IMPORTANCE OF ACCOUNTING TO NON – PROFIT MAKING ORGANIZATION

IMPORTANCE OF ACCOUNTING TO NON – PROFIT MAKING ORGANIZATION

ABSTRACT

This study is titled importance of Accounting to non profit making organization

What profit accounting does for non profit oriented organization is to enable the management is measuring performance decision making and adequate planning in finding out some possible solutions to the numerous problems. In chapter one, it deals with introduction background of the study, statement of study purpose of study significance of study research questions etc

Hence, proper accounting is required in non profit making organization in order to ascertain the indebtedness of the organization and also pinpoint ways by which settlements may be made

Chapter two deals with the literature review, importance of accounting to non profit making organization, the effects of accounting to non profit making organization significance role of accounting to non profit making organization etc

The researcher work ends in chapter three with summary, conclusions and recommendations.

TABLE OF CONTENTS

Title page———————————————           i

Approval page—————————————-           ii

Dedication——————————————–           iii

Acknowledgement————————————           iv

Abstract ———————————————-           vi

Table of contents————————————-           v

CHAPTER ONE

1.0  Introduction————————————-           1

1.1  Background of the study————————    1

1.2  Statement of the study————————–   6

1.3  Purpose of the study—————————–   7

1.4  Significance of the study————————-   7

1.5  Research questions——————————-  8

1.6  Hypothesis—————————————– 9

1.7  Scope of the study———————————       9

1.8  Limitations of the study—————————-       10

CHAPTER TWO

• Literature review——————————– 11

2.1  The importance of accounting to non-profit

making organization—————————–   14

• The effects of accounting to non-profit

making organization——————————  15

• The significant role of accounting to non-profit

making organization——————————  16

• The role of accounting to non-profit

making organization——————————  22

• The summary of the chapter——————— 23

CHAPTER FIVE

• Summary of findings—————————– 30

5.1  Conclusions—————————————  31

5.2 Recommendation———————————

5.3 Suggestions for further study——————–    33

Reference—————————————–  34

APPENDIX

CHAPTER ONE

1.0  INTRODUCTION

1.1  BACKGROUND OF THE STUDY

American accounting Association defined Accounting as the process of identifying, measuring and communicating economic information to permit inform judgment and decisions by the users of the information. This information is presented system matically and accurately recorded financial report about an entity engage in economic activity to users of such report.

(Akeju, 2003, 2003; 29)

In this study accounting is a systematic record measurement and economic process used to report on the financial activities of association not for profit making motive, not for profit organization as defined by Akeju (2002) ‘’ are those organization which are established not the objective of making profit and distributing such profit to their members in form of interest on capital in the business organization to pursue the objective of which the business is established for’’

The name not for profit can be misleading because the impression that the business are not allowed to partake in profit making activities this is not such, the business are allowed under law to undertake any lawful business activities not against their constitution and use the net cash flow for which they are established therefore, it is possible that not for profit making organization undertake tracing activities which can bring profit to them but such profit is not to be distributed as a result to the members in form of interest or dividend.

Organization that fall under non-profit motive include public and private organization which set up to promote art, culture, religion, science, social club and so not. Examples of them includes stride unions student unions, sports, religion, social clubs and so no. it is established by members of like minds do their welfare, they are required to be registered as an association under the companies and Allied matters Decree no 1 of 1990 as amended. They are intended for profit but they indulge in any activities that is profit oriented

The official of these organizations are elected mostly for their commitment than for their commitment than for the financial knowledge. Therefore, only the simplest records are maintained including a cash book periodically, the records are passed to the associations accountant who many prepare a receipt and payments account. If and expenditure account. Determines the accumulated fund and finally close it up by a balance sheet for the financially period

Normally the association in this range may carry out activities in different several ways there may not be uniform title for such transactions amongst the organizations. As a result such similar transactions are financially treated alike despite the different in title they may bear. Then the financial statement whether the reported results of the organization truly reflects its operations

The accounting entries of a non-profit making organization is governed by the basic principles in book keeping and accounts. It is recorded like the way incomplete records is recorded because most of the accounting information is not available as they are provided and maintained by incompetent staff. However, financial report produced as based on the reputations of the associations, some associations in line with their cord of operations requires that its officers should prepare and present to members and users monthly, quarterly semi annually or annually reports since most association prepare and present financial statement annually In any period a small profit or loss usually arises. In the long term however, profits are accumulated only to the extent that they are needed, for example to enable self financing expansion to take place. The associations organize fund raising activities to improve their financials for instance, dances and parties could be organized. Also a bar to provide refreshment to members at commercial rates could be established where the activities is for a temporary nature as is in the case of dances and parties, the expenses is simply set off against revenue in the income and expenditure account. But where the activities are on the permanent basis, a separate trading account should be prepared and the profit or loss from the activity is transferred to the income and expenditure account.

The financial statement of the non-making organization is probably very important and most relevant source of information to the members, management of the association and interested outsiders. This is because they indicate the general condition for the organization and used in comparing past result with current one.

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