Accounting And Financial Reporting Methods

894 Words Sep 19th, 2015 4 Pages
A non-profit organization is an organization exempted from making tax payments and its main objective is to offer the public with services without making any profits. It can be classified as a charitable, religious, educational or scientific organization (Strydom & Stephen, 2014). Its excess funds are not shared among its stakeholders as cash dividend; rather they are reinvested back to the organization in the pursuance of its objectives. On the other hand, the sole purpose of the for-profit organizations is literally to make profits, share the dividends among the stakeholders or reinvent it back into the business. . As such, all its business objectives are geared towards raising more capital while considering the ethical issues that may arise in the pursuance of these goals.
The for-profit and non-profit organizations share common characteristics. For instance, they both make financial decisions that will help them to raise enough capital so as to meet their objectives. They also implement strategic planning as part and parcel of their business model. Accounting and financial reporting methods are used in both organizations to assess their performance. The organizational structures in both organizations are also similar. Despite the similarities, the two organizations also have differences. For example, they have diverse stakeholders who largely determine their business plans. Unlike the for-profit organizations, the non-profit organizations are often prone to…
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