Difference between Non-profit and profit Organisation

The difference between Not-for-profit Organisations and Profit Earning Organisation

The major difference between Non-profit and profit Organisations is on the basis of nature. The assets are those things that will provide benefits in the future but liabilities are those things, which the business has to pay in the future. To know the more difference between Current and Current Liabilities, we have to know the meaning of both terms. So, the meaning of both terms are explained below: –

Meaning of Non-profit Organisation: –

The Non-profit Organisation is that Organisation which did not do their work for earning profit rather than its main objective is to do work to achieve a specific goal for the welfare of society or its members. This is also known as non-profit Organisations.

The type of Organisation run its operation mainly on the donations, entrance fee, subscription fee, or membership fee. 

Examples: –

  • Charitable Hospital
  • Charitable School, College or Educational Institutions
  • Particulars Club of any Society, Colony or city
  • Gurudwaras, Temple, Church, and Masjids

To know more in the detail, please check out the following link:

https://tutorstips.com/not-for-profit-organisations/

Meaning of Profit Earning Organisation: –

The profit Organisation is the Organisation which exists to make a profit for its owner(s) Because profit is the fuel for every business without profit business can not v survived for a long period of time. 

Examples: –

  • Retail stores like Reliance retails
  • TeleCommunication like Reliance Jio.
  • Power & Energy Like Reliance Power

3. Chart of Differences: –

The differences between the Non-Profit and Profit Organisation are shown in the following chat. 

Basis of Difference

Non-Profit Organisation

Profit Organisation

Meaning

They did not do their work for earning profit rather than its main objective is to do work to achieve a specific goal for the welfare of society or its members. The profit Organisations is that Organisation which exists to make a profit for its owner(s)

Main Objective

To serve society for a better future.  To earn more profit to run the business because profit is the fuel of every business.

Source of Revenue

The main source of revenue for the NPO is Donations, grants, Membership fee, and entrance fee The main source of revenue for the Profit Organisation is the amount received from selling its products and services. 

Financial Statement

Financial Statements included the following statements
1. Receipts and payment A/c
2. Income and Expenditure A/c
3. Balance Sheet
Financial Statements included the following statements
1. Trading A/c
2. Profit/Loss A/c or Income statement
3. Balance Sheet
4. Cash flow Statement

Managed By 

This type of business is managed by its trustees, committees or any one person whose authorised by the whole members. It includes mainly three types of business. So it is managed as per the type of business: –
1. Sole Proprietorship – Managed by its Owner
2. Partnerships –  Managed by its partners
3. Companies – Managed by its Directors

Funded From 

It is started with funding received from donations.  It is started with initial capital investment by its owner(s). 

Download the chart: –

If you want to download the chart please download the following image and PDF file:-

Chart of differences between Non Profit and Profit Organisation min - Difference between Non-profit and profit Organisation
Chart of differences between Non-Profit and Profit Organisation-min

application pdf - Difference between Non-profit and profit Organisation

Chart of Difference between Current Assets and Current Liabilities

 

The conclusion of Difference: –

The major difference in both terms is on the basis of nature. The Non-profit organisation is the main aim of server society for a better future and for the profit is the main aim to earn more profit by selling its products and services. 

Thanks for reading the topic

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T.S. Grewal’s Double Entry Book Keeping

 

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