Capital Budgeting and Non-Profits

Capital Budgeting and Nonprofits Author’s Name Institution Course Name Instructor’s Name Due Date Capital Budgeting and Nonprofits There is a clear distinction in the structural arrangement of balance sheets of for-profit and nonprofit organizations owing to the dissimilarities in their objectives. The balance sheets of for-profit companies focus on assets, liabilities, and equity since they are business ventures that look forward to making their shareholders wealthier. Equity is the residual interest in owners that may remain after paying off all the liabilities. On the other hand, nonprofits do not aim to make profits; they have no shareholders but serve a particular purpose (Indeed Editorial Team, 2024). Consequently, nonprofit balance sheets contain net assets (restricted and unrestricted) instead of equity to indicate the availability of funds constrained by the donor. Nonprofit organization's accounting is similar to for-profit accounting but slightly different in revenue recognition and reporting. Nonprofit organizations adhere to the GAAP and aim to generate revenue and a profit like for-profit organizations. Nonprofits, however, are concerned with the prudent use of resources and are accountable to the fund providers, such as t...