What is a Not-for-Profit Organisation?
NPO or not for profit organisation, also renowned as a non-business organisation or nonprofit establishment is staunched to a certain social principle or prescribing for a shared point of view. According to economic terms, it is an establishment that utilises its surfeit of the revenues to additionally attain its ultimate aim, rather than allocating its income to the entity’s leaders, shareholders or members.
What is Accounting for Not-for-Profit Organisation?
There are a few establishments which are set up for furnishing service to its affiliates and the public. Such establishments incorporates charitable institutions, clubs, religious organisations, schools, welfare societies, trade unions and societies for the betterment as well as promotion of art and culture. These establishments have served as their primary objective and not the profit as terms of establishments in business. Usually, these establishments do not undertake any business pursuit and are regulated by the administrators who are completely accountable to their members and the society for the utilization of the funds raised for meeting and objectives of the establishment. Therefore, they also have to manage accurate accounts and prepare the financial statement which takes the form of Income and Expenditure Account Receipt and Payment Account and Balance Sheet, at the end of for every accounting year (usually a financial year).
This is also a legitimate requirement and assists them to keep an eye on their income and expenditure, the trait of which is distinct from those of the business establishments.
The above mentioned is the concept that is explained in detail about Accounting for Not-for-Profit Organisation for the class 12 students. To know more, stay tuned to BYJU’S.