Organisation

Organisation

The term organisation in accounting refers to any business enterprise, regardless of whether it operates for profit or for a not-for-profit motive. Accounting is not limited to businesses that aim to earn profit; it applies equally to charitable institutions, clubs, government bodies, and other entities.

The nature and structure of an organisation depend on two factors: the size of its activities and the level of business operations. Based on these, an organisation can take any of the following legal forms:

• Sole-proprietory concern – owned and run by a single individual, who bears all the risk and enjoys all the profit.
• Partnership firm – owned by two or more persons who share profits and losses according to an agreement.
• Cooperative society – a voluntary association of persons formed to meet common economic needs, operating on the principle of mutual help.
• Company – a legal entity separate from its owners (shareholders), with limited liability, formed under the Companies Act.
• Local authority – a government body at the municipal or local level, such as a municipal corporation or panchayat.
• Any other association of persons – any group of individuals coming together for a common purpose, whether economic or social.