W8

Discussion # 1

What information do financial statement users want to know about a not-for-profit entity especially during this COVID-19 crisis and the many protest marches in the United States and Worldwide? Explain why these users would want this information.

Comment #1

According to the Financial Accounting Standards Board (FASB) (2016, par. 3), “not-for profit organizations include charities, foundations, colleges and universities, health care providers, religious organizations, trade associations, and cultural institutions, among others” therefore, nonprofits are organizations not owned by shareholders and are not intended to earn profit for distribution. Rather, nonprofits usually seek to receive money to allocate for programs, grants, and other social support systems.

The financial statement of a non-profit is similar to the balance sheet of a for-profit business. As the balance sheet of a for-profit business, it reports the nonprofit organization’s assets and liabilities, as of the date when the assets turned into cash and when the liabilities must be paid. Instead of equity of stockholders, the third section of the financial statement changes to net assets since non-profit organization do not have owners. According to Copley & Manktelow (2018, par. 4), “amounts currently reported as temporarily or permanently restricted should now be reported in a single class: net assets with donor restrictions. Those amounts currently reported as unrestricted net assets should now be reported as net assets without donor restrictions” thus, the net assets section of a nonprofit's statement of financial position requires to be classified based on the restrictions made by the donors at the time of their contributions.

The non-profit organizations financial statements give information about how the resources or donations were used and the decisions the organization’s administrative board did to allocate those donations into a good cause. The Association of International Certified Professional Accountants (AICPA) (2019, p. 3) explains that “donors give to support a mission they care about. The financial statements identify how much an NFP is spending on mission-related programs” therefore, users use this information to know if the organization that they donated their money to is financially stable and to make sure that their donations will go to a good use instead of someone’s pocket.

Power Point

Please make a 10 slide PowerPoint presentation explaining the Week 7 case you submitted