Question

distinctions between fund based accounting and non fund based accounting ?​

Answer 1

Difference between Fund Accounting and Non-Fund Accounting...

Fund Accounting:

1. Each fund is treated as a separate fiscal and financial accounting entity.

2. Specific Funds can be used for the purposes for which those funds were obtained; however, the General Fund can be used for meeting general and administrative expenses.

3. In addition to regulating agencies, accountability in fund accounting is towards legislature and contributors of funds.

4. Financial statements include Receipts and Payments Account, Income & Expenditure Account and Balance Sheet.

5. The final result of matching revenue with the expenses is either surplus or deficit.

6. Expenditure must be approved in budget and sanctioned by the gove­rning body.

Non-Fund Accounting :

1. The business enterprise as a whole is treated as a separate entity.

2. The combined resources of business entity can be used for any purpose of the business.

3.In addition to regulating agencies, accountability in non fund accounting is towards owners and consumers etc.

4. Financial statements include Trading Account, Profit & Loss Account and Balance Sheet.

5.The final result of matching revenue with the expenses is either profit or loss.

6. Expenditure must be as per the commercial principles. Preparation of budget is not necessary.

Answer 2

Distinction between fund based accounting and non fund based accounting are -

1. Fund based accounting is a specific system of accounting that records resources that have a restricted amount of use. This accounting system is used by non profit organizations which has to focus on the way resources were spent than the amount of profits. Non based fund accounting does not deal with financial transactions.

2. The fund based accounting considers each fund as a separate entity and the non fund based accounting follows the principle of separate legal entity.

3. The fund based accounting deals with deficit or surplus whereas the non fund based accounting deals with profit or loss.