Home/Study Directory/UPSC EPFO/Not-for-Profit Accounts for UPSC EPFO APFC
UPSC EPFO APFC · STUDYHUB
Not-for-Profit Accounts for UPSC EPFO APFC
Receipts and Payments vs Income and Expenditure, Subscription Formula and 10 MCQs
Updated: 6 November 2026 · Accountancy series · Beginner-friendly, exam-depth notes · ~12 min read
📤 Share this with your APFC study group
Plain English first
Start here: what is a not-for-profit organisation?
A not-for-profit organisation (also called a non-profit) is a body that serves members or the public. Examples: sports clubs, schools run as societies, charitable trusts, resident welfare associations.
Businesses prepare a Profit and Loss Account. Not-for-profits prepare an Income and Expenditure Account. The logic is similar. The names and treatments change.
Why APFC asks this
Why not-for-profit accounts keep returning to APFC papers
Accountancy is the section where many aspirants quietly lose marks. Not-for-profit accounts look hard because the names feel new. The idea is simple.
A club, society, or trust does not exist to earn profit for owners. It still needs clear books. Examiners check three skills: can you read a cash summary, can you make an accrual statement for the year, and can you treat capital items correctly.
If you learn those three skills, most questions become short and safe. This note is written so a beginner can follow every step, while keeping the depth a strong APFC attempt needs.
The topic also rewards memory more than calculation. Examiners usually ask whether a receipt is capital or revenue, whether an item belongs in the Receipts and Payments Account or the Income and Expenditure Account, and what happens to a surplus. All of that fits on one revision card, which you will find near the end of this page.
Browse more notes in the Study Directory and the UPSC EPFO hub.
Core comparison
Receipts and Payments vs Income and Expenditure
The first scoring skill is knowing the differences cold. Treat the table as a one-glance answer to the most common theory question.
| Basis | Receipts and Payments A/c | Income and Expenditure A/c |
|---|---|---|
| Nature | Real account (summary of cash book) | Nominal account (like a Profit and Loss Account) |
| Starts with | Opening cash and bank balances | Expenses on the debit side; no opening balance |
| Ends with | Closing cash and bank balances | Surplus or deficit |
| Items | Capital and revenue | Revenue only |
| Periods | All periods, whenever cash moves | Current year only |
| Basis of accounting | Cash basis | Accrual basis |
| Non-cash items | Not included | Included (depreciation, outstanding, prepaid) |
Most tested numerical
The subscription adjustment formula
Subscriptions are the most tested number. Start with the amount received in cash, then correct it for time. Remove cash that belongs to the previous year, remove cash that belongs to the next year, and add dues that belong to this year but are still unpaid.
Take a worked case. A club received ₹60,000 as subscriptions. Dues outstanding were ₹5,000 at the start and ₹8,000 at the end. Advance was ₹2,000 at the start and ₹3,000 at the end. Income is 60,000 + 8,000 − 5,000 + 2,000 − 3,000 = ₹62,000. The same method works for any expense in reverse: salaries paid ₹24,000, outstanding ₹2,000 at the start and ₹3,000 at the end give an expense of ₹25,000.
If a question gives the subscription account in a different form, such as a ledger with a missing figure, do not panic. Build the account, post the known entries and find the balancing number. For more solved practice of this type, keep CrackTarget’s EPFO mock tests open next to this note.
Classification skill
Capital receipt or revenue receipt?
This is the second place where marks are won or lost. The rule of thumb is simple: if the benefit lasts beyond the year, or the purpose is specific, it is usually capital and goes to a fund or the Balance Sheet. If it supports regular running of the organisation, it is revenue and goes to Income and Expenditure.
| Item | Usual treatment |
|---|---|
| Annual subscriptions | Revenue income (after adjustment) |
| Life membership fees | Capital; credited to Life Membership Fund |
| Entrance or admission fees | Usually capital (revenue only if the question says so) |
| General donations | Revenue income |
| Specific-purpose donations | Capital fund or specific fund |
| Legacies | Capital |
| Sale of old newspapers or scrap | Revenue income |
| Sale of a fixed asset | Capital receipt; profit or loss to Income and Expenditure |
| Purchase of sports equipment or furniture | Capital; shown as an asset |
| Consumed stationery, honorarium, rent | Revenue expense |
Funds and trading
Specific funds, trading activities and the capital fund
Many organisations keep a Prize Fund, a Building Fund or a Sports Fund. Income earned on the fund’s investments is added to the fund, and the expense it is meant for, such as prizes awarded, is deducted from the fund. Neither goes through Income and Expenditure unless the question says so. Whatever remains is shown on the liabilities side of the Balance Sheet.
