A private NFP's statement of cash flows presents cash from operating activities using the indirect method. In the reconciliation of the change in net assets to cash from operating activities, which item is added?

Question

Quizplus · Accepted Answer

The correct answer is C) Reduction in contributions receivable. When using the indirect method to present cash from operating activities, a reduction in contributions receivable is added back to the change in net assets. This adjustment is made because it represents an increase in cash flows, as the organization has collected more contributions receivable, thus increasing its cash, even though it does not affect the net assets directly in the period the contributions were initially recognized.

A Private NFP's Statement of Cash Flows Presents Cash from Operating