Balance Sheet Treatment for Non-Profit Organizations of Special items like Entrance Fees, Donations, Legacy, etc.
by Special items received by non profit organisations are classified as revenue receipts or capital receipts. Capital receipts are generally shown in the Balance Sheet by adding them to specific funds or capital funds.
| Special Item | Journal Entry | Balance Sheet Treatment |
|---|---|---|
| Entrance Fees (Revenue Nature) | Bank A/c Dr. To Entrance Fees A/c |
Not shown separately, transferred to Income and Expenditure A/c |
| Entrance Fees (Capital Nature) | Bank A/c Dr. To Capital Fund A/c |
Added to Capital Fund |
| General Donation | Bank A/c Dr. To Donation A/c |
Transferred to Income and Expenditure A/c |
| Specific Donation | Bank A/c Dr. To Specific Fund A/c |
Shown as separate fund under Liabilities |
| Building Donation | Bank A/c Dr. To Building Fund A/c |
Shown as Building Fund in Balance Sheet |
| Legacy Received | Bank A/c Dr. To Legacy A/c |
Added to Capital Fund |
| Life Membership Fee | Bank A/c Dr. To Life Membership Fund A/c |
Shown under Liabilities as Life Membership Fund |
| Endowment Fund Received | Bank A/c Dr. To Endowment Fund A/c |
Shown as Endowment Fund Liability |
| Prize Fund Received | Bank A/c Dr. To Prize Fund A/c |
Shown as Prize Fund Liability |
| Subscription Outstanding | Outstanding Subscription A/c Dr. To Subscription A/c |
Shown as Current Asset |
| Subscription Received in Advance | Subscription A/c Dr. To Subscription Received in Advance A/c |
Shown as Current Liability |
Adjustment Entries
| Adjustment | Journal Entry |
|---|---|
| Transfer Revenue Income | Income and Expenditure A/c Dr. To Income A/c |
| Transfer Revenue Expenses | Expense A/c Dr. To Income and Expenditure A/c |
| Transfer Surplus | Income and Expenditure A/c Dr. To Capital Fund A/c |
| Transfer Deficit | Capital Fund A/c Dr. To Income and Expenditure A/c |
Important Points
• Revenue receipts affect the Income and Expenditure Account.
• Capital receipts are shown in the Balance Sheet.
• Specific donations are kept separate and used only for the stated purpose.
• Funds created for specific purposes appear on the liabilities side of the Balance Sheet.