Distinction between non profit concern and non trading concern

Non-trading Concerns:

Non-trading Concerns: The main objective of these concerns is to provide goods and services that fulfill a social need

Non-trading Concerns: The main sources of income of these concerns are entrance fees, subscriptions, donations, Govt. and municipals grants etc

Non-trading Concerns: The excess of income over expenditure is not distributed but is used to fulfill the needs of the concerns

Non-trading Concerns: Non-Trading concerns may be in the form of club, society, association and trust

Non-trading Concerns: In non-trading concerns, the ownership does not lie in the hands of anyone. No one can claim the ownership of these concerns, All the persons carrying on the society or club or trust are its members

Non-trading Concerns: The control and management of non-trading concerns rest in the hands of trustees, governing body and committee of management.

Non-trading Concerns: The accounts of non-trading concerns are also maintained according to the double entry system of accounting. These institutions do not maintain a full set of books but only a cashbook is maintained. Receipts end payments account is prepared instead of trial balance and Income and expenditure account is prepared to present to the members showing how much income has exceeded expenditure or vice versa.

Net Profit Concern  

Main Aim is Service:

The basic aim of non-profit organizations is to serve the society. They are working for the benefit of the society as a whole

Profit is not the Criterion:

NPO are formed for some idealistic purposes such as religious charitable providing education etc earning of profits can never be their aim

3. Surplus not distributed among its Members:

Though earning profit is not the criterion for non-profit organizations, yet there may be excess of income over expenditure or excess of expenditure over income. The former is known as ‘surplus’ and latter is known as ‘deficit’. Unlike other business, surplus or deficit of non-profit organizations is not distributed among its members. They are adjusted in the capital fund of such organizations.

4. Separate Entity:

The separate entity concept is equally applicable to non-profit organizations. Such organizations are treated as a separate entity distinct from its members.

5. Unique Names Connoting their Working:

The names of non-profit organizations denote the nature and style of their functioning. For example, JMD Educational Society, Shri Sai Keertan Mandli, Shri Sunder Dev Sports Club and Shri Sanatan Dharam Ramlila Committee etc.

6. Management by Elected Persons:

These organizations are run and managed by elected members.

7. Major Funds from Contributions and Donations etc..:

Usually, non-profit organizations are not self sufficient to run their activities with the revenue generated from their own sources, so they depend upon the subscriptions, donations and grants received from various government departments.