F6 - M2 - Not for profit financial reporting - part 2

Question 1

Is statement of cash flows required for non profits? What is the primary purpose?

Answer 1

Yes it is required, because non profits are on accrual basis.

The purpose is to provide relevant information about the cash receipts and cash payments for the non profit.

Uses operating, investing, and financing, and can use direct or indirect method.

Question 2

If the non profit uses direct method for statement of cash flows, do they have to do a reconciliation of net income to cash flows like for profits do?

Answer 2

No

Question 3

What are operating activities for the statement of cash flows?

Answer 3

For me, these are activities that are used in the day to day operations. Anything that is not financing or investing.

It is important to note, that if you receive a contribution that the board designates to purchase some asset in the future, that is still operating. The purchase of the asset is investing, but since it has not been expensed yet, you still keep it as operating.

Question 4

What are investing activities for the statement of cash flows?

Answer 4

Investments in pp&e, proceeds from the sale of artwork or purchases of art work, proceeds from the sale of assets that were received in the prior period and whose sale proceeds were restricted to investment were restricted to investment in equipment.

Question 5

What are financing activities for the statement of cash flows?

Answer 5

Loans,