Cash in hand refers to the physical cash available with a trust or club on the date of preparing the Balance Sheet. It includes money kept in the cash box, petty cash, and any other cash available for meeting day-to-day expenses. Since trusts and clubs regularly incur small expenses such as postage, stationery, refreshments, and local transportation, maintaining a certain amount of cash is necessary for smooth operations. Cash in hand is considered the most liquid asset because it can be used immediately to meet financial obligations. The amount of cash in hand is determined from the Cash Book and is shown under current assets in the Balance Sheet. Proper management of cash in hand is essential because excessive cash may increase the risk of theft or misuse, while insufficient cash may create difficulties in meeting immediate expenses. Therefore, organizations maintain an adequate balance to ensure efficient financial management and uninterrupted operations.

Example: A sports club has ₹20,000 in its cash box at the end of the financial year. This amount is shown as Cash in Hand under current assets in the Balance Sheet.

Features

• Most liquid asset of the organization.
• Used for day-to-day expenses.
• Derived from the Cash Book.
• Shown under current assets.
• Helps maintain smooth operations.
• Indicates the immediate cash position.

2. Cash at Bank

Cash at bank refers to the amount deposited by a trust or club in various bank accounts, such as savings accounts, current accounts, or fixed deposits. Most non-profit organizations prefer keeping their funds in banks because it ensures safety and facilitates easy financial transactions. Cash at bank includes balances available for withdrawal and use in the ordinary course of activities. It is an important asset because it reflects the liquidity and financial strength of the organization. The amount shown as cash at bank is verified with the bank passbook or bank statement. Proper maintenance of bank balances enables organizations to make timely payments, receive donations and subscriptions conveniently, and maintain proper records of financial transactions. It also reduces the risks associated with holding large amounts of physical cash and promotes transparency in financial management.

Example: A charitable trust has a balance of ₹1,50,000 in its savings bank account on 31 March 2026. This amount is shown as Cash at Bank in the Balance Sheet.

Features

• Highly liquid asset.
• Maintained in bank accounts.
• Ensures safety of funds.
• Facilitates easy financial transactions.
• Helps determine liquidity.
• Verified from bank statements.

3. Investments

Investments represent the surplus funds of a trust or club that are invested in government securities, bonds, fixed deposits, or other approved financial instruments. The primary purpose of making investments is to earn additional income in the form of interest or dividends and to ensure the long-term financial stability of the organization. Trusts and clubs often invest funds that are not immediately required for daily operations. Investments may be general investments or investments relating to specific funds, such as Building Funds or Prize Funds. These investments are shown as assets in the Balance Sheet and are generally classified as long-term assets. Proper investment management helps organizations generate regular income, meet future financial requirements, and undertake development projects without depending entirely on donations and subscriptions.

Example: A club invests ₹5,00,000 in government bonds and earns annual interest on the investment. The investment is shown on the asset side of the Balance Sheet.

Features

• Generate additional income.
• Improve financial stability.
• Usually long-term assets.
• May relate to special funds.
• Help finance future projects.
• Require proper monitoring and management.

4. Furniture and Fixtures

Furniture and fixtures include tables, chairs, cupboards, desks, shelves, computers, fans, and other office equipment owned by a trust or club. These assets are acquired to facilitate the day-to-day activities and administration of the organization. Since furniture and fixtures provide benefits for more than one accounting period, they are treated as fixed assets and shown on the asset side of the Balance Sheet. They are generally recorded at their original cost and reduced by depreciation every year to determine their book value. Proper accounting of furniture and fixtures helps management know the value of assets available and plan for repairs and replacements. These assets contribute to creating a comfortable and efficient working environment for employees and members. Maintaining proper records of furniture and fixtures also prevents loss, theft, and misuse of organizational property.

Example: A club owns furniture and office equipment costing ₹2,50,000. After charging depreciation of ₹25,000, the book value of ₹2,25,000 is shown in the Balance Sheet.

Features

• Classified as fixed assets.
• Used for administrative activities.
• Subject to annual depreciation.
• Recorded at book value.
• Provide long-term benefits.
• Require proper maintenance and replacement.

5. Building

Buildings include office premises, clubhouses, auditoriums, libraries, hostels, and other structures owned by a trust or club. Buildings are among the most valuable assets of non-profit organizations because they provide the physical infrastructure necessary for carrying out activities and serving members. Since buildings have a long useful life, they are treated as fixed assets and are shown on the asset side of the Balance Sheet after deducting accumulated depreciation. Proper accounting for buildings helps management determine their value and plan for maintenance, renovations, and future expansions. Buildings also enhance the reputation and operational capacity of the organization by providing adequate facilities for meetings, educational programs, sports, and cultural activities.

