Lesson Note on Account of Non-Profit Organization: Receipts and Payments Account for SSS 2

Class: Senior Secondary School 2 (SS2 / SSS2)
Term: 1st Term
Week: 5
Age: 16 years
Duration: 45 minutes
Subject: Financial Accounting
Curriculum Theme: Nil
Previous Lesson: Manufacturing Account: Transfer of Goods and Balance Sheet Preparation.
Topic: ACCOUNT OF NON-PROFIT ORGANIZATION
Subject Matter: Meaning of non-profit organization accounts (accounts prepared for clubs, societies and charities), introduction, receipts and payment account (features, limitations), formats of receipts and payments account, preparation of receipts and payment account

Specific Objectives

By the end of the lesson, pupils should be able to:

Cognitive Domain:

• Define a non-profit organization.
• Explain the meaning of a Receipts and Payments Account.
• State the features and limitations of a Receipts and Payments Account.
• Outline the format of a Receipts and Payments Account.

Affective Domain:

• Pay attention to the lesson on accounts of non-profit organizations.
• Participate actively in discussions about Receipts and Payments Accounts.
• Appreciate the importance of proper record-keeping for non-profit organizations.

Psychomotor Domain:

• Prepare a simple Receipts and Payments Account from given transactions.
• Apply the correct format for preparing a Receipts and Payments Account.

Social Domain:

• Work cooperatively when reviewing sample transactions.
• Communicate understanding of accounting concepts for non-profit organizations.

Reference Materials

The following resources were used in planning this lesson:

• Senior Secondary Schools Education Curriculum
• State Unified Scheme of Work
• Financial Accounting for Senior Secondary Schools by O. A. Longe
• https://www.accaglobal.com/ng/en/student/exam-support-resources/fundamentals-exams-study-resources/f3/technical-articles/club-accounts.html
• https://www.educba.com/receipts-and-payments-account-format/

Instructional Materials

The teacher will teach this lesson with the aid of:

• Charts showing the format of a Receipts and Payments Account
• Flashcards with accounting terms
• Sample transactions for non-profit organizations

Rationale for the Lesson

This lesson helps pupils understand how organizations that do not aim to make profit manage their finances. It enables them to differentiate between profit and non-profit entities and to prepare basic financial statements for clubs and societies, which is important for transparency and accountability.

Prerequisite/Previous Knowledge

Pupils have basic knowledge of accounting principles, debit and credit entries, and the preparation of simple cash books.

Lesson Content/Board Summary

ACCOUNT OF NON-PROFIT ORGANIZATION

Meaning of Non-Profit Organization

A non-profit organization is an entity established with the primary aim of providing services to its members or the public, rather than making profit. Examples include clubs, societies, schools, hospitals, and charitable organizations.

Receipts and Payments Account

The Receipts and Payments Account is a summary of the cash book. It records all cash and bank transactions (both capital and revenue items) over a specific period, usually a year. It starts with the opening cash/bank balance and ends with the closing cash/bank balance.

Features of Receipts and Payments Account

The following are features of a Receipts and Payments Account:

• It is a summary of the cash book.
• It includes both capital and revenue items.
• It is a real account.
• It starts with an opening cash/bank balance and ends with a closing cash/bank balance.
• It does not consider non-cash items like depreciation or accruals.

Limitations of Receipts and Payments Account

The following are limitations of a Receipts and Payments Account:

• It does not show whether the organization has made a surplus or deficit, as it is not an Income and Expenditure Account.
• It does not account for accrued expenses or income, or prepaid expenses or unearned income.
• It does not record non-cash transactions such as depreciation or bad debts.
• It does not provide a complete financial picture of the organization.

Format of Receipts and Payments Account

[Name of Organization]

Receipts and Payments Account

For the year ended [Date]

Preparation of Receipts and Payments Account

Example:

The following information relates to Great Hope Club for the year ended 31st December 2023:

• Cash in hand on 1st January 2023: ₦5,000
• Subscriptions received: ₦40,000
• Donations received: ₦15,000
• Rent paid: ₦12,000
• Salaries paid: ₦20,000
• Purchase of sports equipment: ₦10,000
• Printing and stationery: ₦3,000

Prepare the Receipts and Payments Account for Great Hope Club.

Solution:

Great Hope Club

Receipts and Payments Account

For the year ended 31st December 2023

Step 1: List all cash receipts on the debit side (Receipts side).

Step 2: List all cash payments on the credit side (Payments side).

Step 3: Calculate the total receipts and total payments.

