Question

Under current accounting and reporting standards nongovernmental, not-for-profit organizations (NFPs) must utilize the fund accounting structure set forth in the AICPA Audit and Accounting Guide Not-for-Profit Entities.

A. True
B. False

Answer 1

The assertion that nongovernmental not-for-profit organizations must use the fund accounting structure set forth in the AICPA Guide is false. These organizations should follow the FASB's ASC. The AICPA Guide provides recommendations but is not binding.

Step-by-step explanation:

The question asks whether nongovernmental, not-for-profit organizations (NFPs) must use the fund accounting structure set forth in the AICPA Audit and Accounting Guide Not-for-Profit Entities. The correct answer to this question is False.

Nongovernmental not-for-profit organizations are recommended to follow accounting standards set by the Financial Accounting Standards Board (FASB), specifically the Accounting Standards Codification (ASC). Although the AICPA Guide does provide helpful information and best practices, adherence to the specific fund accounting structure it suggests is not a mandatory requirement for NFPs under current accounting and reporting standards.

Not-for-profit organizations have the primary goal of fulfilling their societal or community missions rather than generating profit, which differentiates them from for-profit entities.