Section 1: 30–40%1B1
Statement of Financial Position (NFP)
Exam insight
NFP accounting feels foreign because there's no equity section; net assets take its place. A question you'll see often asks whether a board designation turns unrestricted net assets into restricted ones. It doesn't. Only outside donors can create restrictions. Once the net asset model clicks, the rest of NFP falls into place.
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
Patterns in this topic
The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.
The Restriction GateOnly a donor can restrict: two net asset classes, board designations stay without restrictions, and spending releases the restriction.The Pledge TestUnconditional pledges are revenue now, discounted if long-term; conditional pledges wait as refundable advances until the barrier falls.
Exam tip
Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.