NCERT Class 12 Books Accountancy Chapter 1- Accounting for Partnership: Basic Concepts

Safalta Expert Published by: Noor Fatima Updated Fri, 08 Jul 2022 12:14 AM IST

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Here is the information about NCERT Class 12 Books Accountancy Chapter 1. You can give a read to this blog and get PDFs of the subject. 

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NCERT Class 12 Books Accountancy Chapter 1- Accounting for Partnership: Basic Concepts is accessible here for download purposes. You can download the PDF for and learn from the book anytime you want. Students who are studying in Class 12 and candidates who are preparing for competitive exams can download the PDF for NCERT Class 12 Books Accountancy Chapter 1- Accounting for Partnership: Basic Concepts to learn from the reading material.  

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The Chapter Goes Like This-


LEARNING OBJECTIVES

After studying this chapter, you will be able to;
  • Identiy the need for, and nature of accounting records relating to not-for-profit organisations;
  • List the principal financial statements prepared by notfor-profit organisations;
  • Prepare the Receipt, and Payment Account and Income and Expenditure Account;
  • Prepare Income and Expenditure Account and Balance Sheet from a given Receipt and Payment Account;
  • Explain treatment of certain peculiar items of Receipts and Payments such as subscriptions from members, special funds, legacies, sale of old fixed assets, etc
There are certain organisations which are set up for providing service to its members and the public in general. Such organisations include clubs, charitable institutions, schools, religious organisations, trade unions, welfare societies and societies for the promotion of art and culture. These organisations have service as the main objective and not the profit as is the case of organisations in business. Normally, these organisations do not undertake any business activity, and are managed by trustees who are fully accountable to their members and the society for the utilization of the funds raised for meeting the objectives of the organisation. Hence, they also have to maintain proper accounts and prepare the financial statement which take the form of Receipt and Payment Account; Income and Expenditure Account; and Balance Sheet. at the end of for every accounting period (normally a financial year). This is also a legal requirement and helps them to keep track of their income and expenditure, the nature of which is different from those of the business organisations. In this chapter we shall learn about the accounting aspects relating to not-for-profit organisation.


1.1 Meaning and Characteristics of Not-forProfit Organisation

Not-for -Profit Organisations refer to the organisations that are for used for the welfare of the society and are set up as charitable institutions which function without any profit motive. Their main aim is to provide service to a specific group or the public at large. Normally, they do not manufacture, purchase or sell goods and may not have credit transactions. Hence they need not maintain many books of account (as the trading concerns do) and Trading and Profit and Loss Account. The funds raised by such organisations are credited to capital fund or general fund. The major sources of their income usually are subscriptions from their members donations, grants-in-aid, income from investments, etc. The main objective of keeping records in such organisations is to meet the statutory requirement and help them in exercising control over utilisation of their funds. They also have to prepare the financial statements at the end of each accounting period (usually a financial year) and ascertain their income and expenditure and the financial position, and submit them to the statutory authority called Registrar of Societies.

The main characteristics of such organisations are:
  • Such organisations are formed for providing service to a specific group or public at large such as education, health care, recreation, sports and so on without any consideration of caste, creed and colour. Its sole aim is to provide service either free of cost or at nominal cost, and not to earn profit.
  • These are organised as charitable trusts/societies and subscribers to such organisation are called members.
  • Their affairs are usually managed by a managing/executive committee elected by its members.
  • The main sources of income of such organisations are: (i) subscriptions from members, (ii) donations (general). (iii) legacies(general). (iv) grantin-aid, (v) income from investments, etc. 5. The funds raised by such organisations through various sources are credited to capital fund or general fund.
  • The surplus generated in the form of excess of income over expenditure is not distributed amongst the members. It is simply added in the capital fund.
  • The Not-for-Profit Organisations earn their reputation on the basis of their contributions to the welfare of the society rather than on the customers’ or owners’ satisfaction.
  • The accounting information provided by such organisations is meant for the present and potential contributors and to meet the statutory requirement.


