what is non-profit organisations? with a solved example.
Not-for-Profit Organisations (NPO) are set up with the prime objective of providing services and not to earn profit thereby enhancing the welfare of society. Such organisations include schools, hospitals, trade unions, religious organisations, etc. The person/s or the groups of individuals who govern and manage the working of an NPO are known as trustees. NPO's main sources of income are donations, subscriptions, life membership fees, grants etc. As these organisations are not set up with profit motive, they do not prepare Trading and Profit and Loss Account. Instead, they maintain Receipt and Payments Account, Income and Expenditure Account and Balance Sheet.
A non-profit organisation is an organisation that doesn't run for making profit.
Its accounting is done by recepits and payments account then income and expenditure account then balance sheet.
This is ascertained in order to know how much funds and donations they received and how much they spent over it and how much subscriptions they received and what is the state of their assets.