Teaching team:

1.Mr. Uzziel Hategekimana (Gikondo) 0788620046

2.Mr. Benoit Kanyangira (Gikondo)07885165231
3.Mr. Mpambara Frederic (Huye) 0788856627
4.Mrs. Mwiza Yvette (Huye) 0788561560
5.Mrs. Nalubega Cisy (Nyagatare) 0788219639
6.Mr. Tumwine James (Nyagatare) 0788484804
7.Mr. Jean Claude Mbonimpa (Rusizi) 0735637119
Learning outcomes
 This topic aims at imparting students with
knowledge and skills on how to record
financial transactions of non profit making
entities.
 After successful completion of this topic
students will be able to:
a) Identify different source and use of income for
non profit making entities
b) Know and use of particular accounts for non
profit making entities
c) Prepare final accounts for non profit making
entities
 Introduction
 Non Profit Making entities are some form of organizations that are set up
to promote or to cater for the welfare of the members involved and not to
make a profit. These include clubs like football clubs and sports clubs,
welfare associations and any other societies like charitable institutions.

 They are not governed by any statutory regulations governing the keeping
of proper books of account nor the form of financial statements that are
to be prepared.

 Most of the time the records kept are of cash basis. So most of the time
the financial statements are prepared in either:

 Receipts and payments account with a list of assets and liabilities or

Income and expenditure account and balance sheet
Since the organization is not trading, then the main source of income is
from members.
 Subscriptions income : Subscriptions represent the contribution by
members of the organization towards the income for the period.

 Other incomes: may be through donations from well wishers and

even sometimes from small trading activity or investing activity.
Expenses will be similar to that of trading concerns other than the
slight difference in nature.

 Accumulated fund: This represents the accumulated income overtime.

It is similar to capital for trading concerns. This exists because there is
no specific owner for the organization but for the members in whole.
Accounting for non-trading organizations
Since accounting records may not be up to date or may be lacking, the
following procedures will be followed:
I. Obtain the opening information about the assets, liabilities and
Accumulated fund.
II. This is determined by preparing a statement of affairs at the
start of the period. From the accounting equation it is possible to get
the opening balance of accumulated fund. Assets – Liabilities =
Accumulated fund

III.Prepare a summary of receipts and payments if it is not prepared yet

from the scanty information available.
IV.Use control accounts to determine missing figures of subscriptions
income or balances and other income and expenses.

V. Do other adjustments for non-current assets, current assets and

current liabilities.

VI.Use all the information from previous steps to prepare the financial
 •Format of the Financial statements

Name of Organization
Income and Expenditure Account for the year ended date
FRw FRw
Incomes
Subscriptions XX
Profit from trading activities XX
Income from investments XX
Donations XX
Income from other activities like dance or festival XX

XX
Expenditure
Depreciation XX
Salaries and wages XX
Expenses on other activities [prizes] XX
Loss from trading activities XX
All other expenses XX
(XX)
SURPLUS/(DEFICIT) XX
Balance sheet as at date
FRw FRw FRw
Non-current assets Cost Dep’n Net
Land and buildings XX (XX) XX
Furniture and Equipment XX (XX) XX
Motor Vehicles XX (XX) XX
Investments XX - XX
XX
Current Assets
Inventory for the bar XX
Debtors (or accounts receivable) XX
Prepaid expense XX
Accrued subscriptions XX
Bank XX
Cash XX
XX
XX
Accumulated fund XX
Surplus/(deficit) XX XX
XX
Other funds
Life membership XX
Non-current liabilities :
5 Year loan XX
Current liabilities
Creditors (bar supplies) XX
Accrued expense XX
Notes To The Above Format:
(i)Subscriptions:
 These are the amounts received by the club from the members to renew their
membership. It is often paid on an annual basis.
It is an income for the club and therefore reported in the income and expenditure
account.
Depending on the policy of a club, any subscriptions due but not received are shown
as accrued income (debtors for subscriptions) in the balance sheet.
 Any amounts prepaid are shown as prepaid (creditors for subscriptions).
 Some clubs will not report subscriptions as income until it is received in form of
cash.

(ii)Income from Investments:

 Some clubs invest excess cash in the bank (fixed deposit account), shares of limited
companies, treasury bills and any other investment that may be available.
 If the club is investing with no specific intention (i.e a general investment) then
income from this investment should be reported in the income and expenditure
account.
 If the investment is for a specific purpose and relates to a specific fund (e.g building
fund) it will not be reported in the income and expenditure account but credited
directly to the fund.
Other funds
These are funds set up for a specific purpose and not general. They will be
shown together with the accumulated fund.

 Any incomes relating to these funds will be credited directly to the funds and
any expenses will be taken off from these funds e.g. building fund, education
fund.

Life Membership Fund

 Some members may pay some amount to become life members of the club
and if this happens, there may be a need to spread out this income over the
expected life of the members in the club.

 Depending on the policy of a club, the following accounting treatment

may be allowed:
 The full amount is reported in the Income and Expenditure account in the
year it is received and therefore no balance is retained in the life membership
account.
 The amount is shown separately in the life membership fund with no transfer
in the Income and Expenditure account and hence no balance in the life
membership account.
 To transfer some amounts from the life membership funds to the income and
Example
The Secretary of the Green lodge Club issued the following receipts and payments account to
members:
Receipts and Payments Account for the year to 30 June 2019
FRw‘000’ FRw‘000’
Cash balance 1,620 Wages 15,300
Subscriptions 22,410 Secretary's salary 2,700
Bank loan 4,500 Rent of hall 900
Games' fees 270 Printing and postage 2,115
Drink machine receipts 936 Purchase of new chairs 3,240
Loss on dance 198
Cash balance 5,283
29,736 29,736
The Secretary gave the following information:
Subscriptions included FRw180,000 from previous year, FRw72,000 received in respect of advance
payment for next year, and that FRw225,000 was due but unpaid.
Games' fees included FRw27,000 paid in advance for the following year's matches.
The cleaner had not been paid FRw108,000 for June and was to be paid this amount in July 2019
Stationery purchased in the year and held in stock on 30 June was valued at FRw180,000.
The furniture at 30 June valued at FRw3,105,000 , this included what was purchased during the year.
The accumulated fund at the previous 1 July was FRw1,800,000.

