1. What are some similarities between the type of accounting performed at Goodwill and accounting at for-profit companies?
2. What are some differences between the type of accounting performed at Goodwill and accounting at for-profit companies?
3. How can Goodwill use ratio analysis to improve its operations?

The mission of Goodwill is to enhance the lives of individuals, families, and communities “through learning and the power of work.” Despite its nonprofit status, Goodwill establishments are similar to for-profit businesses regarding the accounting function. Like for-profit firms, nonprofit organizations like Goodwill must provide detailed information about how they are using the donations that are provided to them. One major reason is that donors want to know how much of their donations is going toward activities such as job creation and how much is going toward operational and administrative expenses. Like investors donors want to know how their money is being spent.

Goodwill creates the equivalent of a balance sheet and income statement, called the “statement of financial position” and “statement of activities.” On the statement of financial position, Goodwill has what it calls its net assets rather than owner’s equity. However, like for-profit firms, Goodwill’s financials are audited. The organization must also be able to tabulate cost of goods sold, determine which activities are generating which revenues, and perform ratio analysis to identify best players in the industry to generate ideas and form partnerships.