Lesson 1 – What are compliant accounting standards for nonprofits?

Without an accounting system, your nonprofit cannot know whether or not it has enough financial resources available to operate efficiently. While basic accounting principles are the same for nonprofits and for-profit businesses, the big difference is the net worth on the balance sheet. For a for-profit, the net worth represents owners’ equity. Since a nonprofit does not have owners, the net worth is represented as different classifications of net assets.