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Which of the following type of entities commonly uses fund accounting for internal reporting purposes?

1) Government organizations
2) Non-profit organizations
3) For-profit organizations
4) Individuals

User Timber
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1 Answer

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Final answer:

Entities that commonly use fund accounting for internal reporting include government organizations and non-profit organizations, as it helps them manage funds according to specific purposes and regulations.

Step-by-step explanation:

Fund accounting is most commonly used by certain types of entities for internal reporting purposes. These entities include government organizations, non-profit organizations, and other organizations beyond those that exist to make a profit. Fund accounting allows these entities to track and report on funds that have been earmarked for specific purposes, such as grants, donations, or operational goals.

Unlike for-profit businesses that focus on profitability, non-profit organizations, including welfare groups, churches, hospitals, schools, museums, and others, utilize fund accounting to ensure they manage their funds according to their non-profit missions and comply with regulations. For-profit organizations and individuals typically use other accounting methods focused on profit generation and personal finance, respectively.

User Iraklis Bekiaris
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