Session Plan : Concept of non-trading organisations

0–5 min: Introduce the meaning of non-trading (not-for-profit) organisations with examples.

2️⃣ 5–15 min: Explain characteristics, objectives, and differences from trading organisations.

3️⃣ 15–30 min: Discuss major financial statements—Receipts & Payments A/c, Income & Expenditure A/c, and Balance Sheet.

4️⃣ 30–40 min: Explain sources of income: subscriptions, donations, grants, and special funds.

5️⃣ 40–45 min: Recap key points and discuss 5 important exam questions. 

Lecture Material : (PDF, PPT)

Learning Material (IV Quadrant Approach)

(Q1) : Text and Image based Content (PDF/Image Formats)

A non-trading organisation, also known as a non-profit organisation (NPO) or not-for-profit concern, is an entity established primarily to serve the community or its members rather than to earn profits. These organisations focus on providing services in areas such as education, healthcare, culture, religion, and social welfare.

🔍 Key Characteristics of Non-Trading Organisations

1. Primary Objective: Service Over Profit

The main goal is to offer services that fulfill social, cultural, educational, or charitable needs, without the intention of making a profit.

2. Sources of Income

Non-trading organisations typically generate income through:

• Membership subscriptions

• Donations and grants from individuals, corporations, or governments

• Entrance or admission fees

• Fundraising events

• Investment income

3. Utilisation of Surplus

Any surplus (excess of income over expenditure) is reinvested into the organisation to enhance or expand its services, rather than being distributed among members.

4. Management and Governance

These organisations are typically managed by a board of trustees, governing body, or management committee responsible for overseeing operations and ensuring alignment with the organisation's objectives.

5. Accounting Practices

Non-trading organisations maintain financial records using the double-entry bookkeeping system. At the end of the financial year, they prepare:

• Receipts and Payments Account: A summary of all cash transactions during the year.

• Income and Expenditure Account: Similar to a profit and loss account, it reflects the organisation's performance over the period.

• Balance Sheet: A statement of assets and liabilities as of the year-end.

🏢 Examples of Non-Trading Organisations

• Educational institutions (schools, colleges)

• Hospitals and clinics

• Charitable trusts and foundations

• Religious institutions (temples, churches, mosques)

• Clubs and societies (sports clubs, cultural associations)

• Public libraries

• Orphanages and old-age homes

📊 Distinction Between Trading and Non-Trading Organisations

Aspect Trading Organisation Non-Trading Organisation

Primary Objective To earn profit through goods/services sales To provide services without profit motive

Sources of Income Sales revenue, service charges Subscriptions, donations, grants, fees

Profit Distribution Profits distributed among owners/shareholders Surplus reinvested into the organisation

Forms of Organisation Sole proprietorships, partnerships, companies Clubs, societies, trusts, associations

Accounting Statements Trading Account, Profit & Loss Account, Balance Sheet Receipts & Payments Account, Income & Expenditure Account, Balance Sheet

(Q2) : Video Based Content (Youtube)

(Q3) : Formative Assessment (Google Form/Any Other Online Quiz Platform)