302110 Flashcards
When a nongovernmental not-for-profit entity has board-designated net assets, where should the amounts and purposes of these net assets be disclosed?
On the face of the statement of financial position but not in the notes to the financial statements
Neither on the face of the statement of financial position nor in the notes to the financial statements
Either on the face of the statement of financial position or in the notes to the financial statements
In the notes to the financial statements but not on the face of statement of financial position
Either on the face of the statement of financial position or in the notes to the financial statements
Nongovernmental not-for-profit entities have the option to report board designated net assets either on the face of the statement of financial position or in the notes to the financial statements.
Not-for-Profit Entity
According to the FASB ASC Glossary, a not-for-profit entity is distinguished from a business entity by three characteristics: contribution of significant resources from providers who do not expect proportionate return, operating purposes other than to provide goods or services for profit, and absence of ownership interests like business enterprises. In addition, the IRS stipulates that no part of the organization’s net earnings can inure for the benefit of any specific person or persons.
FASB ASC Glossary
IRS Form 1023
AICPA Audit and Accounting Guide Not-for-Profit Entities, Section 15.09
Statement of Financial Position
The statement of financial position provides information about the entity’s assets, liabilities, and equity and their relationships to one another at a particular point in time. A statement of financial position shows a snapshot of the firm’s financial position on a given date, delineates the enterprise’s resource structure (major classes and amount of assets) and its financing structure (major classes and amount of liabilities and equity), and provides users with information to assess the entity’s liquidity, financial flexibility, profitability, and risk.
SFAC 8.1, OB12
The statement is based on the fundamental accounting model Assets = Liabilities + Equity.
