Section 1: 30–40%1B2
Statement of Activities (NFP)
Exam insight
NFP statements look nothing like for-profit ones: no retained earnings, no income statement. Expect questions on which statements are required (financial position, activities, and cash flows) and what goes where. One thing people forget is that NFPs have to show functional expense information, either on the face of the statements or in the notes.
What AICPA wants you to know
- 1Describe the overall structure of the NFP statement of activities
- 2Classify revenues as with or without donor restrictions and explain how restrictions are released
- 3Distinguish between program services and supporting activities in expense presentation
- 4Apply the three required disclosures about liquidity and availability of resources
- 5Explain how investment returns are reported on the statement of activities
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.The NFP Reporting RulesASU 2016-14 sets the mechanics: a functional expense analysis for every NFP, the liquidity disclosure, and netted investment return.
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.