Introduction
The accounting for not-for-profit organizations is different from that of profit-making organizations. It is because the former does not aim to earn profits but to serve a specific purpose.

Non-fund based accounting
Non-fund based accounting relates to the income and expenditure account of not-for-profit organizations. The following are the key features of non-fund based accounting:

• It records all the revenue and expenses of the organization.


• It is prepared on an accrual basis, meaning that revenue is recognized when earned, and expenses are recognized when incurred.


• It does not include any items related to the capital or reserve funds of the organization.


• It shows the net surplus or deficit of the organization for a particular period.


• It provides an overview of the organization's financial performance.

Income and expenditure account
The income and expenditure account is the primary financial statement of not-for-profit organizations. It records all the revenue and expenses incurred during a particular period. The following are the key features of the income and expenditure account:

• It shows the organization's revenue from various sources, such as donations, grants, and membership fees.


• It shows the organization's expenses, such as salaries, rent, and office expenses.


• It shows the net surplus or deficit for a particular period.


• It provides an overview of the organization's financial performance for a particular period.


• It is prepared on an accrual basis.

Conclusion
Non-fund based accounting is an essential aspect of accounting for not-for-profit organizations. It helps in recording all the revenue and expenses of the organization and provides an overview of the financial performance. The income and expenditure account is the primary financial statement that shows the organization's revenue and expenses, net surplus or deficit, and financial performance for a particular period.