Example: A charitable trust owns a community hall valued at ₹20,00,000. After charging depreciation, the building is shown in the Balance Sheet at its book value.

Features

• Long-term fixed asset.
• Provides infrastructure for activities.
• Subject to depreciation.
• Represents a major investment.
• Enhances operational capacity.
• Requires periodic maintenance.

6. Sports Equipment

Sports equipment includes cricket kits, footballs, badminton rackets, gym equipment, and other items used by sports clubs and recreational organizations. These assets are essential for conducting sports and recreational activities and providing services to members. Sports equipment is treated as a fixed asset because it provides benefits over several years. However, due to continuous usage, sports equipment undergoes wear and tear and is therefore subject to depreciation. Proper accounting for sports equipment helps management assess its value, monitor its condition, and plan for replacement when necessary. Maintaining adequate and modern equipment improves the quality of services offered by the club and increases member satisfaction.

Example: A sports club owns gym equipment and sports accessories worth ₹3,00,000. After charging depreciation of ₹30,000, the equipment is shown at ₹2,70,000 in the Balance Sheet.

Features

• Classified as fixed assets.
• Used for sports and recreational activities.
• Subject to wear and tear.
• Depreciated annually.
• Enhance member services.
• Require regular maintenance and replacement.

7. Outstanding Subscriptions

Outstanding subscriptions refer to subscription amounts due from members but not yet received by the trust or club on the date of preparing the Balance Sheet. Since subscriptions are a major source of income for most non-profit organizations, proper accounting for outstanding subscriptions is important. These amounts are considered assets because they represent money that the organization has a legal right to receive in the future. Outstanding subscriptions are added to subscription income while preparing the Income and Expenditure Account and are shown as current assets in the Balance Sheet. Monitoring outstanding subscriptions helps management improve collection efficiency and maintain a healthy cash flow.

Example: A club is entitled to receive ₹40,000 as subscriptions from members that remain unpaid at the end of the year. This amount is shown as an asset in the Balance Sheet.

Features

• Represents income due but not received.
• Treated as a current asset.
• Recorded on an accrual basis.
• Added to current year’s income.
• Improves accuracy of financial statements.
• Expected to be collected in the future.

8. Accrued Income

Accrued income is income that has been earned during the accounting period but has not yet been received by the trust or club. Examples include interest on investments, rent receivable, and dividend income due. Since the income relates to the current year, it must be recognized according to the accrual basis of accounting. Accrued income is treated as a current asset because it represents an amount receivable in the future. Recording accrued income ensures that the Income and Expenditure Account reflects the true income of the organization and prevents understatement of revenue. It also helps management assess the total amount of income earned during the year.

Example: Interest of ₹8,000 on government securities has become due but has not yet been received. This amount is shown as Accrued Income in the Balance Sheet.

Features

• Income earned but not received.
• Treated as a current asset.
• Recorded on an accrual basis.
• Increases current year’s income.
• Represents future cash inflow.
• Improves accuracy of financial statements.

9. Prepaid Expenses

Prepaid expenses are expenses paid in advance for future accounting periods. Examples include prepaid insurance, rent, and subscriptions. Since the benefits of these expenses will be received in the next accounting period, they are not treated as expenses of the current year. Instead, they are shown as current assets in the Balance Sheet. Proper accounting for prepaid expenses ensures that only expenses relating to the current period are charged to the Income and Expenditure Account. This treatment follows the matching principle and provides a true and fair view of the organization’s financial performance.

Example: A trust pays an insurance premium of ₹24,000 for twelve months, of which ₹6,000 relates to the next year. The amount of ₹6,000 is shown as a prepaid expense in the Balance Sheet.

Features

• Represents expenses paid in advance.
• Treated as a current asset.
• Relates to future accounting periods.
• Reduces current year’s expenses.
• Follows the matching principle.
• Provides future economic benefits.

Steps in Preparing the Balance Sheet for Trusts and Clubs

Step 1. Determine the Opening Capital Fund

The first step in preparing the Balance Sheet is to determine the Opening Capital Fund or Accumulated Fund of the trust or club. The Capital Fund represents the net worth of the organization and is similar to the owner’s capital in a business concern. It can be obtained from the previous year’s Balance Sheet. If no previous Balance Sheet is available, a Statement of Affairs is prepared by listing all assets and liabilities, and the difference between them is treated as the opening Capital Fund. Determining the correct Capital Fund is important because it forms the base for calculating the closing Capital Fund and presenting the financial position of the organization.

