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Fund accounting is an accounting system for recording resources whose use has been limited by the donor, grant authority, governing agency, or other individuals or organisations or by law. [1] It emphasizes accountability rather than profitability , and is used by nonprofit organizations and by governments.
While not-for-profit organizations and non-profit organizations (NPO) are distinct legal entities, the terms are sometimes used interchangeably. [3] An NFPO must be differentiated from a NPO as they are not formed explicitly for the public good as an NPO must be, and NFPOs are considered "recreational organizations", meaning that they do not ...
Logo of the United Nations Children's Fund (UNICEF), an organization of the United Nations. A nonprofit organization (NPO), also known as a nonbusiness entity, [1] nonprofit institution, [2] not-for-profit organisation, [3] or simply a nonprofit, [a] is a non-governmental (private) legal entity organized and operated for a collective, public or social benefit, as opposed to an entity that ...
The for-profit entity may also be directed by a sole proprietor, while a non-profit organization needs a board of directors. Like any other for-profit organization, it will base its accounting on the quarterly income, whereas a non-profit charity will purely focus on the activities carried out. [10]
A mutual-benefit nonprofit corporation or membership corporation, in the United States, is a type of nonprofit corporation chartered by a state government that exists to serve its members in ways other than obtaining and distributing profits to them. Therefore, it cannot obtain IRS 501(c)(3) non-profit status as a charitable organization. [4] [5]
In a non-profit corporation, the "agency problem" is even more difficult than in the for-profit sector, because the management of a non-profit is not even theoretically subject to removal by the charitable beneficiaries. The board of directors of most charities is self-perpetuating, with new members chosen by vote of the existing members.
The objectives to which accounting reports to differ significantly from that for which generally accepted accounting practice has been developed for in the private (business) sector; & The usage of the results of accounting processes of government differs significantly from the use thereof in the private sector.
Unlike non-profit organizations the policies of these organizations are usually profit oriented. Managers (corporate employees) here have a profit oriented mindset and aim at maximising the revenue of the firm which in turn contributes to the dividends (in case of public limited) or profits of the shareholders/owners. [4]