Nonprofit And For-Profit Accounting

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Recommended: Similarities between profit and nonprofit organizations

The calculation of inventory expense on the operations statement and the posted balance on the statement of condition (balance sheet) may be approached in several different ways. List and discuss the various methods of inventory valuation that may be used. Indicate in your response why a certain method may be used in certain situations. What are predominant methods used in health care organizations (tax exempt or for profit)
In Inventories are sold, and they are purchased on a continuous basis. Due to the varying market conditions, the prices of the inventories may change and as a result, valuation of inventory is imperative. There are various methods that organizations use in valuing stocks. The most common methods are:
LIFO
The LIFO approach …show more content…

For instance, the profit making health organizations have the main intention of creating profits for the shareholders while the nonprofit organizations are created to further their mission (Knowing the Differences Between Nonprofit and For-Profit Accounting , 2015). Just the way these organizations differ in their purpose and foundation, they also differ in their accounting procedures. Their financial statements are presented in different ways. The financial statements prepared at the end of a year are also very different. The main reason for these differences is because the two organizations follow different accounting standards. In this part, I will lay an explicit focus on how the two organizations present the various items in the owners’ equity statement (Baker, …show more content…

For example, in a profit making organization, the assets will be classified as either noncurrent assets, intangible assets or as current assets. However, this is not the case in nonprofit healthcare organizations. For nonprofit healthcare organizations, assets are classified as permanently restricted assets, which refers to assets that cannot be used up. These assets can be current or noncurrent assets, but the donor restricts their use. On the other hand, they also have unrestricted assets (Baker, 2013). These are assets that do not have any restriction, and the organization can use them (Baker,

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