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Summary Accounting - Non-profit organizations
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3 page detailed summary of non-profit organizartions
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NON-PROFIT ORGANISATIONS:INTRODUCTION:
We are looking at non-profit organisations, for example clubs.
These can include sports clubs like the golf club, tennis club and soccer club.
These are not like professional sports clubs as they wish to make a profit like any
other business.
Businesses:
- Owner contributes capital
- Uses capital to buy stock and assets
- Adds a mark-up and sells stock
- Draws up income statement to determine profit or loss
- Owner gets profits, rewards for investments.
Sports clubs:
- Members pay subscriptions to belong to the club.
- Use the subscriptions to run the clubs and benefit the members and improve
facilities.
- The income always equal the expenses (should not make a profit)
- If there are more expenses = deficit
- If there are more incomes = surplus
CLUBS:
The main purpose of a non-profit club is to provide facilities to its members.
Even though their main goal is not to make a profit, their income should still cover
its expenses.
On the other hand the main goal of a business is to make a profit.
Formation of a club:
- A group of people with similar interests come together to discuss a plan.
- Some members will do work without getting paid.
- Members will set out rules by which members need to abide, the constitution of
the club.
- Need to have a meeting every year to elect a chairperson, vice chairperson,
secretary and treasurer.
- This annual meeting is known as the annual general meeting (AGM)
- Can give a gift to the hardest working member called an honorarium.
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