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For example, while South African companies follow International Financial Reporting Standards (IFRS), the US requires compliance with its Generally Accepted AccountingPrinciples (GAAP). IFRS is principles-based and allows for some judgment in financial reporting, while GAAP is more rigid, rules-based, and less forgiving.
The basic accountingprinciples for nonprofit organizations are the same as accounting for for-profit companies. . So let’s start with the basics, and later we’ll dig into some of the things that make nonprofit accounting unique. . How is nonprofit accounting different? Get the free guide!
You may also know it as a profit and loss statement or income and expense report. In the for-profit world, they call the difference between revenues and expenses net income. Or profit. . It shows you the “profit” of your nonprofit. But here, we call profit a “surplus” instead. Get the free guide!
In simple terms, that means the cannabis industry taxable income is closer to its revenue rather than profit. The difference between cost of goods sold and ordinary business expenses is well defined in Generally Accepted AccountingPrinciples (GAAP) but routinely ignored by small business bookkeeping services. Interest expense.
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Nonprofit organizations distinguish themselves from for-profit entities through their purpose and mission. Their mission is usually anchored on a cause or social purpose, not on the generation of profits. NPOs must adhere to these accounting policies to remain compliant with the law and maintain their tax-exempt status.
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Expansion contributes to a profitable business, but if you don’t prepare to handle rapid growth, you will ultimately hurt your bottom line and prevent your business from reaping the benefits. With split operations, there is an increased risk of inaccurate, error-prone data and a considerable loss of productivity.
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