Wiley CPAexcel Exam Review 2014 Focus Notes: Financial Accounting and Reporting

Focus on: Not-for-Profit Accounting—Module 22

ACCOUNTING FOR NONPROFIT ENTITIES

Financial Statements of Not-for-Profit Organizations

All not-for-profit organizations must prepare at least three financial statements

Not-for-profit organizations include:

• Hospitals
• Colleges and universities
• Voluntary health and welfare organizations (VHW)

Required financial statements for all types include:

1. Statement of Financial Position

2. Statement of Activities

3. Statement of Cash Flows

VHWs must also prepare a Statement of Functional Expenses

Statement of Financial Position

Includes assets, liabilities, and net assets

• Unrestricted net assets—Available for general use, including those set aside by board of trustees
• Temporarily restricted net assets—Donated by outside party and restricted to specific purpose
• Permanently restricted net assets—Donated by outside party and required to be invested with earnings restricted or unrestricted

Statement of Activities for Not-for-Profit Organizations

Similar to income statement

• Reports revenues, gains, expenses, and losses
• Also reports temporarily restricted assets released from restriction
• Categorized activities among unrestricted, temporarily restricted, and permanently restricted to provide change in net assets for each
• Change added to beginning balance to provide ending net assets for each category

Expenses classified by:

• Object—Nature of ...