Non-profit accounting refers to the recording and reporting of business transactions of a non-profit organization. Such an entity one that has no ownership interests and has an operating purpose other than to earn a profit. It also receives significant contributions from third parties that do not expect a return. Here are some highlights.

· Net assets take the place of equity in the balance sheet, since there are no investors to take an equity position

· Net assets are classified as with donor restrictions or without donor restrictions. Assets without donor restrictions can be used for any purpose.

· A non-profit exists for a certain program. You can view the revenues and expenses associated with each program

· Costs are assigned to the management and administration classification, with the intent being to keep costs as low as possible

· Financial statements of a non-profit are different as the statement of activities replaces income statement and statement of financial position replaces the balance sheet.