Step 4: Find the difference between total receipts and total payments to get the closing balance (Balance c/d).

Step 5: If total receipts are greater than total payments, the balance is a debit balance (cash in hand/bank). If total payments are greater than total receipts, the balance is a credit balance (bank overdraft).

Teaching Methods/Instructional Techniques

Discussion, Lecture, Demonstration, Question and Answer, Visual Aids

Instructional Procedures

Step 1: Introduction

Time: 5 minutes
Teaching Skill: Set Induction
Teacher’s Activity: The teacher greets the pupils and asks them to recall the types of organizations they know and their main objectives.
Pupils’ Activity: Pupils respond by mentioning profit-making organizations and their objective of making profit.
Learning Point: Pupils recall prior knowledge of organizations and their objectives.

Step 2: Meaning of Non-Profit Organization

Time: 5 minutes
Teaching Skill: Explanation
Teacher’s Activity: The teacher explains the meaning of a non-profit organization, giving examples like schools, clubs, and charities.
Pupils’ Activity: Pupils listen attentively and note down the definition and examples.
Learning Point: Pupils understand the concept of a non-profit organization.

Step 3: Receipts and Payments Account

Time: 5 minutes
Teaching Skill: Explanation
Teacher’s Activity: The teacher introduces the Receipts and Payments Account as a summary of the cash book for non-profit organizations.
Pupils’ Activity: Pupils listen and ask questions for clarification.
Learning Point: Pupils understand the purpose of a Receipts and Payments Account.

Step 4: Features and Limitations

Time: 5 minutes
Teaching Skill: Discussion
Teacher’s Activity: The teacher leads a discussion on the key features and limitations of a Receipts and Payments Account.
Pupils’ Activity: Pupils identify and discuss the features and limitations based on the teacher’s guidance.
Learning Point: Pupils can state the characteristics and drawbacks of the account.

Step 5: Format of Receipts and Payments Account

Time: 10 minutes
Teaching Skill: Demonstration
Teacher’s Activity: The teacher displays a chart showing the format of a Receipts and Payments Account and explains each section.
Pupils’ Activity: Pupils observe the format, copy it into their notebooks, and ask questions.
Learning Point: Pupils become familiar with the structure of the account.

Step 6: Preparation of Receipts and Payments Account

Time: 10 minutes
Teaching Skill: Practical Application
Teacher’s Activity: The teacher provides a sample of transactions and demonstrates how to prepare a Receipts and Payments Account step-by-step on the board.
Pupils’ Activity: Pupils follow the demonstration and attempt to prepare the account in their notes.
Learning Point: Pupils gain practical skills in preparing the account.

Step 7: Evaluation/Review

Time: 5 minutes

Teaching Skill: Questioning/Assessment

Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

1. Define a non-profit organization.
2. What is a Receipts and Payments Account?
3. State three features of a Receipts and Payments Account.
4. Mention two limitations of a Receipts and Payments Account.
5. Classify the following as either a receipt or a payment: (a) Subscriptions received, (b) Rent paid, (c) Donations received, (d) Purchase of equipment.

Pupils’ Activity: Pupils answer orally and in writing.

Learning Point: Pupils demonstrate understanding of the lesson.

Step 8: Conclusion

Time: 5 minutes
Teaching Skill: Summarization
Teacher’s Activity: The teacher summarizes the key points of the lesson, emphasizing the difference between profit-making and non-profit organizations and the role of the Receipts and Payments Account. The teacher also gives homework: to find more examples of non-profit organizations in their community.
Pupils’ Activity: Pupils listen to the summary and copy down the homework.
Learning Point: Pupils consolidate their understanding of the topic.

Lesson Keywords

• Non-profit organization – An entity whose primary purpose is to provide services rather than make profit.
• Receipts – All cash inflows received by the organization.
• Payments – All cash outflows made by the organization.
• Receipts and Payments Account – A summary of cash and bank transactions for a non-profit organization.
• Capital items – Transactions related to the acquisition or disposal of fixed assets.
• Revenue items – Transactions related to the day-to-day operations of the organization.

Differentiation

The teacher will provide additional support to struggling pupils by offering simplified examples and one-on-one guidance, while advanced pupils will be challenged with more complex transactions for account preparation.

Note for teachers using this lesson plan

Teachers should ensure that pupils grasp the fundamental difference between a Receipts and Payments Account and an Income and Expenditure Account, even though the latter is not the main focus of this particular lesson. Real-life examples of local clubs or societies can enhance pupil engagement.