If the club runs a canteen, a bar or a shop, prepare a separate Trading Account and transfer only the profit or loss to Income and Expenditure. Do not show the sales and purchases there.
The Capital Fund (also called Accumulated Fund or General Fund) is the opening balancing figure: total assets less outside liabilities. The year’s surplus is added to it and a deficit is deducted from it. No dividend is paid, and that is the real difference between a club and a business.
Apply it
Mini worked example: from Receipts and Payments to Income and Expenditure
Suppose a sports club shows these items in its Receipts and Payments Account: subscriptions ₹62,000, life membership fees ₹10,000, donation for a pavilion ₹20,000, salaries paid ₹24,000 and sports equipment purchased ₹15,000. Salaries outstanding rose by ₹1,000 during the year, and depreciation on equipment is ₹3,000.
- Keep only revenue items for Income and Expenditure. Income = subscriptions ₹62,000.
- Expenditure = salaries ₹25,000 (24,000 + 1,000) + depreciation ₹3,000 = ₹28,000.
- Surplus = 62,000 − 28,000 = ₹34,000.
- Life membership ₹10,000 → Life Membership Fund. Pavilion donation ₹20,000 → specific fund. Equipment ₹15,000 → asset.
Only revenue items enter Income and Expenditure. Income is the subscriptions of ₹62,000 (after adjustment, as in the formula above). Expenditure is salaries of ₹25,000 (24,000 + 1,000) and depreciation of ₹3,000, a total of ₹28,000. The surplus is 62,000 − 28,000 = ₹34,000. The ₹10,000 life membership fee goes to the Life Membership Fund, the ₹20,000 donation to the specific fund, and the ₹15,000 equipment is shown as an asset. This is exactly how the examiner separates capital from revenue.
Do not lose marks here
High-yield traps
- Depreciation and outstanding expenses are never in Receipts and Payments.
- Receipts and Payments carries capital items; Income and Expenditure does not.
- Life membership fee is a capital receipt, not annual income.
- Closing balance of Receipts and Payments is cash and bank, not surplus.
- For stationery and similar items, charge consumption (opening + purchase − closing), not purchase.
- For the subscription formula, sign errors are the main cause of mistakes. Say it aloud: add what is due, subtract what belongs to others.
- Always check the stem for special instructions from the constitution; they override textbook rules.
- R&P = real, cash, all periods, capital + revenue.
- I&E = nominal, accrual, current year, revenue only.
- Subscriptions = Received + Closing due − Opening due + Opening advance − Closing advance.
- Capital = life fees, specific donations, legacies, asset sale proceeds.
- Surplus = add to Capital Fund.
Revise fast
Key takeaways
R&P = real, cash, all periods, capital plus revenue. I&E = nominal, accrual, current year, revenue only. Subscriptions = Received + Closing due − Opening due + Opening advance − Closing advance. Capital = life fees, specific donations, legacies, asset sale proceeds. Surplus = add to Capital Fund.
Practise this chapter with a timer: solve one subscription adjustment, one fund entry and one full Income and Expenditure account in 20 minutes. It builds exam-hall speed faster than reading more theory.
Practice
10 practice MCQs with score analysis
Attempt all ten, then press Submit. You will see correct, wrong and unattempted counts, your percentage and explanations.
📤 Found this useful? Share it with a friend preparing for APFC
Common doubts
FAQ
Is the Receipts and Payments Account the same as the cash book?
It is a summary of the cash book, classified by nature of receipt and payment, with opening and closing balances of cash and bank.
Do not-for-profit organisations prepare a Profit and Loss Account?
No. They prepare an Income and Expenditure Account, and a Trading Account only for any trading activity such as a canteen.
Is entrance fee always capital?
Standard textbook treatment is capital, but if the question or the constitution says to treat it as revenue, follow the question.
Where can I practise more?
Try CrackTarget’s EPFO mock tests and the labour law MCQ set to balance accountancy with law revision.