Accumulated Fund

It is an accounting term that is used for the official capital fund of a non-profit organization such as charitable organizations and NGOs. The accumulated fund of an organization is the reserve of the funds and is maintained when revenue of the organization are greater than the expenses of that organization. In a certain case when the expenditures become more than the revenue of the organization money is withdrawn from this account to fulfill those expenditures.

This account is more common with non-profit organization such as social clubs and social societies. These organizations make accumulated fund account so that they can use this account to rise in capital or to purchase fixed assets afterwards when required. With the help of accumulated funds these organizations can purchase buildings, land, furniture and other sorts of equipments. This term must not be confused with another likely term called accumulated earnings. This term is used for public limited and profit oriented organization and is related to the stockholders of those businesses. This term indicates the figure that is the total earnings and the profit of the company after deducting the monetary distributions of the stockholders of that company. Unlike accumulated fund this accumulated earnings are calculated during the beginning of each financial year. Accumulated earnings are a bit similar to the retained earnings as these are also calculated after deducting the shareholders funds from the actual earnings. Accumulated fund plays the same role for non-profit organization as the accumulated earnings play for a profitable organization.

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