There are no prerequisites.

Course Description

Nonprofit organizations have a unique set of needs when it comes to operations, accounting, and reporting. In this course, instructor Larry Perry walks you through the qualifications of a nonprofit organization, key Statements of Financial Accounting Standards (SFASs) that specifically affect accounting and reporting, and accounting standards for nonprofit financial statements. Illustrative financial statements and footnotes are provided along with a breakdown of revenue recognition and expense accounting that includes coverage of contributions, donations, financial statement assertions, internal controls, cost allocation methods, and more.


Larry L. Perry, CPA

Larry L. Perry, CPA, has been in practice for over 40 years. He writes accounting and auditing manuals and is currently an author and presenter of live staff training seminars, live webcasts, and self-study CPE programs, including self-study courses for Western CPE.

He’s a managing member of CPA Firm Support Services, LLC, an organization that provides resources, training, and consulting to smaller CPA firms. Larry focuses on practical ways to perform effective and efficient accounting and auditing engagements.

Course Specifics

Aug 23, 2017
There are no prerequisites.

Compliance Information

Qualifies for CA Fraud: No

Learning Objectives

Upon successful completion of this course, participants will be able to:

Section 1

  • Recognize the fundamental definitions and operating principles of nonprofit organizations
  • Identify Statements of Financial Accounting Standards for nonprofit organizations
  • Recognize basic financial statements and footnotes presentations for nonprofit organizations
  • Recall principles of accounting and reporting for accounts presented on the statement of financial position

Section 2

  • Recognize principles of revenue recognition in Statements of Financial Accounting Standards for nonprofit organizations
  • Identify the proper accounting for revenues of nonprofit organizations
  • Recognize the basic principles of accounting and reporting for revenues accounts presented on the statement of activities
  • Recognize the characteristics and design of basic internal controls over cash receipts and revenues that enable their proper recognition in financial statements

Section 3

  • Recognize the proper accounting for expenses of nonprofit organizations
  • Recognize principles of accounting and reporting for accounts presented on the statement of activities
  • Identify the characteristics and design of internal controls over cash disbursements that enable their proper recognition in financial statements
  • Identify the elements contained in a statement of functional expenses
  • Identify joint costs, noting the methods and bases for cost allocation

Table of Contents

Section 1 – Introduction, Overview, and the Statement of Financial Position

Learning Objectives

Definitions of Nonprofit Organizations

Accounting Standards Codification (ASC) Topic 958

Examples of Nonprofit Organizations

Voluntary Health and Welfare Organizations

Internal Revenue Service Definition of Nonprofit Organizations

IRS Classifications for Types of Nonprofit Organizations

Key SFSASs Affecting Nonprofit Organizations

FASB Summary of Statement No. 116 (Topic 958) –

FASB Summary of Statement No. 117 (Topic 958) –

FASB Summary of Statement No. 124 (Topic 958) –

FASB Summary of Statement No. 157 (Topic 820) –

Issues Related to Reporting Frameworks

Nonprofit Organization Financial Statements

Statement of Financial Position

Statement of Activities

Statement of Cash Flows

Statement of Functional Expenses

Illustrative Financial Statements and Footnotes

Note A – Summary Of Significant Accounting Policies


Summary of Significant Accounting Policies

Inventory of Merchandise and Supplies

Property and Equipment

Revenue Recognition

Income Taxes

Use of Estimates


Note B – Investments

Note C – Property and Equipment

Note D – Related Party Transactions

Note E – Debt Obligations

Note F – Restricted Net Assets

Note G – Operating Lease

Note H – Donated Services

Note I – Noncash Transactions

Note J – Joint Cost Allocation

Accounting Standards for Assets, Liabilities, and Net Assets

Statement of Financial Position  -- Assets

Cash and Cash Equivalents:


Promises to Give

Intentions to Give

Unconditional and Conditional Promises to Give

Accounts Receivable

Property and Equipment



Statement of Financial Position – Liabilities


Deferred Revenue

Refundable Advances

Statement of Financial Position – Net Assets



Section 1 – Review Questions

Section 2 – Revenues Recognition

Learning Objectives

Key SFASs Affecting Revenue Recognition

FASB Summary of Statement No. 116 (Topic 958)

Accounting Standards Updates

ASU No. 2012–05

ASU No. 2013-06

Illustrative Statements of Activities, Cash Flows, and Footnotes

Understanding Revenue Recognition

Revenues and Gains Overview:

Not-for-Profit Entities – Revenue Recognition – 958-605-25


Contributions Received:

Statement of Activities – Revenues


Restricted Contributions

Temporary and Permanent Restrictions:

Unrestricted Support:

Restrictions on Contributions Met in the Same Year:

Designations Imposed by the Board of Directors:

Donated Materials or Merchandise:

Donated Long-Lived Assets and Free Use of Facilities:

Donated Services:

Agency Transactions:

Exchange Transactions:

Recognizing Other Accrual Basis Revenues:

Special Events

Service Fees/Dues

Sales of Merchandise and Publications

Third Party Reimbursements

Assertions, Internal Controls, and Revenue Recognition

Financial Statement Assertions

Entity-Level Controls

Activity-Level Controls

An Illustration of Effective Counting Procedures for Cash Receipts (Activity-Level Controls)

Procedures for Counting Mail Receipts, Can Collections, Offerings, and Other Cash Receipts

General Notes

Specific Counting Procedures


Section 2 – Review Questions

Section 3 – Expense Accounting

Learning Objectives

Nonprofit Organization Financial Statements

Nonprofit GAAP for Expenses

Types of Expenses – Accounting and Presentation

Classification of Particular Costs

Cost Allocations in the Statement of Activities


Accounting for Costs of Joint Activities that Include Fundraising

The Fundraising Presumption:

Overcoming the Fundraising Presumption:

Purpose Criterion

Audience Criterion

Content Criterion

A Chronology of the Application of Criteria to Overcome the Fundraising Presumption:

An Example of Application of the Purpose, Audience, and Content Criterion

Cost Allocation Methods

Physical Units Method

Relative Direct Cost Method

Stand-Alone Joint Cost Allocation Method

Bases for Cost Allocations

Statement of Functional Expenses

Illustrative Footnotes Disclosure for Allocation of Costs

Note Y. Joint Cost Allocation

Internal Controls and Expense Recognition

Entity-Level Controls

Activity-Level Controls

Summary of Different Presentation and Disclosure Requirements for NPOs

Statement of Financial Position

Statement of Activities

Statement of Cash Flows

Nonprofit GAAP vs. Form 990 Accounting Methods


Section 3 – Review Question

Review Question Answers and Rationales



Final Examination

Answer Sheet

Course Evaluation

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