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.
You may also be interested in other articles form “accounting from non-trading concerns” chapter:
- Final Accounts of Non-Trading Concerns
- Receipt and Payment Account
- Income and expenditure account
- Difference Between Receipts and Payments and Income and Expenditures Account