Differences in the accounting procedures between profit and not for profit org?
*NFP = Not For Profit. NFP accounting is sometimes called fund accounting or modified accrual method. 1. The primary purpose of NFP accounting is related to social objectives rather than profit as is the case with for profit (accrual) accounting. 2. The standard-setting organization that establishes modified accrual accounting standards for NFPs is the GASB whereas FASB sets the standards for accrual accounting (For Profit) 3. Under accrual accounting for nongovernment NFPs, the Statement of Activities (income statement) uses the term “net assets” in place of “excess” or “deficiency,” as is the case under modified accrual. Corporations simply call this the “net income.” 4. By definition, income is not a very useful accounting concept for nonprofits, but take longer to realize that the other bottom line, owner’s equity, is not a very useful idea either. 5. The relationship between revenues and expenditures is one fundamental difference between the nonprofit and for-profit organizations.
