Accounting and Reporting for Not-for-Profit Organizations

Solutions

Case study 1

Knowledge check solutions

1.  
   1. Incorrect. A Statement of Financial Position is a basic financial statement for NFPs.
   2. Incorrect. A Statement of Activities is a basic financial statement for NFPs.
   3. Correct. A Statement of Retained Earnings is not a basic financial statement for NFPs. Retained earnings are called net assets for NFPs.
   4. Incorrect. A Statement of Cash Flows is a basic financial statement for NFPs.
2.  
   1. Incorrect. NFPs must present more than two financial statements at minimum.
   2. Correct. At a minimum, NFPs must present at least three financial statements.
   3. Incorrect. NFPs are not required to present a minimum of four financial statements.
   4. Incorrect. NFPs are not required to present a minimum of five financial statements.
3.  
   1. Incorrect. Contributions of significant amounts of resources from resource providers who do not expect commensurate value in return is a characteristic of an NFP.
   2. Incorrect. Operating purposes other than to provide goods or services at a profit is a characteristic of an NFP.
   3. Correct. Prohibition to make a profit is not a characteristic of an NFP.
   4. Incorrect. Absence of ownership interests is a characteristic of an NFP.

Case study 2

Knowledge check solutions

1.  
   1. Incorrect. Revenues are shown on the statement of activities.
   2. Incorrect. Expenses are shown on the statement of activities.
   3. Correct. Retained earnings do not exist in an NFP.
   4. Incorrect. Gains and losses are shown on the statement of activities.
2. 1. Correct. The statement ...