Section 1: 30–40%1B1
Statement of Financial Position (NFP)
Exam Insight
NFP accounting feels foreign because it throws out the equity section entirely and replaces it with net assets. The AICPA's biggest trap: asking whether a board designation converts unrestricted net assets into restricted - it does NOT. Only external donors create restrictions. Get the three-class net asset model straight and the rest of NFP falls into place.
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What AICPA Wants You to Know
- 1Describe the two classes of net assets under ASU 2016-14 and what goes in each
- 2Identify how NFP assets, liabilities, and net assets are classified on the balance sheet
- 3Distinguish between donor restrictions and board designations
- 4Apply the NFP investment reporting standards (pooled investments, fair value)
- 5Recognize what triggers a reclassification between net asset classes