Respected Sir , my question is that when NPO receives fund for creating assets then when asset is created equal amount is transferred to capital reserve but why it is not income for NPO as it is getting asset free of cost ?
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Fund based accounting for NPO
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Funds received for assets are restricted donations, not revenue. They are recorded as liabilities to preserve the integrity of the Income & Expenditure account, and are only moved to the Capital Fund once the asset is acquired, ensuring the NPO's true operational health is transparently reported.
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