1.2 Accounting Records of Not-for-Profit Organisations

As stated earlier, normally such organisations are not engaged in any trading or business activities. The main sources of their income are subscriptions from members, donations, financial assistance from government and income from investments. Most of their transactions are in cash or through the bank. These institutions are required by law to keep proper accounting records and keep proper control over the utilization of their funds. This is why they usually keep a cash book in which all receipts and payments are duly recorded. They also maintain a ledger containing the accounts of all incomes, expenses, assets and liabilities which facilitates the preparation of financial statements at the end of the accounting period. In addition, they are required to maintain a stock register to keep complete record of all fixed assets and the consumables. 

institutions are required by law to keep proper accounting records and keep proper control over the utilization of their funds. This is why they usually keep a cash book in which all receipts and payments are duly recorded. They also maintain a ledger containing the accounts of all incomes, expenses, assets and liabilities which facilitates the preparation of financial statements at the end of the accounting period. In addition, they are required to maintain a stock register to keep complete record of all fixed assets and the consumables.

Final Accounts or Financial Statements: The Not-for-Profit Organisations are also required to prepare financial statements at the end of the each accounting period. Although these organisations are non-profit making entities and they are not required to make Trading and Profit & Loss Account but it is necessary to know whether the income during the year was sufficient to meet the expenses or not. Not only that they have to provide the necessary financial information to members, donors, and contributors and also to the Registrar of Societies.

For this purpose, they have to prepare their final accounts at the end of the accounting period and the general principles of accounting are fully applicable in their preparation as stated earlier, the final accounts of a ‘not-for-profit organisation’ consist of the following:
  • Receipt and Payment Account
  • Income and Expenditure Account
  • Balance Sheet
The Receipt and Payment Account is the summary of cash and bank transactions which helps in the preparation of Income and Expenditure Account and the Balance Sheet. Besides, it is a legal requirement as the Receipts and Payments Account has also to be submitted to the Registrar of Societies along with the Income and Expenditure Account, and the Balance Sheet.

Income and Expenditure Account, and the Balance Sheet. Income and Expenditure Account is akin to Profit and Loss Account. The Not-for-Profit Organisations usually prepare the Income and Expenditure Account and a Balance Sheet with the help of Receipt and Payment Account. However, this does not imply that they do not make a trial balance. In order to check the accuracy of the ledger accounts, they also prepare a trial balance which facilitates the preparation of accurate Receipt and Payment Account as well as the Income and Expenditure Account and the Balance Sheet.

In fact, if an organisation has followed the double entry system they must prepare a trial balance for checking the accuracy of the ledger accounts and it will also facilitate the preparation of Receipt and Payment account. Income and Expenditure Account and the Balance Sheet.


Glimpses of the Chapter-







You can download the complete book from the link given below. 
 

NCERT Class 12 Books Accountancy Chapter 1- Accounting for Partnership: Basic Concepts- PDF Download

Chapter 1- Accounting for Partnership: Basic Concepts
Safalta provides the latest NCERT course books for all the major subjects of Class 12. A team of proficient teachers drafts these matters in a precise and thorough manner. You can download the PDFs for all the subjects in a chapter-wise format.

These Books are very effective in preparing for annual exams. Here is the PDF for NCERT Books Class 12 Accountancy Chapter 1- Accounting for Partnership: Basic Concepts.
 

Where can you download NCERT Books Class 12 Accountancy Chapter 1 PDF?

Candidates can download NCERT Books Class 12 Accountancy Chapter 1- Accounting for Partnership: Basic Concepts PDF for free on our page. Links are given below.

Chapter 1- Accounting for Partnership: Basic Concepts

Why is NCERT Books Class 12 Accountancy the best study material?

The book can also help in clarifying doubts. Other benefits of studying from the NCERT Books Class 12 Accountancy are-
  • Students gain profound knowledge about Accountancy through the NCERT Books Class 12 Accountancy
  • The course books contain pictures that can help students in better understanding of the chapters
  • These books can help students in self-study

Are CBSE Books for Class 12 Accountancy important from an examination perspective?

The chapters in CBSE Books for Class 12 Accountancy are vital for board exams and higher classes. Students should read the chapter given in the CBSE books for Class 12 Accountancy. These stories and practice questions can help gain excellent marks.

To get outstanding marks, we provide mock test papers that can help gear-up your preparations for exams. Additionally, you can also download e-books to get yourself prepared even in a better way.
 

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