nonprofit entities Exercise
The membership fee of the Clayville Club was R150 for 2007 and R180 for 2008 per member per annum. On 1 January 2008, the beginning of the financial year of the Club, the membership fees of 5 members were received in advance (at the new rate for membership fees) and that of 8 members were still outstanding for During 2008 membership fees received amounted to R21 720, including R1 200 in respect of 2007 and R1 230 in respect of The membership fees of 7 members were still outstanding on 31 December Which amount represents the amount that was credited to the income and expenditure account of the club on 31 December 2008 in respect of membership fees?
Membership fees was R180 for 2008

12. Nonprofit entities 2008 Financial year 12 1 2 3 4 5 6 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
2008 membership fees R180

13. Nonprofit entities Exercise
The membership fee of the Clayville Club was R150 for 2007 and R180 for 2008 per member per annum. On 1 January 2008, the beginning of the financial year of the Club, the membership fees of 5 members were received in advance (at the new rate for membership fees) and that of 8 members were still outstanding for During 2008 membership fees received amounted to R21 720, including R1 200 in respect of 2007 and R1 230 in respect of The membership fees of 7 members were still outstanding on 31 December Which amount represents the amount that was credited to the income and expenditure account of the club on 31 December 2008 in respect of membership fees?
On 1 January 2008, 5 member’s fees were received in advance

14. Nonprofit entities R(180x5) =R 900 2008 Financial year 12 1 2 3 4 5 67 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
R(180x5) =R 900
From 2007 R(180 x 5) = R900

15. Nonprofit entities Calculation of Income Fees received R
2008 Financial year 12 1 2 3 4 5 6 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
Calculation of Income
Fees received R
add: 2008 Fees
less:2007 Fees
less:2009 Fees
add: 2008 Fees
R(180x7)
Total Fees 2008
At calculation of income for 2008 it must be added because it was received in advance in 2007 and it is for 2008

16. Nonprofit entities: Membership fees
Dr Membership fees Cr
2008
Jan 1
Dec 31
Fees outstanding
R(150x8)
Balance b/d
Income & Expenditure
In advance
Balance c/d R
Fees in advance
R(180x 5)
Balance b/d
Bank CRJ
Fees in arrears
R(180x7)
Balance c/d
900
2009
Balance b/d
In membership fees it is a credit, fees in advance from 2007 for 2008

17. Nonprofit entities Exercise
The membership fee of the Clayville Club was R150 for 2007 and R180 for 2008 per member per annum. On 1 January 2008, the beginning of the financial year of the Club, the membership fees of 5 members were received in advance (at the new rate for membership fees) and that of 8 members were still outstanding for During 2008 membership fees received amounted to R21 720, including R1 200 in respect of 2007 and R1 230 in respect of The membership fees of 7 members were still outstanding on 31 December Which amount represents the amount that was credited to the income and expenditure account of the club on 31 December 2008 in respect of membership fees?
On 1 January 2008, 8 members were still outstanding for 2007

18. Nonprofit entities R(150x8) =R 1 200 2008 Financial year 12 1 2 3 4 56 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
R(150 x 8) = R1 200 for 2007
R(150x8) =R 1 200

19. Nonprofit entities Calculation of Income Fees received R
2008 Financial year 12 1 2 3 4 5 6 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
Calculation of Income
Fees received R
add: 2008 Fees
less:2007 Fees (1 200)
less:2009 Fees
add: 2008 Fees
R(180x7)
Total Fees 2008
At calculation of income for 2008 it must be subtracted because it was for 2007 and not for 2008

20. Nonprofit entities: Membership fees
Dr Membership fees Cr
2008
Jan 1
Dec 31
Fees outstanding
R(150x8)
Balance b/d
Income & Expenditure
In advance
Balance c/d R
1 200
Fees in advance
R(180x 5)
Balance b/d
Bank CRJ
Fees in arrears
R(180x7)
Balance c/d
900
2009
Balance b/d
In membership fees it is a debit, fees were still outstanding for 2007

21. Nonprofit entities Exercise
The membership fee of the Clayville Club was R150 for 2007 and R180 for 2008 per member per annum. On 1 January 2008, the beginning of the financial year of the Club, the membership fees of 5 members were received in advance (at the new rate for membership fees) and that of 8 members were still outstanding for During 2008 membership fees received amounted to R21 720, including R1 200 in respect of 2007 and R1 230 in respect of The membership fees of 7 members were still outstanding on 31 December Which amount represents the amount that was credited to the income and expenditure account of the club on 31 December 2008 in respect of membership fees?
During 2008 membership fees received amounted to R21 720

22. Nonprofit entities Calculation of Income Fees received R 21 720
2008 Financial year 12 1 2 3 4 5 6 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
Calculation of Income
Fees received R
add: 2008 Fees
less:2007 Fees (1 200)
less:2009 Fees
add: 2008 Fees
R(180x7)
Total Fees 2008
At calculation of income for 2008 it must be added because it was membership fees received for 2008

23. Nonprofit entities: Membership fees
Dr Membership fees Cr
2008
Jan 1
Dec 31
Fees outstanding
R(150x8)
Balance b/d
Income & Expenditure
In advance
Balance c/d R
1 200
Fees in advance
R(180x 5)
Balance b/d
Bank CRJ
Fees in arrears
R(180x7)
Balance c/d
900
21 720
2009
Balance b/d
In membership fees it is a credit or income

24. Nonprofit entities Exercise
The membership fee of the Clayville Club was R150 for 2007 and R180 for 2008 per member per annum. On 1 January 2008, the beginning of the financial year of the Club, the membership fees of 5 members were received in advance (at the new rate for membership fees) and that of 8 members were still outstanding for During 2008 membership fees received amounted to R21 720, including R1 200 in respect of 2007 and R1 230 in respect of The membership fees of 7 members were still outstanding on 31 December Which amount represents the amount that was credited to the income and expenditure account of the club on 31 December 2008 in respect of membership fees?
Including R1 200 in respect of 2007

