Not-for-Profit Organizations (NPOs) operate for charitable, educational, religious, cultural, or social welfare purposes, not for profit maximization. Examples: Charitable Trusts, Educational Institutions, Hospitals, Religious Bodies, Sports Clubs, Research Organizations. Key characteristics: No profit motive (surplus used for organizational objectives), Members are stakeholders not owners, Registered under Societies Registration Act/Trusts Act/Public Charitable Institutions Act, Governed by Constitution/Memorandum. Accounting Framework: ICAI provides separate accounting standards for NPOs. Financial statements required: Receipt & Payment Account (cash basis), Income & Expenditure Account (accrual basis), Balance Sheet (statement of financial position). Objectives: Demonstrate stewardship of resources, Show how funds were utilized, Comply with regulatory requirements, Provide accountability to members and donors. Differences from For-Profit: No P&L Account showing profit (replaced by I&E Account), No shareholders, Focus on fund utilization rather than profit, Specific income sources (subscriptions, donations, grants). NPOs must maintain detailed records for Funds/Endowments separately. Accounting principles: Accrual concept, Matching principle, Going concern, Substance over form apply. Exam tip: Understand characteristics and objectives of NPOs; distinguish NPO statements from sole proprietorship statements; grasp the focus on fund utilization and stewardship.