You are required to prepare an income and expenditure account for the club for the year
ended 30 June 2019 and a balance sheet at that date.
 Workings
Subscription account
FRw‘000’ FRw‘000’
Accrued b/f 180 Receipts and payments 22,410

Income and expenditure 22,383

Prepaid c/f 72 Accrued c/f 225
22,635 22,635

Games fees account

FRw‘000’ FRw‘000’
Income and expenditure 243 Receipts and payments 270
Prepaid c/f 27
270 270

Wages account
FRw‘000’ FRw‘000’
Receipts and payments 15300 Income and expenditure 15408
Accrued c/f 108
15408
15048
 Workings

Printing and postage account

FRw‘000’ FRw‘000’
Receipts and payments 2,115 Income and expenditure 1,935
Inventory c/f 180
2,115 2,115

Furniture FRw.‘000’
Acquired during the year 3,240
Balance c/f 3,105
Depreciation 135

Notes:
In this question the accumulated fund was given
Receipts and payments account had already been prepared
Depreciation was calculated assuming there was no other balance at the start of the year because of
lack of that information
Take care of the adjustments of income and expenses as shown in the workings
Solution: Greenlodge Club
Income and Expenditure Account for the year ended 30 June 2019
FRw‘000’ FRw‘000’
Incomes
Subscriptions (w1) 22,383
Games fees (w2) 243
Drink machine receipts 936
23,562
Expenditure
Wages (w3) 15,408
Printing and postage (w4) 1,935
Secretary’s salary 2,700
Rent 900
Loss on dance 198
Depreciation (w5) 135
21,276
Surplus 2,286
Balance sheet as at 30 June 2019
FRw‘000’ FRw‘000’
Non-current assets Net
Furniture (w5) 3,105
Current Assets
Stationery stock (w4) 180
Accrued subscription (1) 225
Cash 5,283
5,688
8,793
Accumulated fund 1,800
Surplus 2,286
4,086
Non-current liabilities
Bank loan 4,500
Current liabilities
Prepaid subscriptions (w1) 72
Prepaid games fees (w2) 27
Accrued wages (w3) 108
207
8,793
Notes:
In this question the accumulated fund was given
Receipts and payments account had already been prepared
Depreciation was calculated assuming there was no other balance at the start of the year because of
lack of that information
Take care of the adjustments of income and expenses as shown in the workings

Workings

Printing and postage account

FRw‘000’ FRw‘000’
Receipts and payments 2,115 Income and expenditure 1,935
Inventory c/f 180
2,115 2,115
Furniture FRw.‘000’
Acquired during the year 3,240
Balance c/f 3,105
Depreciation 135
 Exercise (Q21)
The assets and liabilities of the Safari Social Club as at 1 November 2018 were:
Cash held at bank Rwf380,000; furniture and equipment Rwf420,000; bar stock Rwf120,000; rent
owing on premises Rwf30,000. The following is a summary of receipts and payments for the club for
the year ended 31 October 2019:
Receipts Rwf Payments Rwf
Balance 1 November 2018 380,000 Bar purchases 1,485,000
Subscriptions 1,420,000 Annual dance expenses 580,000
Annual dance 750,000 Rent of premises 840,000
Bar sales 2,040,000 Secretary's expenses 225,000
Purchase of furniture 200,000
Wages of caretaker 580,000
Balance 31 October 2019 680,000
4,590,000 4,590,000
The following information was also available:
- Bar stock at 31 October 2019 was FRw150,000
- Rent for premises of FRw110,000 was owing at 31 October 2019
- Depreciation on furniture is 10% of value of furniture at the end of the year
You are required to:
(a) Calculate the accumulated fund at 1 November 2018
(b) Prepare an income and expenditure account for the year ended 31 October 2019,
showing clearly the profit/loss on the bar and the dance
(c) Prepare a balance sheet for the club as at 31 October 2019
 Q23: CBESA a students welfare organization at CBE provided for you the following balances and ‘receipts
and payments’ for the year ended 31 May 2017. CBESA operates a shop for the students at the campus.

Receipts FRw Payments FRw

Subscriptions 2,560,000 Advertising 345,000
Shop sales receipts 1,540,000 Shop Purchases 857,000
Donations received 1,500,000 Loan repayment 400,000
Government Subsidies 1,890,000 Interest paid 120,000
Shop assistants Wages 560,000
Shop rent 750,000
Additional equipment 250,000
31 May 2018 FRw 2017FRw
Equipment (Net book value) ? 340,500
Shop furniture and fittings (Net book value) ? 246,700
Shop inventory 350,500 400,400
Accounts payable 210,000 145,000
Bank overdraft ? 52,000
Bank loan ? 1,200,000
Shop assistants wages unpaid 135,000 89,000
Subscriptions accrued 524,000 845,000
Additional information Depreciation:
Equipment 15% reducing balance basis ; Shop furniture and fittings 10% reducing balance basis
Required: a) Calculation of the accumulated fund as at 01 June 2017
b) Income and expenditure account on 31 May 2018(showing profit or loss from the shop)
c) Balance sheet as at 31 May 2018