SSC CGL Exam  >  SSC CGL Notes  >  SSC CGL Tier 2 - Study Material, Online Tests, Previous Year  >  PPT - Accounting for Not-for-Profit Organisation

PPT - Accounting for Not-for-Profit Organisation | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year PDF Download

Download, print and study this document offline
Please wait while the PDF view is loading
 Page 1


CHAPTER #2
Accounting for
Non-Profit Organizations
Prepared by: Asadullah Sharifi
Lecturer at Maiwand University, Kabul
Page 2


CHAPTER #2
Accounting for
Non-Profit Organizations
Prepared by: Asadullah Sharifi
Lecturer at Maiwand University, Kabul
Definition and Explanation
? What is non-profit organization?
? There are certain organizations which are
formed not to earn profits but to render
services to their members and to the public.
Such organizations are clubs, hospitals,
libraries, colleges, charitable/religious
institutions, literary societies etc.
? These non-profit seeking entities exist with a
primary motive of providing service.
Page 3


CHAPTER #2
Accounting for
Non-Profit Organizations
Prepared by: Asadullah Sharifi
Lecturer at Maiwand University, Kabul
Definition and Explanation
? What is non-profit organization?
? There are certain organizations which are
formed not to earn profits but to render
services to their members and to the public.
Such organizations are clubs, hospitals,
libraries, colleges, charitable/religious
institutions, literary societies etc.
? These non-profit seeking entities exist with a
primary motive of providing service.
Conti…
? Services such as a club provides sports and
recreational facilities; a hospital renders medical
services; a literary society promotes art and
culture; and an association may also be formed to
protect the rights of its members.
? Though the main source of income of such
organizations is membership subscriptions,
donations and grants etc., they may also
undertake trading activities in order to earn
some profit which is also used for the furtherance
of the goals of the organization.
Page 4


CHAPTER #2
Accounting for
Non-Profit Organizations
Prepared by: Asadullah Sharifi
Lecturer at Maiwand University, Kabul
Definition and Explanation
? What is non-profit organization?
? There are certain organizations which are
formed not to earn profits but to render
services to their members and to the public.
Such organizations are clubs, hospitals,
libraries, colleges, charitable/religious
institutions, literary societies etc.
? These non-profit seeking entities exist with a
primary motive of providing service.
Conti…
? Services such as a club provides sports and
recreational facilities; a hospital renders medical
services; a literary society promotes art and
culture; and an association may also be formed to
protect the rights of its members.
? Though the main source of income of such
organizations is membership subscriptions,
donations and grants etc., they may also
undertake trading activities in order to earn
some profit which is also used for the furtherance
of the goals of the organization.
Conti…
? As the main aim of these organizations is not
to earn profits, they do not prepare Trading
and Profit and Loss A/c. But still they would
like to know whether their current incomes are
sufficient to meet their current expenses. For
this purpose they prepare an Income and
Expenditure Account which is similar to a
Profit and Loss A/c of profit seeking entity.
? A Balance Sheet is also prepared in order to
show the financial position of the non-profit
organization.
Page 5


CHAPTER #2
Accounting for
Non-Profit Organizations
Prepared by: Asadullah Sharifi
Lecturer at Maiwand University, Kabul
Definition and Explanation
? What is non-profit organization?
? There are certain organizations which are
formed not to earn profits but to render
services to their members and to the public.
Such organizations are clubs, hospitals,
libraries, colleges, charitable/religious
institutions, literary societies etc.
? These non-profit seeking entities exist with a
primary motive of providing service.
Conti…
? Services such as a club provides sports and
recreational facilities; a hospital renders medical
services; a literary society promotes art and
culture; and an association may also be formed to
protect the rights of its members.
? Though the main source of income of such
organizations is membership subscriptions,
donations and grants etc., they may also
undertake trading activities in order to earn
some profit which is also used for the furtherance
of the goals of the organization.
Conti…
? As the main aim of these organizations is not
to earn profits, they do not prepare Trading
and Profit and Loss A/c. But still they would
like to know whether their current incomes are
sufficient to meet their current expenses. For
this purpose they prepare an Income and
Expenditure Account which is similar to a
Profit and Loss A/c of profit seeking entity.
? A Balance Sheet is also prepared in order to
show the financial position of the non-profit
organization.
Final Accounts of non-profit 
organizations
? Non-Profit Organizations also prepare their
final accounts more or less on the lines of the
profit seeking organizations, which include the
following statements:
1. The Receipts and Payments Account
2. The Income and Expenditure Account
3. The Balance Sheet
Read More
1375 videos|1309 docs|994 tests

Up next

FAQs on PPT - Accounting for Not-for-Profit Organisation - SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

1. What is the purpose of accounting for not-for-profit organizations?
Ans. The purpose of accounting for not-for-profit organizations is to accurately record and report financial information to stakeholders such as donors, regulators, and the public. This helps in demonstrating transparency, accountability, and maintaining the organization's tax-exempt status.
2. How is accounting for not-for-profit organizations different from accounting for for-profit organizations?
Ans. Accounting for not-for-profit organizations differs from accounting for for-profit organizations in several ways. Not-for-profit organizations focus on achieving a mission rather than generating profits. They rely heavily on contributions and grants, and their financial statements are structured differently, emphasizing sources of support and the use of funds rather than profit and loss.
3. What are some key financial statements used in accounting for not-for-profit organizations?
Ans. Some key financial statements used in accounting for not-for-profit organizations include the Statement of Financial Position (Balance Sheet), Statement of Activities (Income Statement), Statement of Cash Flows, and Statement of Functional Expenses. These statements provide information about the organization's financial position, revenue and expenses, cash flows, and allocation of expenses by function.
4. How are contributions and grants accounted for in not-for-profit organizations?
Ans. Contributions and grants in not-for-profit organizations are typically recorded as revenue when received or promised, depending on the specific terms and conditions. They are often categorized as either unrestricted, temporarily restricted, or permanently restricted based on any donor-imposed restrictions. These categories determine how the funds can be used by the organization.
5. What are some common challenges in accounting for not-for-profit organizations?
Ans. Some common challenges in accounting for not-for-profit organizations include accurately tracking and reporting restricted funds, ensuring compliance with donor restrictions, managing complex revenue recognition rules, allocating costs to different programs and functions, and staying up-to-date with evolving accounting standards and regulations specific to the not-for-profit sector.
1375 videos|1309 docs|994 tests
Download as PDF

Up next

Explore Courses for SSC CGL exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Related Searches

Extra Questions

,

Online Tests

,

ppt

,

Exam

,

shortcuts and tricks

,

Previous Year Questions with Solutions

,

Free

,

past year papers

,

Online Tests

,

PPT - Accounting for Not-for-Profit Organisation | SSC CGL Tier 2 - Study Material

,

Objective type Questions

,

pdf

,

Summary

,

study material

,

Previous Year

,

Viva Questions

,

mock tests for examination

,

Previous Year

,

Important questions

,

PPT - Accounting for Not-for-Profit Organisation | SSC CGL Tier 2 - Study Material

,

Online Tests

,

Semester Notes

,

video lectures

,

Previous Year

,

PPT - Accounting for Not-for-Profit Organisation | SSC CGL Tier 2 - Study Material

,

MCQs

,

practice quizzes

,

Sample Paper

;