Historically, what pattern of reporting was used by private not-for-profit entities? (1) The same as used with respect to for-profit entities.
(2) Reporting that utilizes a fund accounting approach.
(3) A pattern of reporting that does not consider the entire entity.
A) 1 only.
B) 2 only.
C) 1 and 2 only.
D) 1, 2 and 3.
E) 2 and 3 only.

Question

Quizplus · Accepted Answer

Private not-for-profit entities typically use a fund accounting approach, which involves segregating and reporting on financial activity by various funds or categories (such as unrestricted, temporarily restricted, and permanently restricted funds). This differs from the reporting used by for-profit entities, which generally focus on the overall performance and financial position of the entire entity. Option (3) is incorrect because fund accounting does consider the entire entity, but breaks it down into various funds or categories for reporting purposes. Option (1) is incorrect because, as noted, the reporting patterns for not-for-profit entities generally differ from those used with for-profit entities.

Historically, What Pattern of Reporting Was Used by Private Not-For-Profit