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Non-Profit Organisations (NPO) 🏥

Definition: Organisations established for rendering service to society or its members, and NOT for earning profit.

  • Examples: Sports Clubs, Hospitals, Libraries, Schools, Charitable Trusts, Temples.

Main Objective: Service (Education, Health, Recreation, Religion).

Features 🌟

  1. Service Motive: Profit is not the goal.
  2. No Owners: There are no shareholders. There are Members or Trustees.
  3. Surplus/Deficit: They don't use the terms "Profit" or "Loss".
    • Profit -> Surplus (Excess of Income over Expenditure).
    • Loss -> Deficit (Excess of Expenditure over Income).
  4. Funds: Money comes from Subscriptions, Donations, and Grants.
Trading Org"Buy/Sell Goods -> Earn Profit -> Distribute to Owners."
↓
Non-Profit Org"Collect Donations -> Provide Service -> Surplus stays in Org."
Capital Fund

Since there are no owners, there is no "Capital Account". Instead, they have a Capital Fund (or General Fund) which grows over time with accumulated surplus and life membership fees.

Quiz Time! 🎯

Test Your Knowledge

Question 1 of 5

1. The primary motive of a Non-Profit Organisation is:

Profit Maximization
Service to Society
Market Dominance
Sales Growth

💡 Final Wisdom: "They work for a cause, not for applause (or money). But they still need to count the money to keep the lights on!" 💡

Next up: Receipts & Payments Account - The NPO's Cash Book! 💰

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