NOT-FOR- PROFIT MAKING CONCERN

Not-for-profit organizations, such as educational institutions, public hospitals, and charitable trusts, operate with the main objective of providing services rather than making profits. These organizations rely on various sources of funding like contributions, donations, and grants. Accounting for non-profit entities involves preparing financial statements such as Receipt and Payment Account, Income and Expenditure Account, and Balance Sheet, following principles similar to other organizations but with special considerations for revenue and expenses unique to non-trading entities.

• Nonprofit organizations
• Accounting treatment
• Funding sources
• Financial statements
• Not-for-profit

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1. NOT-FOR- PROFIT MAKING CONCERN

2. NOT-FOR- PROFIT MAKING CONCERN Until now, we have seen accounting treatment for business transaction of business entities whose main objective is to earn profit. There are certain organisations that are not established for making profit but to provide some service. These services are generally given to members who make subscriptions to avail them. These are also called as nontrading entities. The examples of such organisations are: Gymkhana / sports clubs Educational institutions Public hospitals Libraries - Cultural clubs like Rotary or Lions club Religious institutions Charitable trusts - - - - - -

3. These organisations get their funds in the form of contributions by way of entrance fees, life membership fees, annual subscriptions, donations, grants, legacies etc. The accounting of such organisations is based on similar principles followed by the other organisations. Given the nature of these institutions, there are certain items of revenue and expenses that need special understanding so that accounting treatment could be correctly decided.

4. Financial Statement These non-profit organisations prepare Receipt and Payment Account Income and Expenditure Account Balance Sheet