"Non profit organisations are set up for the welfare of the society or for the promotion of art and culture in the society. These organisations do not manufacture, purchase or sell goods or provide services. Thus, they do not need to prepare trading and profit and loss accounts. They credit the funds received to the capital fund or general fund accounts. Nonprofit accounting relies on using the statement of financial position (balance sheet), statement of activities (income statement), and cash flow statement. The statement of financial position gives you a screenshot of the health of your nonprofit during a period of time. Accounting helps measure organizations' financial strength. Since nonprofit organizations have different financial goals than for-profit companies, the accounting practices of both differ. While nonprofits do generate revenue, the purpose is to pay for programs and cover operating costs. The final accounts of these organisations consist of: receipts and payments a/c, income and expenditure a/c and balance sheet."

Manju VP

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