Wiley CPAexcel Exam Review 2015 Focus Notes: Financial Accounting and Reporting

Module 22

Not-for-Profit Accounting

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

NOT-FOR-PROFIT COMPANYSTATEMENT OF FINANCIAL POSITIONDECEMBER 31, 20X2
Assets:	Liabilities:
Cash	100	Accounts payable	50
Marketable securities	300	Notes payable	100
Accounts receivable, net	40	Bonds payable	100
Inventory	120	Total liabilities	250
Property, plant, and equipment	80	Net assets:
Total assets	640	Unrestricted	45
Temporarily restricted	305
Permanently restricted	40
Total net assets	390
Total liabilities and net assets	640

Statement of Activities for Not-for-Profit Organizations

Similar to income statement:

• Reports ...