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Question: Discuss About The Financial Management In Profit Organization? Answer: Introduction The study aims to identify and evaluate the key differences of financial management between a profit and a not-for-profit organization, where the two different organizations are selected to support the understanding of the need of financial management in not-for-profit organization (Bryce, 2017). Demonstrating key differences of financial management There are several differences between a profit and not-for- profit organisation. While the aim of the profit organisation is to generate income by selling goods and providing services. Their nature of business is to earn profit. On the flipside, not-for-profit organizations are more service oriented, where they raise funds by the way of donations, for instances, public hospitals and trusts are not directly involved in earning revenue (Arvidson and Lyon, 2014, p.875). On the financial aspect, profit motive organizations need to maintain financial statements according to the rules of AASB and IASB. However, only income and expenditure account, receipt and payment account along with classified balance sheet are required to be prepared in not-for-profit organizations. Profit organisation is managed either by sole proprietor partner or by directors whereas the not-for-profit organisation is managed by either committee, trustees or by governing bodies. Money earned beyond by the profit organisation is delivered to the capital account, on the other hand, the surplus of revenue over expenditure which results in the excess is delivered to the capital fund. Profit organisation pay taxes for the profit that they made but not-for-profit do not distribute profit individuals they may be tax exempt. When a profit organisation goes out of business they can liquidate their assets and give money to the shareholder whereas if a not-for-profit goes out of business its assets must be donated to other not-for-profit organization that has a similar mission. Profit organisation are generally based to generate revenue for business people and their employee but not-for-profit are generally based to serve a humane and environmental need. Understanding the differences between Wesfarmers Limited and Community Housing Council of South Australia Wesfarmers Limited being an ASX listed profit earning organization must prepare financial statements with respect to the guidelines and accounting frameworks laid by AASB and IASB. It can be seen from the yearly reports of Wesfarmers, that the gathering working sections are sorted out and overseen exclusively by the character of the items. Intrigue pay and cost are not dispensed to working part, since these sorts of exercises are taken care of on the gathering premise. The disorganized objects provide information about the thing that are not perceived in the monetary proclamation but rather could significantly affect the Group's budgetary position and execution. However, other objects give information on things which require revelations to concur with AASB and other overseeing articulation. All things considered, these are not viewed as crucial in understanding the money related introduction or position of the gathering (www.wesfarmers.com.au, 2017). On the counterpart, Community Housing Council of South Australias financial statement is different, where only income and expenditure is prepared (chcsa.org.au, 2017). However, this organization also prepares comprehensive income statement including the receipt of donation and funds in the form of revenue. Interest income is named intrigue expands while utilizing the compelling interest technique. This is a technique for ascertaining the recovered cost of a monetary resources and disseminating the premium income over the appropriate time-span by utilizing the effective interest rates on various loans and advances, which is the rate that precisely deducts to figure future money voucher to the normal existence of the budgetary advantage for the net conveying total of the financial resources. Exchange and others payable sum speaks to liabilities for merchandise and ventures gave to the joined affiliation and before to the finish of the money related year and which is unpaid. Due to thei r transient nature, they are figured at the stifled cost and it is not reduced. Critical evaluation of the differences According to Zeff. et al (2014, p.240) the financial management system of profit motive organizations like Wesfarmers Limited, are completely based on the accounting guidelines, which are helpful for the stakeholders to read and understand the financial perspective of the company and take valuable decision. On the other hand, Lvanov and Avasilc?i (2014, p.1192), have also supported the fact, but made contradict judgment in case of not-for-profit organization, where Newberry (2014, p.295), explained that these kinds of organizations do not require to maintain such format for preparing annual report since they do not depend on the public stock. In addition, Finkler. et al (2016) cited that contributors to not-for-profit organization also receives benefit because their contributions are tax deductible. They also clarified that some of the not-for-profit organisation are forced to discontinue their service to the community in need when not-for-profit itself lacks. For profit organisation if the business goes down the final advantage of the company is that their assets are highly liquid and the owner can sell the company's assets so that they can arrange liability or for personal profit. However, Skelcher and Smith (2015, p.440) supported for not-for-profit organisation and said that many employees that work under not-for-profit organisation have an individual interest and conditions to the organisations cause. While not supporting the scenario Arvidson and Lyon (2014, p.870) explained that potential rebound and social fight harass some not-for-profit organisation whose duty are considered intense, either they are based on fun damentalist beliefs or radical attitude. While not supporting the condition Newberry (2014, p290) clarified that the employee of the not-for-profit organisation inherit intrinsic reward from the satisfaction of helping clients and community member who are not in the position to defend for themselves. This organisation receive salary by requesting donations from the community or they also sale their item to raise money for the cause. Conclusion From the above case, we can see that the profit organisation is to generate income by selling goods and providing services. Their nature of business is to earn profit. On the other-hand, not-for-profit organizations are more service oriented, where they raise funds by the way of donations, for instances, public hospitals and trusts are not directly involved in earning income. Reference list Arvidson, M. and Lyon, F. (2014). Social impact measurement and non-profit organisations: compliance, resistance, and promotion. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 25(4), pp.869-886. Bryce, H.J. (2017). Financial and strategic management for nonprofit organizations. Walter de Gruyter GmbH Co KG. Chcsa.org.au. (2017). Available from: https://chcsa.org.au/wp-content/uploads/2017/01/2016-Annual-Report-Complete.pdf [Accessed on 7 Sep. 2017]. Finkler, S.A., Smith, D.L., Calabrese, T.D. and Purtell, R.M. (2016). Financial management for public, health, and not-for-profit organizations. CQ Press. Lvanov, C.I. and Avasilc?i, S. (2014). Measuring the performance of innovation processes: A Balanced Scorecard perspective. Procedia-Social and Behavioral Sciences, 109, pp.1190-1193. Newberry, S. (2014). The use of accrual accounting in New Zealands central government: Second thoughts. Accounting, Economics and Law, 4(3), pp.283-297. Skelcher, C. and Smith, S.R. (2015). Theorizing hybridity: Institutional logics, complex organizations, and actor identities: The case of nonprofits. Public administration, 93(2), pp.433-448. Wesfarmers.com.au. (2017). Available from: https://www.wesfarmers.com.au/docs/default-source/reports/2016-annual-report.pdf?sfvrsn=4 [Accessed on 7 Sep. 2017]. Zeff, S.A., Radcliffe, V. and Gunz, S. (2014). Accounting and Auditing Activities of the Ontario Securities Commission, 1960s to 2008 Part 3: The Fifth Chief Accountant, 19962008. Accounting Perspectives, 13(4), pp.223-252.