{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/205/958/#05-overview-and-background","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"205","topic_title":"Presentation of Financial Statements","subtopic":"205-958","subtopic_title":"Not-for-Profit Entities","section":{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"205-958-05-1","para":"05-1","html":"
This Subtopic discusses the presentation of financial statements for not-for-profit entities (NFPs), including the following items:
  1. a
    The objectives of financial reporting by NFPs
  2. b
    A complete set of financial statements
  3. c
    Statement of functional expenses
  4. d
    Comparative financial statements
  5. e
    Expiration of restrictions
  6. f
    Reporting endowment funds
  7. g
    Disclosures of a general nature that do not belong with other Subtopics.
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Additional information concerning the reporting model of an NFP can be found in the following Subtopics:
  1. a
    Not-for-Profit Entities—Balance Sheet, Subtopic 958-210
  2. b
    Not-for-Profit Entities—Income Statement, Subtopic 958-220
  3. c
    Not-for-Profit Entities—Statement of Cash Flows, Subtopic 958-230.
","snippet":"Additional information concerning the reporting model of an NFP can be found in the following Subtopics:\n(a) Not-for-Profit Entities—Balance Sheet, Subtopic 958-210\n(b) Not-for-Profit Entities—Income Statement, Subtopic …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a2cd06860aae2b4dd19d35b5a064351cae122318dda7cdd4c231c92889e7b05e","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ea566f0db01f9662cc3d1d0000c130cff4e9a64b9f41b62623035a5d87e85061","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}},{"block":null,"heading":"Purpose of Financial Statements","paragraphs":[{"citation":"205-958-05-3","para":"05-3","html":"
The primary purpose of financial statements is to provide relevant information to meet the common interests of donors, members, creditors, and others who provide resources to NFPs. Those external users of financial statements have common interests in assessing both of the following:
  1. a
    The services an NFP provides and its ability to continue to provide those services
  2. b
    How managers discharge their stewardship responsibilities and other aspects of their performance.
","snippet":"The primary purpose of financial statements is to provide relevant information to meet the common interests of donors, members, creditors, and others who provide resources to NFPs. Those external users of financial state…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c42bcddab1c79ab26146f7b30b819439b0fe29dcdcfb06ecb79cbef2c8bcec38","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}},{"citation":"205-958-05-4","para":"05-4","html":"
More specifically, the purpose of financial statements, including accompanying notes, is to provide information about all of the following:
  1. a
    The amount and nature of an NFP's assets, liabilities, and net assets
  2. b
    The effects of transactions and other events and circumstances that change the amount and nature of net assets
  3. c
    The amount and kinds of inflows and outflows of economic resources during a period and the relation between the inflows and outflows
  4. d
    How an NFP obtains and spends cash, its borrowing and repayment of borrowing, and other factors that may affect its liquidity
  5. e
    The service efforts of an NFP.
","snippet":"More specifically, the purpose of financial statements, including accompanying notes, is to provide information about all of the following:\n(a) The amount and nature of an NFP's assets, liabilities, and net assets\n(b) Th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:272c6e768637f450b7d4d356772c0bd93b10d65540e5c813be9c4347f52d5ad4","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d32e1702941f1abd9e4c916018c29a25ced49246fa9ae50eae0e96ecfea89597","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}},{"block":null,"heading":"A Complete Set of Financial Statements","paragraphs":[{"citation":"205-958-05-5","para":"05-5","html":"
General-purpose external financial statements provided by an NFP include a statement of financial position, a statement of activities, and a statement of cash flows. Individual financial statements provide different information, and the information each statement provides generally complements information in other financial statements.
","snippet":"General-purpose external financial statements provided by an NFP include a statement of financial position, a statement of activities, and a statement of cash flows. Individual financial statements provide different info…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:178c7d7019664ea4928aa1c0cba836f6f9e7431d02b8f565a792a80413e86f00","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}},{"citation":"205-958-05-6","para":"05-6","html":"
General-purpose financial statements classify and report net assets in two groups—net assets with donor restrictions and net assets without donor restrictions—based on the existence or absence of donor-imposed restrictions and the nature of those restrictions.
","snippet":"General-purpose financial statements classify and report net assets in two groups—net assets with donor restrictions and net assets without donor restrictions—based on the existence or absence of donor-imposed restrictio…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4ffe8416a7751578a8fa1230135246ef0a70bde175bb74cc0b15a78692cc2511","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}},{"citation":"205-958-05-6A","para":"05-6A","html":"
The guidance in the Not-for-Profit Entities Topic uses certain statement titles and the terms net assets without donor restrictions and net assets with donor restrictions. Other titles and other labels may also be used, as illustrated in paragraphs 958-205-55-2 and 958-210-55-3.
