Features of not–for–profit organisations
Following are the features of not–for–profit organisations:
1. Not–for–profit organisations are the organisations which function without any profit motive.
2. Their main aim is to provide services to a specific group or the public at large.
3. Generally, they do not undertake business or trading activities.
4. Their main sources of income include subscription from members, donations, grant-in-aid and legacies.
At the end of the accounting period, the following final accounts are prepared by not–for– profit organisations:
(i) Receipts and payments account,
(ii) Income and expenditure account and
(iii) Balance sheet
Not–for–profit organisations registered under Section 8 of the Indian Companies Act, 2013 are required to prepare their Income and Expenditure account and Balance Sheet as per Schedule III to the Indian Companies Act, 2013.
Note: In this unit, only the not–for–profit organisations not registered under the Indian Companies Act, 2013 are dealt with. Hence, Income and Expenditure account and Balance Sheet are not prepared as per Schedule III of the Indian Companies Act, 2013.
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