Analyse the accounting system is a non-profit organization
Answers
Answer:
Non-profit accounting refers to the recording and reporting of business transactions of a non-profit organization. Such an entity one that has no ownership interests and has an operating purpose other than to earn a profit. It also receives significant contributions from third parties that do not expect a return. Here are some highlights.
· Net assets take the place of equity in the balance sheet, since there are no investors to take an equity position
· Net assets are classified as with donor restrictions or without donor restrictions. Assets without donor restrictions can be used for any purpose.
· A non-profit exists for a certain program. You can view the revenues and expenses associated with each program
· Costs are assigned to the management and administration classification, with the intent being to keep costs as low as possible
· Financial statements of a non-profit are different as the statement of activities replaces income statement and statement of financial position replaces the balance sheet.
Explanation:
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Answer:
You can choose a cash-basis or an accrual accounting system for nonprofit organization. Cash-basis accounting is a system where you record expenses or income when you actually pay or receive them, not when the transaction takes place. For example, you run a nonprofit where members must pay dues.