• 1 Marks

FA – May 2023 – L1 – SA – Q20 – Accounts of Not-for-Profit Entities

Identifying the term used for the difference between assets and liabilities in a not-for-profit organization.

The difference between the assets and liabilities of a not-for-profit organisation is called:

A. Net asset

B. Net liability

C. Accumulated fund

D. Working capital

E. Net capital

C

Explanation:
In not-for-profit organizations, the difference between assets and liabilities is referred to as the “Accumulated Fund.” This represents the total equity or net worth of the organization, similar to retained earnings in a for-profit business.

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