Describe what fund accounting is and why is it used for not-for-profit organizations.

Fund accounting comprises the collective accounting procedures resulting in a self-balancing set of accounts for each fund established by legal, contractual or voluntary actions of an organization. Elements of a fund can include assets, liabilities, net assets, revenues and expenses (and gains and losses where appropriate). Fund accounting involves an accounting segregation, although not necessarily a physical segregation, of resources.
It has been used successfully to keep track of restricted resources and to convey information through financial statements about the restrictions placed on an organization's resources. Given that not-for-profit organizations often have a stewardship role over assets, fund accounting has facilitated the reporting, implementation and execution of this stewardship role.