Question

WEEK 6 DISCUSSION “Contributions and Investments: Not-for-Profit versus Business”

How do not-for-profits differ from governments in the way they account for business-type activities, such as dining halls, gift shops and admission fees? Also, in what significant way do not-for-profits account for investments differently from businesses?

Answer 1

Not for profit organizations are more concerned about the charitable activities rather than development activities. Development activities are done by the government and charitable activities are more done and organized by the NGO’s.

For accounting of dining halls by the government it is treated as public welfare activity by the government, however this is treated as charitable activity by the NGO’s. regarding the admission fees it is taken as income by the government or as a recovery of the expenditure but if this in case of NGO this is taken as donations that will be used for giving further benefits to the public.

NGO only sees that how much they have in revenue over the expenditure to make more charities, in case of government they prepare financial statements to show how much is expensed out of the grants received.