25. Nonprofit entities less: 2007 Fees (1 200) 2008 Financial year 12 1 23 4 5 6 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
less: 2007 Fees (1 200)
2007 fees

26. Nonprofit entities Calculation of Income Fees received R 21 720
2008 Financial year 12 1 2 3 4 5 6 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
Calculation of Income
Fees received R
add: 2008 Fees
less:2007 Fees (1 200)
less:2009 Fees
add: 2008 Fees
R(180x7)
Total Fees 2008
At calculation of income for 2008 it must be subtracted because it was for 2007 and not for 2008

27. Nonprofit entities: Membership fees
Dr Membership fees Cr
2008
Jan 1
Dec 31
Fees outstanding
R(150x8)
Balance b/d
Income & Expenditure
In advance
Balance c/d R
1 200
Fees in advance
R(180x 5)
Balance b/d
Bank CRJ
Fees in arrears
R(180x7)
Balance c/d
900
21 720
2009
Balance b/d
In membership fees it is a debit, fees received were outstanding for 2007

28. Nonprofit entities Exercise
The membership fee of the Clayville Club was R150 for 2007 and R180 for 2008 per member per annum. On 1 January 2008, the beginning of the financial year of the Club, the membership fees of 5 members were received in advance (at the new rate for membership fees) and that of 8 members were still outstanding for During 2008 membership fees received amounted to R21 720, including R1 200 in respect of 2007 and R1 230 in respect of The membership fees of 7 members were still outstanding on 31 December Which amount represents the amount that was credited to the income and expenditure account of the club on 31 December 2008 in respect of membership fees?
R1 230 received in respect of 2009 and not 2008

29. Nonprofit entities less: 2009 Fees (1 230) 2008 Financial year 12 1 24 5 6 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
less: 2009 Fees (1 230)
2009 fees

30. Nonprofit entities Calculation of Income Fees received R 21 720
2008 Financial year 12 1 2 3 4 5 6 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
Calculation of Income
Fees received R
add: 2008 Fees
less:2007 Fees (1 200)
less:2009 Fees (1 230)
add: 2008 Fees
R(180x7)
Total Fees 2008
At calculation of income for 2008 it must be subtracted because it was for 2009 and not for 2008

31. Nonprofit entities: Membership fees
Dr Membership fees Cr
2008
Jan 1
Dec 31
Fees outstanding
R(150x8)
Balance b/d
Income & Expenditure
In advance
Balance c/d R
1 200
21 450
1 230
Fees in advance
R(180x 5)
Balance b/d
Bank CRJ
Fees in arrears
R(180x7)
Balance c/d
900
21 720
2009
Balance b/d
In membership fees it is a debit, fees received in respect of 2009 and this became the in advance balance

32. Nonprofit entities Exercise
The membership fee of the Clayville Club was R150 for 2007 and R180 for 2008 per member per annum. On 1 January 2008, the beginning of the financial year of the Club, the membership fees of 5 members were received in advance (at the new rate for membership fees) and that of 8 members were still outstanding for During 2008 membership fees received amounted to R21 720, including R1 200 in respect of 2007 and R1 230 in respect of The membership fees of 7 members were still outstanding on 31 December Which amount represents the amount that was credited to the income and expenditure account of the club on 31 December 2008 in respect of membership fees?
The membership fees of 7 members were still outstanding on 31 December 2008

33. Nonprofit entities add: 2008 Fees R(180x7) 1 260 2008 Financial year12 1 2 3 4 5 6 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
2007 Membership fees R150
add: 2008 Fees
R(180x7)
2008 fees

34. Nonprofit entities Calculation of Income Fees received R 21 720
2008 Financial year 12 1 2 3 4 5 6 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
Calculation of Income
Fees received R
add: 2008 Fees
less:2007 Fees (1 200)
less:2009 Fees (1 230)
add: 2008 Fees
R(180x7)
Total Fees 2008
At calculation of income for 2008 it must be added because it is still outstanding for 2008

35. Nonprofit entities: Membership fees
Dr Membership fees Cr
2008
Jan 1
Dec 31
Fees outstanding
R(150x8)
Balance b/d
Income & Expenditure
In advance
Balance c/d R
1 200
1 230
Fees in advance
R(180x 5)
Balance b/d
Bank CRJ
Fees in arrears
R(180x7)
Balance c/d
900
21 720
1 260
2009
Balance b/d
In membership fees it is a credit, fees still outstanding for 2008 and this became the fees outstanding balance

36. Nonprofit entities Calculation of Income Fees received R 21 720
2008 Financial year 12 1 2 3 4 5 6 7 8 9 10 11
2007 Membership fees R150
2008 Membership fees R180
Calculation of Income
Fees received R
add: 2008 Fees
less:2007 Fees (1 200)
less:2009 Fees (1 230)
add: 2008 Fees
R(180x7)
Total Fees
At calculation of income for 2008 the total fees for 2008 R21 450

37. Nonprofit entities: Membership fees
Dr Membership fees Cr
2008
Jan 1
Dec 31
Fees outstanding
R(150x8)
Balance b/d
Income & Expenditure
In advance
Balance c/d R
1 200
21 450
1 230
Fees in advance
R(180x 5)
Balance b/d
Bank CRJ
Fees in arrears
R(180x7)
Balance c/d
900
21 720
1 260
23 880
2009
Balance b/d
In membership fees it is a debit, income and expenditure of R21 450