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  • What are the financial reporting objectives for a NFP or government entity?

    The overall objective of financial reporting of nonbusiness organizations is to provide financial statement readers with the following: 1) Information useful in making resource allocation decisions – Financial reporting by nonbusiness organizations should provide lenders and those making financial decisions based on the statements with available information in order to come to a decision as to whether they should allocate resources to the organization.  2) Information useful in assessing services and ability to provide services – Financial reporting should provide appropriate information to assist in presenting prospective resource providers with an understanding as to whether that organization can currently provide and will be able to continue providing services into the future. 3) Information useful in assessing management stewardship and performance – Financial reporting should provide information that is useful to users in determining if and how managers of a nonbusiness organization have discharged their stewardship responsibilities. 4) Information about economic resources, obligations, net resources, and changes in them – Financial reporting should provide information about the economic resources, obligations, and net resources of an organization.

  • What does the cash flow statement for a not-for-profit (NFP) include?

    Like reporting for private organizations, the statement of cash flows will report the statements as operating activities, investing activities, and financing activities. FASB ASC 230 provides guidance on the presentation of the statement of cash flows for nongovernmental not-for-profit organizations:

  • What types of industries apply not-for-profit (NFP) accounting?

    In order to be recognized as a not-for-profit (NFP), the entity must be official registered as an NFP. As the name might suggest, an NFP operates for a purpose other than making a profit. The visual below lists out industries where not-for-profit entities are more frequent, but it doesn’t mean that ever entity in that industry is registered as an NFP. For example, in the education industry, there are entities that are for profit and not-for-profit. Common industries include education, healthcare, voluntary health and welfare, labor unions, civic organizations, churches, museums, libraries, and cemetaries.