Difference between Not for Profit and Profit Organizations

Not for profit organisation and profit organisations both provide some goods and services to public. Both can be clubs, hospitals, libraries, schools and other organisation. But still there are lots of differences between them which we can show in following points.

Basis of Difference		Not for Profit  Organizations		Profit Organizations
1. Aim		Main aim of such organisation is to do the welfare of society.		Main aim of such organisations is to earn the money.
2. Capital Vs  Funds		These organisation does not invest capital but invest funds and records such funds in the balance sheet in the form of donation funds, welfare funds etc.		Such organisation invest money in the form of capital and they are interested to get return on it.
3. Financial Statements		Main financial statements of these organisations are a) Receipts and payments account b) Income and expenditure account c) Balance Sheet		Main financial statement of these organisations are a) Manufacturing account b) Trading and profit and loss account c) Balance Sheet d) Cash flow statement
4. Performance		Performance of such organisation is calculated the number of quality welfare activities to the society. For example, a not for organisation provides 10000 free dresses to poor community. So, such organisation will show only surplus in the income and expenditure account, if donation and other earning is more than its expenditure.		Such organisations show their performance in the form of earned net profit in its income and expenditure account.
5. Dividend		Such organisations do not distribute their surplus to members in the form of dividend.		Such organisations distribute their net profit among members in the form of dividend.

Category : 11th Accounting Notes