Accounting For Not-for-Profit Organizations

Define the not-for-profit environment and its three defining characteristics: revenue not from delivering similar value, operations not to generate profit, and no ownership.

Differentiate not-for-profit organizations by pursuing good, lacking ownership, and receiving resources without return, from for-profit entities that pursue profit, have owners, and require value exchange.

Explore key stats of the not-for-profit sector in the US, including $450 billion raised, 7% of the workforce, 5.5% of GDP, and $3.75 trillion in assets.

Explore the key players in the not-for-profit environment: regulators, donors, operators, and beneficiaries, and learn how state and IRS exemptions shape governance and accountability.

Explore major classifications of not-for-profit organizations, including tax-exempt and taxable groups, the independent sector and mutual benefit, and operating versus non-operating bodies and public charities.

Explore the life cycle of a not-for-profit from start-up to dissolution, including applying for IRS tax-exemption, annual and state filings, and key events like leadership changes or expansion.

Master not-for-profit compliance requirements, including annual reports, disclosures, employment filings, and tax returns. Identify when audits or single audits are required to maintain donor transparency.

Explore fundraising in not-for-profit organizations, focusing on compliance with state rules, risk mitigation, and avoiding penalties that can threaten a nonprofit's viability.

Explain how not-for-profit financial reporting emphasizes stewardship and accountability, guiding resource allocation to programs and assessing service delivery through program-based statements.

Learn the general financial statements for not-for-profit organizations. Review the statement of financial position, statement of activities, cash flows, and the functional expenses by program.

Explore how not-for-profit entities present consolidated financial statements, including statements of financial position, activities, cash flows, and the Form 990 using the American National Red Cross as an example.

form a diverse board of directors with fundraising, legal, and accounting expertise; draft bylaws, incorporate, obtain state approval, and apply for EIN and federal and state tax exemptions.

Practice not-for-profit accounting by recording a $50,000 contribution in wave apps, distinguishing restricted and unrestricted donations, and posting journal entries to the general ledger, statements of activities, and balance sheet.

Record initial operating expenses for a not-for-profit, including professional fees, entity setup, prepaid insurance and rent, with rent waivers treated as contributions, and analyze impacts on cash and financial statements.

Track fundraising event entries for a not-for-profit, recording marketing and consultant expenses, fundraising fees, and cash effects, including amortization of prepaid insurance and impact on financial statements.

Record cash receipts and a 500,000 contribution receivable for program a, including 150,000 restricted for future tuition and 170,000 unrestricted from small donors.

In October, record professional fees to the recruiting agency, a sign-off bonus as salaries payable, and the new salaries payable liability; adjust cash and prepaid insurance accordingly.

Record the program manager salaries and retirement benefits as salaries expense, paid in cash, and allocate them by program A for the trial balance, expense classification, and statement of activities.

Execute December end-year entries for a not-for-profit, recording scholarships, salaries, utilities, and office supplies, move restricted cash to unrestricted to pay tuition, and recognize the donor restriction satisfaction and dividend.

In accounting for not-for-profit organizations, clean up year end with adjusting entries for prepaid expenses, rent expenses, and waivers. Learn how this affects the balance sheet and cash flow statements.

Download the clean workbook pdf to follow along with pen-and-paper exercises, practicing accounting for not-for-profit organizations using the course’s pdf workbook content.

Download the solved workbook pdf for accounting for not-for-profit organizations to review a finished product with all entries, compare results with the course demonstrations, and use it as you go.