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Dealing with Accounting and Management of Nonprofit Organizations

What are non-profit organizations?

Nonprofit organizations, as suggested by their very names, are not concerned with profit earning but their agenda is something quite different. They are either working to further a certain social cause or to advocate a specific perspective about things. The surplus revenue here is not treated as a profit is used to take forth its activities ad to further their initial purpose. Nonprofit organizations can have tax exemptions or a charitable status. It is but obvious that they function quite differently than the business organizations, and the nonprofit organizations can be both government and non-government.

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Non Profit organization accounting:

Accounting procedure in nonprofit organization comprise of:

Income and expenditure account

Receipts and payments account, and

Balance sheet

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Income and expenditure account features:

It is an account that records profit and loss and follows the mercantile accounting system. It is a nominal account that either ends with a surplus or with a deficit or has no opening balance. Only revenue items are added in this account and it does not include the capital expenditures or incomes. The function of this account is to keep record of all expenses irrespective of the fact that they’ve been paid or not and at the same time it records all the earnings whether they’ve yet been received or not.

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Receipts and payments accounts feature:

This account can be described as a summary of bank transactions; it starts with an opening balance and ends with a closing balance. Capital as well as revenue items are recorded here and the transactions which have actually taken place find a spot in this account. This is a real which does not deal with non cash transactions and exhibits the cash position of an organization.

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