Difference between NPO and Profit Organisation class 12 CBSE Board

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Looking for Difference between NPO and Profit earning organization in NPO class 12 CBSE, ISC and State Board.

Not for Profit organisation and Profit earning organisations differ in their approach completely.

In one hand NPO works only for welfare of society. On the other hand Business (profit earning) organisation main motive is just to earn profit.

Both also differ what financial statement they prepare to maintain their annual financial transactions.

We have compiled few basic differences between an Not for profit organisation and profit earning organisation below.

NPO Vs Profit Earning Organisation

BasisNPOBusiness Firm
1. MotiveMain motive to serve society and its own member with no profit motiveMain motive is to earn profits
2. Financial StatementsFinancial Statement include – Receipts and Payments account, Income and Expenditure Account and Balance Sheet.Trading account, Profit and loss account, Balance Sheet
3. Surplus vs ProfitThe net balance of Income and Expenditure account is either surplus or Deficit.The Net Balance of Profit & Loss Account is either net profit or loss.
4. Capital vs Capital FundIt does not maintain capital account. Instead they maintaining capital Fund.It maintain Capital Account.
5. Distribution of ProfitSurplus or deficit is not distributed among its members. It is added or subtracted from capital Fund.Net Profit or loss is distributed among the owners of the business.

Further Reading:-

Difference between Income and Expenditure Account and Profit & Loss Account

Difference between Receipts and Payments Account and Income & Expenditure Account

Difference between Receipts and Payments Account and Cash Book

1.NPO Basic Concepts and Theory
2.Receipts and Payments account of NPO format, features, meaning
3.Income and expenditure account of NPO format features meaning
4.Difference between income and expenditure account and Profit & Loss A/c
5.Difference between Receipts and Payments account and income and expenditure account
6.Difference between receipts and payments account and cash book
7.Difference between NPO and profit organisation class 12
1.What is Fund Based Accounting in NPO
2.Admission and Entrance fees Accounting Treatment
3.Accounting Treatment of Life Membership Fees in NPO
4.Accounting Treatment of Donation in NPO
5.Accounting Treatment of Legacy in NPO
6.Accounting Treatment of Government Grant in NPO
7.Accounting Treatment of sale of Old News paper in NPO
8.Accounting Treatment of sale of Old Sports Material in NPO
9.Accounting Treatment of Cost of Material Consumed in NPO
10.Accounting treatment of Sale of Assets in NPO
11.Accounting treatment of Subscription in NPO
12.Accounting treatment of Subscription written off in NPO
S.NNPO Chapter Solution
1.TS Grewal NPO Chapter solution 2021-22 Edition
2.DK Goyal NPO Chapter solution 2021-22 Edition
3.SK Sharma NPO Chapter solution 2021-22 Edition
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Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

Articles: 2015

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