Example: A club has assets of ₹10,00,000 and liabilities of ₹2,00,000 at the beginning of the year. Therefore, the Opening Capital Fund is:

Capital Fund = ₹10,00,000 – ₹2,00,000 = ₹8,00,000

Features

• Represents the net worth of the organization.
• Similar to owner’s capital.
• Obtained from the previous Balance Sheet.
• Forms the basis for preparing the Balance Sheet.
• Increased by surpluses and reduced by deficits.
• Indicates financial strength.

Step 2. Transfer Surplus or Deficit

After preparing the Income and Expenditure Account, the resulting surplus or deficit is transferred to the Capital Fund. A surplus increases the Capital Fund, whereas a deficit decreases it. This adjustment ensures that the Balance Sheet reflects the actual financial position of the trust or club at the end of the accounting period. Transferring the surplus or deficit is essential because it links the Income and Expenditure Account with the Balance Sheet and updates the accumulated resources of the organization.

Example

Opening Capital Fund = ₹8,00,000
Surplus during the year = ₹1,20,000

Closing Capital Fund = ₹9,20,000

Features

• Updates the Capital Fund.
• Reflects annual financial performance.
• Surplus increases net worth.
• Deficit decreases net worth.
• Links final accounts together.
• Shows accumulated resources.

Step 3. Record All Liabilities

The next step is to record all liabilities of the trust or club. Liabilities include outstanding expenses, subscriptions received in advance, loans, creditors, special funds, and specific donations. Proper recording of liabilities is necessary because they represent obligations that the organization must settle in the future. Accurate presentation of liabilities helps assess the solvency and financial stability of the organization and ensures transparency in financial reporting.

Example

A club has the following liabilities:

• Outstanding salaries – ₹20,000
• Creditors – ₹15,000
• Subscription received in advance – ₹10,000

These amounts are shown on the liabilities side of the Balance Sheet.

Features

• Represents future obligations.
• Includes current and long-term liabilities.
• Helps determine solvency.
• Necessary for accurate reporting.
• Affects the Capital Fund.
• Ensures transparency.

Step 4. Record All Assets

All assets owned by the trust or club are recorded on the assets side of the Balance Sheet. Assets include cash in hand, cash at bank, investments, buildings, furniture, sports equipment, outstanding subscriptions, accrued income, and prepaid expenses. Proper recording of assets provides information about the resources available to the organization and helps assess its financial strength and operational capacity.

Example

A trust owns:

• Cash at bank – ₹1,50,000
• Furniture – ₹2,00,000
• Investments – ₹5,00,000

These items are shown on the asset side of the Balance Sheet.

Features

• Represents resources owned.
• Includes current and fixed assets.
• Indicates financial strength.
• Helps determine liquidity.
• Supports future activities.
• Essential for preparing final accounts.

Step 5. Make Necessary Adjustments

Before finalizing the Balance Sheet, various accounting adjustments must be made. These adjustments include outstanding expenses, prepaid expenses, accrued income, subscriptions received in advance, depreciation, and outstanding subscriptions. Proper adjustments ensure that the Balance Sheet presents a true and fair view of the financial position of the organization and follows the accrual basis of accounting.

Example: Rent paid during the year is ₹60,000, including prepaid rent of ₹5,000. Therefore, ₹5,000 is shown as a prepaid expense in the Balance Sheet.

Features

• Ensures accuracy of financial statements.
• Follows the accrual basis.
• Records income and expenses correctly.
• Improves reliability of accounts.
• Necessary for fair presentation.
• Helps determine the correct financial position.

Step 6. Provide for Depreciation on Fixed Assets

Depreciation must be charged on fixed assets such as buildings, furniture, and sports equipment before preparing the Balance Sheet. Depreciation represents the reduction in the value of assets due to wear and tear, usage, and obsolescence. Charging depreciation ensures that assets are shown at their correct book value and that the Income and Expenditure Account reflects the true cost of operations.

Example

Furniture costing ₹2,00,000 is depreciated at 10%.

Depreciation = ₹20,000

Book Value of Furniture = ₹1,80,000.

Features

• Reduces asset value gradually.
• Reflects wear and tear.
• Ensures correct asset valuation.
• Treated as a non-cash expense.
• Follows accounting principles.
• Assists in replacement planning.

Step 7. Prepare the Final Balance Sheet

After recording all assets, liabilities, and adjustments, the final Balance Sheet is prepared. The total of the assets side must be equal to the total of the liabilities side, including the Capital Fund. The completed Balance Sheet presents the financial position of the trust or club on a specific date and serves as an important tool for decision-making, planning, and reporting.

Example