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CH 1 APSCS - UCTC

This document provides an overview of accounting for public sector and non-profit organizations. It classifies organizations as commercial for-profit, which aim to generate revenue, or non-commercial not-for-profit, which provide socially desirable services without profit motive. Non-profits are further divided into public/governmental organizations created by communities to provide services, and private non-profits created by interest groups. While non-profits resemble governments in serving society without profit motive, they also have similarities to businesses in using financial management processes. Key differences are their objectives, sources of funding, ownership structures, and regulatory environment. The accounting systems for non-profits and businesses share some concepts but apply them differently based on their distinct

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67 views8 pages

CH 1 APSCS - UCTC

This document provides an overview of accounting for public sector and non-profit organizations. It classifies organizations as commercial for-profit, which aim to generate revenue, or non-commercial not-for-profit, which provide socially desirable services without profit motive. Non-profits are further divided into public/governmental organizations created by communities to provide services, and private non-profits created by interest groups. While non-profits resemble governments in serving society without profit motive, they also have similarities to businesses in using financial management processes. Key differences are their objectives, sources of funding, ownership structures, and regulatory environment. The accounting systems for non-profits and businesses share some concepts but apply them differently based on their distinct

Uploaded by

Samuel Cross
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Accounting for Public sector and civil society

Exit Exam Tutorial


Based on Blue Print
CHAPTER ONE
Over-view of FR For governmental & NFP Entities
 There are organizations whose objective is not to make profit.
These not-for-profit organizations account their resources and
financial activities under different accounting system.
CLASSIFICATION OF ORGANIZATION
Objectives
1) Commercial for Profit Organization
 Organization whose basic motive is to generate revenue for the
owners
2) Non-Commercial /Not-For-Profit Organization/
 Non-commercial /not-for-profit organization are established to
provide socially desirable services without the intention of
realizing a profit. Non profit organizations have no ownership
shares that can be sold or traded by individuals.
Cont…
 Non-profit organization in turn classified in to based on
ownership:-
 Public Non-Profit Organization/Governmental Organization/
 Governmental organizations are created by formal community action
for the purpose of providing community services and typically include
such entities as federal, state and local governing unit.
 Private Non-Profit Enterprise /Non-Governmental Non Business
Organization
 Are created by groups of people who are interested in seeing particular
services, such as education or health care provided on a non-profit
basis within the community. They are exempt from income tax.
Private not for profit organization further can be classified in to:
Charitable Organization & Membership Organization.
Characteristic of not-for-profit organization
 Non-profit organizations are in certain respect
hybrid because they have some characteristics
similar to those of governmental entities and
other characteristics similar to those of business
enterprises.
Among the features of non-profit organization
that resemble characteristics of governmental
entities are the following: Service To Society, No
Profit Motive, Stewardship For Resources,
Importance of Budget, Financed By the Citizens
Similarities Government and NFP Entities to
Business Entities
 Both are integral part of an economic system
 Both acquire resources to provide goods or services
 Both use financial management processes
 Both need financial information systems
 Both undergoes cost analyses, control and evaluation
techniques
 Both may provide similar services – e.g. transportation
systems; sanitation services; utilities, stadiums, arenas, etc
Distinguishing characteristics of governmental and other not-
for-profit organization from business organization
 Governmental and not-for-profit organizations differ in important ways
from business organizations. The basic difference can be summarized as
follows;
 Organizational Objectives
 Source of Financial Resources
 Source of finance for
 Government…………….……. Tax payers
 Not-for-profit (other) ……….... Contribution (donation)
 Business ……………………… From investors and profit generated
 Ownership Interest
 Cost Benefit Relationship
 Scope of Operation
 Regulation and control
 Accounting System
Cont…
 There is similarities and difference in the accounting system
between profit seeking and not-for-profit organization.
 Similarity
 Double entry system , Accounting cycle, Resource utilization ,
The need for preparation of financial statement , Monterey
value, Consistency , Adequate disclosure, Historical cost
 Difference
 The same concepts and terms are used in both, but with different
connotations. In not for profit accounting for example;
 Entity concept, Periodicity, Matching, Going concern
 TheEnd of Chapter
 Thank You!!!

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