Non-Profit Organizations (NPOs) such as schools, clubs, societies, and charitable institutions regularly use consumable items like stationery and sports material in their day-to-day activities. These items are not meant for resale or long-term use; instead, they are consumed within a short period to support operations. Proper accounting treatment of such items is essential to ensure accurate reporting of income and expenditure.
Meaning of Consumable Items
Consumable items are goods that are used up in the normal course of activities and do not retain long-term value. In NPOs, common examples include:
- Stationery items: pens, registers, files, paper, ink, envelopes, etc.
- Sports material: footballs, cricket bats, shuttlecocks, nets, uniforms used for sports activities.
These items are generally treated as revenue expenses rather than capital assets.
Stationery:
There is a stock of consumable items such as stationery, sports material, medicine, etc. at the end of the year in a Not-for-Profit Organisation. Expenses incurred on consumable items like stationery are generally debited to the Income and Expenditure Account. When opening and closing stocks of stationery are given, adjustments are made to determine the actual consumption of stationery during the year. The cost of stationery consumed is calculated and charged (debited) to the Income and Expenditure Account. The closing stock of stationery is shown on the assets side of the Balance Sheet.
Format:
Accounting Treatment of Stationery:
Illustration:
From the following information, calculate the amount of stationery consumed during the year 2021-22 and show its treatment in books of accounts. The amount paid for stationery during the year was 70,000:
Solution:
Sports Material:
Not-for-Profit Organisations like sports clubs have sports material as consumable items which are charged( debited) to Income and Expenditure A/c. Income and Expenditure A/c will show correct Surplus/Deficit when adjusted sports material consumed is debited to the account. Sports material consumed during the year is derived by making adjustments related to the purchase of sports material and the cost of sports material consumed. The Closing Stock of Sports material consumed are shown in the Asset side of the Balance Sheet.
Format:
Illustration:
From the following information, calculate the sports material used for the year ended 2021-2022 and its treatment in books of accounts when the amount paid during the year for sports material was ₹20,000:
Solution:
