Financial and Accounting Guide for Not-for-Profit Organizations, Eighth Edition 2014 Supplement

CHAPTER 2

Accounting Distinctions between Not-for-Profit and Commercial Organizations

2.2 Principal Areas of Accounting Differences

(a) Cash versus Accrual Accounting

(d) Treatment of Fixed Assets

(g) Net Assets (New)

2.2 Principal Areas of Accounting Differences

p. 19. Remove first full sentence starting “In fact... ”

p. 19, n. 1 should read:

AICPA Audit and Accounting Guide—Not-for-Profit Entities (AAG-NFP) (New York: American Institute of Certified Public Accountants, 2012).

(a) Cash versus Accrual Accounting

p. 20, first paragraph. Add “, or on an ‘as-incurred’ basis” to the end of the last sentence.

(d) Treatment of Fixed Assets

p. 21. Remove section (d).

p. 21. Re-letter sections (e) Contributions, Pledges, and Noncash Contributions and (f) Accounting for Investments as (d) and (e), respectively.

p. 22. Re-letter section (g) Function Reporting of Expenses as (f).

p. 22. Insert new section (g) as follows:

(g) Net Assets (New)

Not-for-profit accounting does not have “equity” like for-profit organizations. Not-for-profit organizations classify their assets less liabilities as net assets. There are three classes of net assets, as follows:

1. Unrestricted net assets, which are the part of net assets of a not-for-profit organization that is neither permanently restricted nor temporarily restricted by donor-imposed restrictions.
2. Temporarily restricted net assets, which are the part of the net assets of a not-for-profit organization resulting from (a) contributions and other inflows ...