engleski

Recognition of revenues and expenses in Croatian nonprofit organizations

Economy development, globalization process, and other trends of rapid economic growth has led to the growing needs for a more quality, reliable and complete information. Information has a twofold character - bad information can cause large financial losses and result in economic fracture, while true, complete and timely information can greatly contribute to the economic development. That is why accounting, being the system based on information of a particular business entity, is of great importance in decision making. The nonprofit organizations are also expected to present their financial statements so that they provide the best possible quality information to users. Based on the information provided, it is possible to monitor the implementation of various goals and tasks. In Croatia, the new system of accounting for the nonprofit organizations has been enforced since January 1st, 2008. Its appliance has brought two major changes: the recognition of fixed assets depreciation over assets’ useful life and the transition from modified cash accounting to the adequately adjusted accrual accounting. The first aim of this paper is to set out and interpret different accounting basis while providing arguments for the introduction of accruals. The second goal is to show the difference in the recognition of revenues and expenses before and after the adoption of the Decree on accounting for nonprofit organizations, and to point out the impact of the recognition on business results. The authors prove the hypothesis that the appliance of different accounting basis for the recognition of business events significantly affects the operating results and the business decision making process.

nonprofit organizations, modified cash basis, full accruals, revenues and expenses, Croatia

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