Property, Plant, And Equipment For Profit Entities

More specifically, cash flow for example; for-profit organization stake holders would expect a steady cash flow and even mirror that flow as a sign of success. On the other hand, in a non-profit cash flow may not be as steady so financial management expectations would differ.

According to our text, “Not-for-profit organizations lack a residual ownership claim and the organization’s purpose is something other than to provide goods and services at a profit.” “Because significant resources are provided to governments and not-for-profit organizations, financial reporting by these organizations is important.” (Page 2).

Depreciation is the loss in value of an asset / building over time due to wear and tear, physical deterioration and age. Depreciation is treated as an expense and is a line item on your income statement but must be applied only to the building and not the land (since land does not wear out over time). You will be able to depreciate the building over a period of 39 years using the Modified Accelerated Cost Recovery System (MACRS). IRS Publication 946 contains the rules and guidelines governing depreciation of non-residential or commercial property.

The contribution ratio of XYZ Non-Profit Corporation for the years 2002 through 2004 are shown in Table 3. In all three years the largest revenue source for the XYZ Non-Profit Corporation was grant income. Grant income may be subject to federal, state, or local government budget funding availability; it also may be subject to deadlines or eligibility criteria which may change from year to year. In 2002 and 2003 the ratio was above 0.5 figures that it should be below, however in both 2003 and 2004 the number decreased. By 2004, the ratio was at 0.49 and if the decreasing trend continues over time then it will give the agency more financial flexibility in the event that the grants become unavailable in the future.

Anna Marie’s Alliance is classified under 501 (c) (3) classification of tax exempt status since it is an organization operated for philanthropic purposes. Stakeholders of nonprofit organizations that use not-for-profit financial statements include donors, grantors, members, lenders, consumers, and others who provide resources to the not-for-profit organizations (Reck, Lowensohn, & Wilson, 2013, p. 543). It is usual for some not-for-profit entities to use cash basis of accounting for internal

Equity in a not-for-profit is known as net assets and for an investor-owned business it is termed as stockholder’s equity because it is owned by the investors/stockholders.

I would want to know whether Sally actually donated, or only promised, to donate the money. There is a huge difference since the money is only deductible once the organization pays.

Not for profit organisations consist of organisations that are not run for the profit or personal gain of individual/s. They are often referred to as charities and provide benefit services to society, often encouraging people to band together by sharing resources to achieve a common goal. Profits can be obtained by these organisations but must applied for the organisations purposes. These organisations include Surf life-saving, Churches, and Salvation Army etc. (Sessoms, 2014).

Depreciation is the reduction in the value of certain fixed assets. It is a periodic reduction of fixed assets, usually done every year. Fixed assets are assets that add value to the company. Examples of fixed assets that can be depreciated are vehicles, buildings, machinery, equipment and fixture and fittings. The only fixed asset that is not depreciated is land, because it is not worn-out overtime, unless natural resources are being exploited. When a company buys a new fixed asset it doesn’t account for the full cost of it as one single large expense, instead the expense is spread over the life time of the asset. This is done by depreciating the asset. For example a company purchases a CNC router for €50,000 and will be used for five year. If they pay the full amount in the

Stakeholders play a critical role in the management and decision-making process of an organization. An example of a stakeholder includes employees, managers, patients, vendors, suppliers, the community, creditors, customers and the government (Daft, 2013). Also, Daft (2013) says, “Stakeholders are groups “within or outside of the organization that has a stake in the organization’s performance” (p. 23). There are a few differences surrounding stakeholder expectations between non-profit and for-profit organizations. The differences in nonprofit organizations and for-profit business organizations are the direction of activities for the end goal (Daft, 2013). Although it is very difficult to measure the impact that a nonprofit has on society, community, or a particular group as opposed to evaluating an income statement from a for-pro-profit organization. The same level of attention should be paid to stakeholder for nonprofit organizations as stakeholders of for-profit organizations.

This paper will examine budgeting procedures for profit and non-profit businesses and compare similarities, and if they exist, differences in accounting practices. This paper will also attempt to review what is Generally Accepted Accounting Procedures (GAAP) for budgeting for any organization to be successful.

The main purpose of commercial organization is to earn money for its owners. The NPOs can’t have owners, as this entity is intended to serve the population, and the law clearly defines that the property (with the concomitant extraction of private benefits) is incompatible with serving the public interest. ## So non-profit organization is the organization that has no profit as the main objective of its activity and doesn’t distribute the profits among the participants. This doesn’t mean that non-profit organizations can’t make money, but the money should go to public purposes for which organization was created. These funds can also be set aside for future programs or transferred to other organizations working for the benefit of society. In this way the NPOs can engage business activities: to produce goods and services, acquire and dispose of securities and property and non-property rights, participate in the economic companies and limited partnerships as an investor.

A not for profit organization is a corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive (Legal, 2013).” There are immense community benefits as a not-for-profit generally accepts everyone regardless of ability to pay. Nonprofit organizations are granted tax-exempt status which helps them to provide services to the public and are expected to be effective managers of their finances as well as being efficient (Financial Management, 2010). In doing so, they can gain exemptions from federal and state incomes taxes and have the ability to solicit tax-deductible contributions (Financial Management, 2010). Organization must follow legal financial

Any company aim is to increase the profit for the share holders, receive dividend (distribution of profits) in order to invest again or issue shares (selling part of the capital, method mainly used by big business to avoid asking bank loans and have liquidity – cash flow), take bank loans, while non for profit organization aim, is not to gain profit or save money but to spend for social purposes, explaining how the money was spent. There are four main types of charities structure; Charitable incorporated organization, Charitable Company,

A Non-profit Organisation (NPO) is an establishment that uses its funding for the pursuit of a specific purpose such as for a charitable cause (Lorette, 2015). It is different from a for-profit organisation as its objective is to provide greater good to the society rather than to maximise the wealth of its stakeholders. The surplus revenues of an NPO are used for either its expansion, self-preservation or plans and no part of the profit is distributed to its members. NPOs are increasingly starting to operate like traditional business organisations as strategic planning and marketing is imperative for their survival.