","snippet":"The guidance in the Not-for-Profit Entities Topic uses certain statement titles and the terms net assets without donor restrictions and net assets with donor restrictions. Other titles and other labels may also be used, …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ed318200dd5451c11f55cf8f095b10ff9a2e026751aaa87ff1c8911af31670d6","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}},{"citation":"205-958-05-6B","para":"05-6B","html":"
The two required net asset classes (with donor restrictions and without donor restrictions) are a minimum classification scheme, if they are applicable. An NFP can choose to further disaggregate the two net asset classes. For example, an NFP may wish to disaggregate net assets with donor restrictions between those expected to be maintained in perpetuity and those expected to be spent over time or for a particular purpose. However, paragraph 958-210-45-1 does require that the amounts for each of the two classes of net assets and the total of net assets be reported in a statement of financial position.
","snippet":"The two required net asset classes (with donor restrictions and without donor restrictions) are a minimum classification scheme, if they are applicable. An NFP can choose to further disaggregate the two net asset classes…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:22d0dd9509828f0bb8ce5ff49811925e35b046801de1b64f5b08d03dd1480166","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}},{"citation":"205-958-05-7","para":"05-7","html":"
The Not-for-Profit Entities Topic does not use the terms fund balance or changes in fund balances because in current practice those terms are commonly used to refer to individual groups of assets and related liabilities rather than to an entity's net assets or changes in net assets taken as a whole. While reporting by fund groups is not a necessary part of external financial reporting, paragraph 958-205-45-3 does not preclude providing disaggregated information by fund groups.
","snippet":"The Not-for-Profit Entities Topic does not use the terms fund balance or changes in fund balances because in current practice those terms are commonly used to refer to individual groups of assets and related liabilities …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a18bea3e39ab538119d010c2195a7b800457f0cb06e8db20d9fb86bbc36e1f94","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ba16092d7d6fa91d58fe051598741f74a57b01563894a46c95cea342af5c39fe","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}},{"block":null,"heading":"Reporting Endowment Funds","paragraphs":[{"citation":"205-958-05-8","para":"05-8","html":"
Laws concerning use of net appreciation of endowment funds that are donor-restricted may vary from jurisdiction to jurisdiction. For example, most jurisdictions follow enacted versions of the Uniform Prudent Management of Institutional Funds Act of 2006 or similar legal guidance (including interpretations of the law issued by state Attorneys General) and some jurisdictions follow trust law.
","snippet":"Laws concerning use of net appreciation of endowment funds that are donor-restricted may vary from jurisdiction to jurisdiction. For example, most jurisdictions follow enacted versions of the Uniform Prudent Management o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bc358446a766b726440e20515366cf9688c06b58cd96f48f1e2aa483c8fe59bb","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}},{"citation":"205-958-05-9","para":"05-9","html":"
Because donor stipulations and laws vary, NFPs must assess the relevant facts and circumstances for their endowment gifts and their relevant laws to determine the classification of endowment funds within the NFP financial reporting model (see paragraph 958-205-45-2), including whether some or all of the investment return on endowments is available for spending.
","snippet":"Because donor stipulations and laws vary, NFPs must assess the relevant facts and circumstances for their endowment gifts and their relevant laws to determine the classification of endowment funds within the NFP financia…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cbc2afc4c8a8d6c2e8991756982e0ccdaab9946483012a14c9b5da00f0dcad20","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}},{"citation":"205-958-05-10","para":"05-10","html":"
Subsection 4(a) of the Uniform Prudent Management of Institutional Funds Act of 2006 provides that, unless stated otherwise in the gift instrument, the assets in an endowment fund are donor-restricted assets until appropriated for expenditure by the institution. For related guidance, see paragraphs 958-205-45-13 through 45-13F.
","snippet":"Subsection 4(a) of the Uniform Prudent Management of Institutional Funds Act of 2006 provides that, unless stated otherwise in the gift instrument, the assets in an endowment fund are donor-restricted assets until approp…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e029e58d79212f4320eb354ae06ffee2e3679d3cf29492de38e83abb277d550","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7c4693d6845211d7e640440a9ef680658209c9d7a8dea74190971da2e4dcbde8","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:590318c65eb48fcc9e6ce11e2d3d88602e739008e5956404f5ad906f63fae49d","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:590318c65eb48fcc9e6ce11e2d3d88602e739008e5956404f5ad906f63fae49d","downloaded_from":"2026-09-09T22:55:50.396Z","last_downloaded_at":"2026-09-09T22:55:50.396Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479479","source_sha256":"3e39924fa796258971acdd4e04a355c55d617cd7d4cdd74ac379477fa736776a"}}