NFP Financial Reporting Pt. 2 Flashcards
Statement of cash flows
a statement of cash flows is required for all NFPs; identical to commercial standards, the primary purpose of the statement of cash flows is to provide relevant information about the cash receipts and cash payments of the NFP during a period; the statement classifies cash receipts and cash payments as operating, investing, and financing activities, and either the direct or the indirect method may be used; the use of the direct method, however, does not require presentation of the reconciliation of net income to cash flows from operations
contributions of unrestricted revenue later earmarked (board designated) for construction or purchase of long-lived assets is classified as cash flows from operating activities
cash flows from financing activities not only includes the cash transactions related to borrowing that are typically found in a commercial statement of cash flows, but also include cash transactions related to certain restricted contributions; cash flows from financial activities may be segregated on the face of the financial statements as follows: proceeds from donor-restricted contributions (for long-lived assets) and other financing activities
the statement of cash flows will explain the change during the period of total cash and cash equivalents and amounts generally described as restricted consistent with commercial accounting; transfers among cash, cash equivalents, and amounts generally described as restricted are not reported as cash flow activities in the statement of cash flows
noncash transactions that should be disclosed in the statement of cash flows include: contributed securities, construction in progress and other fixed asset purchases included in accounts payable, contributions of beneficial interest (unconditional promises to received specified cash flows from a charitable trust or other identifiable pool of assets), and noncash debt refinancing transactions (changes in interest rates or other terms)
