Not-for-Profit Organization and a VHWO - Essay Example

The unique features applicable to not-for-profit organizations have made the accounting industry define them differently.
A basic concept in non-profit organizations is the net asset. This is an asset with fewer liabilities. Such assets are also called funds. Instead of showing retained earnings or owner's equity, the non-profit financial statements show net assets (Finkler, 2010). The source of their money is not through the sale of goods and services but through voluntary contributions from the public. They however provide welfare services that are not in any way motivated by profit-making.

Their definition is, therefore, not similar to for-profit organizations. They are exempted from tax-paying mainly because they are of bigger benefit to the public but to another extent will limit the revenue that the council will be collecting especially if they expand acquiring properties that previously paid tax to the council. There have been rules set by GAAP that have enabled uniformity in the not-for-profit organization in their reporting. Though there is still little difference in their reporting there is a much bigger consistency in their reporting.
Some of these organizations are charity and service organizations. They are organized as a not-for-profit corporation, a cooperative, or they exist informally. Others operate like a foundation, but they are more complex in their administration they hold more favorable taxes and are restricted in the public charities they support. Read More