Educational Institutes- Special Transactions

Educational institutes are not-for-profit organizations. They work for providing education and thus, the welfare of the society. In India, usually, these are registered under the Indian Societies Registration Act, 1860. However, in some of the states, the law requires them to register under the Trust Act also. For example, in the state of Maharashtra, all such societies need to register themselves simultaneously under the Indian Societies Registration Act, 1860 as well as under the Bombay Public Trust Act, 1950.

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Educational Institutes – Special Transactions

These are run by Trust Societies and are thus autonomous bodies. Their office consists of a President, a Secretary, a Treasurer and Executive Committee members. Their General Body comprises of all the members of the society. Also, they may run a number of institutions.

However, the head of the educational institutes for managing the day to day affairs is the Principal. He is also a member of the governing body and is responsible for supervising the smooth functioning of the institute.

The Educational Institutes meet a part of the expenses by raising funds on their own, either from donations or charities. They also receive grants from state governments. However, these grants are not uniform in nature. For the purpose of accounting, these institutes treat financial year as their accounting year.

Thus, we can say that there are three main sources of funds available for educational institutes. They are:

1. Donations and charities from public
2. Fees from students like annual tuition fees, admission fees, term fees, laboratory fees, development fees, etc.
3. Government grants like Maintenance grants, Equipment grants, Building grants, etc

Transactions Related  to Education Institutes

Donation from the public

An institute may receive a donation in cash or in kind. The donation in kind may be in the form of land, building, furniture, utensils, equipment, etc. These are generally given in the memory of a member of the donor’s family. However, the donations may be for recurring or non-recurring purposes.

Admission fees

Usually, the parent body running the educational institute collects the amount of admission or capitation fees from the parents or the guardians of the students seeking admission.

Learn more about Income and Expenditure Account here in detail.

Library and laboratory deposit

It generally remains with the institute until the student leaves the school or college. At the time of leaving the school or college refunds this amount to the student.

Term Fees

For the purpose of accounting for the term fees, the educational institution requires to maintain a separate account for the receipts and expenditures. Any surplus in this account is carried forward to the next year. Hence, it can use an amount of term fees for the following:

1. School functions
2. Medical inspection of the students
3. Printing of school magazines
4. Expenses of printing exam question papers, the supply of answer books and other examination expenses.
5. Inter-school tournaments
6. Sports
7. Extra-curricular activities
8. Scouting and guiding
9. Prizes for various co-curricular activities
10. School musical band
11. Purchase of books for the library
12. Maintenance of playground
13. Sports equipment
14. Material for drawing and craft
15. A contribution made to the cultural or athletic associations that are connected with school activities.
16. Expenses for newspapers and magazines made available to the students.
17. Educational excursions and visits expenses
18. Expenses for School competitions such as drama, skit, dance, music, elocution, debate, etc.

Recurring Grants

These are usually received in the form of Maintenance grants and in installments. Thus, these are spread throughout the year.

Grant-in-aid

The School or College code provides a complete list of the items for which an institution can use these. However, the institute may use the amount of the grant for the following:

1. Payment of Salary and Allowances to staff.
2. Leave Salary
3. Teacher’s training expenses
4. Pension and Gratuity to the staff
5. Rent and taxes
6. Insurance expenses
7. Repairs and maintenance expenses
8. Electricity and telephone expenses
9. Payment of the registration fees to the board of education
10. Audit Fees
11. Scholarships
12. Expenses for conferences
13. Bonus to teachers
14. Any subscription to an educational association, etc.

Solved Example For You

From the following particulars of Tagore school prepare Income and Expenditure Account and Balance Sheet as at 31^st March 2018.

Particulars	Amount (Dr.)	Amount (Cr.)
Security Deposit		250000
Research fund		500000
Capital fund		1990000
Tuition fees		1000000
Government grants		700000
Donations		100000
Hostel room rent		210000
Mess receipts		180000
Salary	1050000
Scholarships	100000
Student welfare expenses	40000
Sports expenses	60000
Repairs and maintenance	125000
Miscellaneous expenses	50000
Building	2000000
Furniture	700000
Buses	500000
Provision for depreciation:
Building		200000
Furniture		70000
Buses		75000
Bank	650000
	5275000	5275000

 

Ans.

In the books of Tagore School

Income and Expenditure A/c

For the year ending 31^st March 2018

Particulars	Amount	Particulars	Amount
To Salary A/c	1050000	By Tuition fees A/c	1000000
To Scholarships A/c	100000	By Government grants A/c	700000
To Student welfare expenses A/c	40000	By Donations A/c	100000
To Sports expenses A/c	60000	By Hostel room rent A/c	210000
To Repairs and maintenance A/c	125000	By Mess Receipts A/c	180000
To Misc. expenses A/c	50000
To Surplus	765000
(excess of Income over expenditure)
	2190000		2190000

 

Balance Sheet

As at 31^st March 2018

Liabilities		Amount	Assets		Amount
Capital fund	1990000		Building	2000000
Add: Surplus	7650000	2755000	Less: provision for depreciation	(200000)	1800000
Security deposit		250000	Furniture	700000
Research fund		500000	Less: provision for depreciation	(70000)	630000
			Buses	500000
			Less: provision for depreciation	(75000)	425000
			Bank		650000
		3505000			3505000