Wiley Not-for-Profit GAAP 2017

5Statement of Cash Flows

1. Perspective and Issues
2. Concepts, Rules, and Examples
   1. Classification of the Statement of Cash Flows
   2. Definition of Cash and Cash Equivalents
   3. Operating Activities Presentation
   4. Cash Flows from Investing Activities
   5. Discussing Gross and Net Cash Flows
   6. Cash Flows from Financing Activities
   7. Noncash Investing and Financing Activities
3. Disclosure Requirements

Perspective and Issues

The FASB's conceptual framework project, in particular Statement of Financial Accounting Concepts 1, states that “Financial reporting should provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions.” Since the ultimate objective of investment and credit decisions is the maximization of net cash inflows, information for assessing the amounts, timing, and uncertainty of prospective organization cash flows is needed. In the not-for-profit environment, donors use cash flow information for these as well as other reasons. For example, a donor wishing to make a significant contribution to a not-for-profit university would desire to assess whether the university is financially sound, similar to a long-term investor. On the other hand, a donor to a small human-service provider may be more interested in knowing that the not-for-profit organization is cash-strapped and in critical need of a cash donation.

The statement of cash flows should help donors and creditors assess the organization's: ...