Not for Profit Accounting
Abstract
Have you ever wondered how not-for-profit organizations are not-for-profit? Or how not-for-profit organizations can operate at an accounting profit but still be considered a not-for-profit organization? Over the year’, not-for-profit organizations have had many changes in rules and regulations set forth for not-for-profit organizations to abide by. There are three major financial statements involved with not-for-profit organizations and one voluntary financial statement, plus four key governmental and federal agencies involved with not-for-profit accounting. There are some key differences between not-for-profit organizations and for-profit businesses. Also, how not-for-profit organizations can keep a tax exempt status. I did not realize there were so many parts that go with not-for-profit accounting. It takes a lot of work to keep not-for-profit organizations going not just internally but externally as well. When people are willing to put in time, effort, and money it is what helps not-for-profit organizations be so successful.
In order to maintain not-for-profit status, organizations must follow a strict set of a guideline’s, set forth by federal and governmental agencies on their financial statements and of the accounting basis. A not-for-profit organization is defined as, “an entity that possesses the following characteristics: (1) receives significant resources from donors who do not expect equivalent value in return; (2) operates for purposes other than to provide goods or services at a profit; and (3) lacks an identifiable individual or group of individuals who hold a legally enforceable residual claim. Entities that fall outside this definition include all investor-owned enterprises and other organizations that provide economic benefits to the owners, members, or participants.” (p. G-12) A for-profit organization is a business whose main goal is making a profit. Non-profit and for-profit have a broad similarity; they both operate at
Have you ever wondered how not-for-profit organizations are not-for-profit? Or how not-for-profit organizations can operate at an accounting profit but still be considered a not-for-profit organization? Over the year’, not-for-profit organizations have had many changes in rules and regulations set forth for not-for-profit organizations to abide by. There are three major financial statements involved with not-for-profit organizations and one voluntary financial statement, plus four key governmental and federal agencies involved with not-for-profit accounting. There are some key differences between not-for-profit organizations and for-profit businesses. Also, how not-for-profit organizations can keep a tax exempt status. I did not realize there were so many parts that go with not-for-profit accounting. It takes a lot of work to keep not-for-profit organizations going not just internally but externally as well. When people are willing to put in time, effort, and money it is what helps not-for-profit organizations be so successful.
In order to maintain not-for-profit status, organizations must follow a strict set of a guideline’s, set forth by federal and governmental agencies on their financial statements and of the accounting basis. A not-for-profit organization is defined as, “an entity that possesses the following characteristics: (1) receives significant resources from donors who do not expect equivalent value in return; (2) operates for purposes other than to provide goods or services at a profit; and (3) lacks an identifiable individual or group of individuals who hold a legally enforceable residual claim. Entities that fall outside this definition include all investor-owned enterprises and other organizations that provide economic benefits to the owners, members, or participants.” (p. G-12) A for-profit organization is a business whose main goal is making a profit. Non-profit and for-profit have a broad similarity; they both operate at
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