Question

But when it comes to the non-profit versus for-profit business how do they compare? Your assignment is to analyze this using a comparison format. Let’s see which side you are on. In 500 words or more, answer the questions listed below. How do their objectives differ? How do they generate revenue? How do they control and report expenses/expenditures? How do they measure and report profit? How is equity and ownership reported? Reflect on your future career goals as an accountant. It is obvious that both non-profit and for-profit businesses need accountants; but, how does their focus and job differ? Do non-profit businesses pay competitively to for-profit businesses? Now that you have compared the two business types and the role accountants play along with their compensation, where do you see yourself fitting and why?

Answer 1

The key difference between a for profit and a non profit is that one is organized to make money for its owners and the other is not. A non profit means to serve the society, charitable, educational, scientific or literary purpose. this distinction in purpose between the two types of organizations is what drives most of other differences between non profits and profits.

All companies have different purposes, but this where the differences between the non profit and for profit is the starkest while for profit organisations there might be many goals but their primary goal is to make profit and produce effective products and services that are valuable to customers companies develop products and services that are either directly solve problems of buyers or increase the effeciencies. A non profit, as against, does not priortize profits and instead dedicated to promoting social affairs or advocating for a particular stand point. success for non profit is measured on an organization accomplishing its philantrophic mission.

most important aspect to run a organizattion is establishing a consistent method of funding projects and operations. for profit tend to fund themselves with bank loans, local investors and generate revenues by selling their products and services. non profits take a different approach by seeking out private donations of time and money, sponsorships from corporates, government grants their main source of revenues are these types of funding only.

for profit organizations they report all their expenses in the profit and loss account this is because for profit organizations need to find out the actual profit which they have earned in a period but non profit organizations report their expenditures to income and expenditure account and receipt and payment account through which they only allocate the expenses which have done during a period.

profit organizations measures profit with comparing the expenses to the sales they have made in a particular period and report that profit in the balancesheet of the organization. but non profit organizations measures their surplus or deficit not the profit or loss that surplus or deficit transferred to the capital fund.

equity and ownership is reported in profit organizations on the basis of kind of organization if there is a company there owners are shareholders if there is sole proprietorship its owner is that sole proprietor in non profit organizations there is board of directors, trustees, committees or governing bodies who are owners and look after the management of a non profit organization.

yes both types of organizations whether profit oriented or not needs accountant but their is difference between their roles in the organizations in profit oriented organizations accountant is required to record the transactions and find out whether the profit is coming on its pace or not and if there is lack in anything he must tell the management about so it can boost up the profits as the motive of the organization but in non profit organizations there is also accountant required to record transactions of the organization and to find out whether there is surplus or deficit from the projects performed by the organization.

of course non profit businesses pay competitively to profit organization because there is difference in the role of accountants in both the organizations there is way much load of responsibilities in the profit organizations on the accountants then the non profit business.