[Addi38]

Accounting for non-profit corporations, or in this case a homeowners' association
Association dues are collected monthly from homeowners. The money is used to pay for repairs, maintenance, security etc of the condominium as a whole.
How should the account be classified?
Should it be as a liability account since it's a non-profit and the money seems really more of a deposit that will be used to pay for future expenses by the condominium or as an income account?

Thanks

[rehmanvohra]

Collections are treated as revenue, and the operating expenses are deducted therefrom. The statement is called Income and Expenditure account and is always prepared on accrual basis.

[Addi38]

How about the non-profit classification of the corporation?
Wouldn't that be violated because we would be recording revenue from operation?

[rehmanvohra]

Non profit organization is an entity. The object is not to earn profit but to provide service. Since the activities are concerned with the provision of services for the benefit of its members, it will prepare a periodical income and expenditure account and a balance sheet. If income earned exceeds the expenditure incurred, it is called a surplus, conversely, it is a deficit. This surplus or deficit is transferred to accumulated fund.

[Addi38]

Thanks rehmanvohra, I had a wrong perspective on non-profit organizations. I NPOs should not at all record income derived from normal operation of the business
Thanks

[morgaine300]

I wonder if you are having the somewhat typical view that a non-profit means that they have no "revenues" or that they aren't allowed to have any profit at all. That's a misconception. They have revenues and expenses like any other organization. (Although they also might have funds that have to be kept track of.) And they are allowed to have profit. It's just that their purpose of existing is not for the sake of having profit for the owners. It's not like a non-profit can exactly break even every year. :-) If they're lucky enough to actually have profits, they can be put back into the operations and have future use.

[Addi38]

I kind of have that wrong view for non-profits. I was confused as to how to treat the revenues and be not liable for income taxes. Now I understand it.