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The Essential Elements of Nonprofit Organizations

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The Essential Elements of Nonprofit Organizations
The Essential Elements of Nonprofit Organizations
Latavia
ACC 380: Accounting for Non-for- Profit Organizations
Instructor Lisbeth Bundli
October 6, 2013

The Essential Elements of Nonprofit Organizations
Many businesses have a purpose of providing and making money for stockholders and owners by providing services. As a result, the financial statements of these businesses allow stockholders and owners analyze and monitor the performance of the business. Nonprofit organizations have a completely different purpose. When analyzing a nonprofit organization’s financial statements there is a great deal of information to be studied. The basic financial statements of a nonprofit organization includes: The Statement of Financial Position, The Statement of Activities and The Statement of Cash Flow. Understanding a Nonprofit organization’s financial information is not only to obtain a financial health, however it is about bringing elements together to create effective financial decisions.
Majority of colleges and universities are nonprofit organizations. These colleges and universities offer a learning environment to provide education for the interests of the students.
Typically, colleges and universities receive a significant portion of their funds from donors, the town, the city and other governmental entities. Often times, these funds are indicated with particular limitations and circumstances. As a result, colleges and universities use a particular system called fund accounting. The major purpose of fund accounting is to analyze the funds that come into the organization and also to ensure that the funds are used for their intended purpose. There are three different types of funds which contribute different elements such as Governmental Funds, Propriety Funds and Fiduciary Funds. Governmental funds type includes general fund, capital projects funds, debt service funds, special revenue funds, and permanent funds.
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