Canada Reporting net income for a registered charity in Canada

Nov 3, 2023
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I just started volunteering for a registered charity. When reviewing their financials i found that the accounting firm who manages their accounting prepare a year end journal entry to reduce their donation revenue by the amount of net income to essentially zero out their income. (Dr. Revenue, Cr. Uneared Revenue). The value of this adjustment is not for restricted revenues, we do not have any restricted revenues. When inquired with the firm why they do this, they indicated that becasue we are a Non-For-Profit organization we should not report any profit, otherwise it will signal to CRA that we have profit and we may lose our status.
Ive checked other registered charities returns on CRA website and see other charities report a net income. Also since these adjustment are not for restricted revenue, it doesnt appear correct to me. Could someone please advise if you have come accross this and if these adjustments are correct? Thank you

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