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GAAP For Non-Profits › Specific Financial Statement Items

Sales and Service Revenue

Many non-profit organizations receive revenues from services or sales. Some non-profit organizations, like condominium corporations, provide only services, receiving no contributions.

The accounting for these revenues must consider both the nature of the revenue and the relevant time period. Sales and service revenue may be received in conjunction with contributions. For example, a membership fee may be paid that covers both services to the members and support for the organization’s other activities. Or the price of a banquet ticket may provide for the cost of a banquet and a donation. A membership fee that is both a contribution and fee for service may be paid to cover services that extend over two fiscal periods. The portion paid for services of a future period should be deferred and recognized in revenue in the period of the service - see Payables and Other Liabilities, Deferred Revenue.

The accounting for sales and service revenue would follow the recommendations that apply to for-profit organizations.
Accordingly, revenue is recognized when

  • collection is reasonably assured, and

in the case of a sale of goods:

  • the significant risks and rewards of ownership have transferred to the buyer
  • all significant acts of the sale have been completed
  • the normal degree of control associated with ownership has passed to the buyer, and
  • reasonable assurance exists to the amount to be received and the extent to which goods may be returned (3400.04,.05)

For services and long-term contracts, revenue would be recognized in proportion to the work completed, except where completion consists of a single act or the percentage of the completion cannot be reasonably estimated: with either of these exceptions, revenue would only be recognized at the completion of the contract. (3400.06)


The gross amounts of revenue should be disclosed. (4400.37)