CA Articles Difference Between General Fund And Capital Fund

Query about capital fund and General Fund is certain to arise while solving Accounting for Non-Profit Organisations.

Non-Profit organisations are entities rum not for profit motive. These are generally governed by a Group of Trustees. They stand in fiduciary relationship with the organization. Profits earned by the Non-Profit Organisation is not distributed but a special account is credited i.e. Capital Fund(Accumulated Fund). Capital Fund represents amount contributed by Members or Trustees. If however members have not contributed any amount, the name should be Accumulated fund.

General fund can be created but is not necessary in Balance Sheet of NPO's.

DIFFERENCE :

Firstly Capital Fund is adjusted with the annual surplus or deficit. General Fund is credited only in case of surplus i.e loss is adjusted with Capital Fund. Secondly, Amount contributed by Members can be credited only in Capital Fund not general fund.


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