Tag: book keeping and accountancy

Non-for-profit organisations earn their reputation on the basis of contributions to the welfare. The are set up for the purpose of promoting science, commerce, social cause, education etc. Their main purpose is not to earn profit but to provide services. 

Non-for-Profit organisations do not maintain Capital account. They prepare income and expenditure account as profit and loss account, receipts and payments account as cash account and balance sheet. They do not maintain a capital account because of all the balance regarding the capital introduced and withdrawn are recorded in the balance sheet.

Main source of income of No-for-Profit organisation is legacies, donations and subscriptions. A non-for-Profit organisations is set up for promoting science, commerce, social cause etc. 

The main objective of non-for-profit organisations is providing services. The services provided by the not-for-profit organisations are meant to satisfy the needs of the people like joining as member and receive medicines at very low cost.

The organisations which are set up for providing services are called as not-for-profit organisations. They are set up for purpose other than profit for promoting science, religion, social cause etc. Hence, the organisation meant for a social cause are categorized as Not-for-profit organisation. 

In a double entry system, every transaction has two effects. One is debit and other is credit. In Trial Balance, balances of all the ledger accounts are recorded. If debit side of trial balance matches with credit side it shows the mathematical accuracy of all the accounts. 

The funds raised by not-for-profit-organisation are transferred to the capital fund. This is because like any other profit earning organisation they don't have a capital account to be shown in balance sheet. So, the excess of assets over liabilities is credited to capital fund. 

The not-for-profit organisations are the ones which are responsible for the welfare of society and are a type of places which run without considering the profit. This type of organisation is funded mainly by the donations given by people and in return they are obliged to take care of the welfare of the society.  

A Charitable organisation is an organization whose main objective is social well being. Charitable organisations often depend on donations. Corporation, Audit firms and Insurance companies work for profit motive. They can not be considered as Non- profit organizations. 

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Not for Profit organisations are formed for providing service to specific group or public at large such as education, health care, sports and so on. These are organised as charitable trusts/ societies and subscribers to such organisations are called members. These organisations have service as the main objective. Normally these organisations do not undertake any business activity and are managed by trustees/executive committee. these committee is elected by its members.