This chapter provides an overview of the key elements of balance sheets prepared under the NFP reporting model, including the statement’s format, organization, and contents. Although it is more formally referred to as the statement of financial position, the term “balance sheet” is used throughout this chapter.

The presentation requirements are set forth in ASC 958-205, Not-for-Profit Entities—Presentation of Financial Statements, and ASC 958-210, Not-for-Profit Entities – Statement of Financial Position. Incremental requirements for NFP HCOs are found in ASC 954‑205, Health Care Entities—Presentation of Financial Statements, and ASC 954-210, Health Care Entities – Statement of Financial Position. In addition, NFPs are within the scope of ASC 205, Presentation of Financial Statements, and ASC 210, Balance Sheet.

The NFP-specific requirements are based on the requirements used by business entities, and generally are no more stringent. The principal differences appear in the equity section. Because NFPs are not owned in the same sense as business enterprises, there are no capital accounts or shares to report. Another difference is that NFPs are subject to fiduciary requirements associated with use of donor-restricted contributions received, which generally do not apply to business entities. As a result, equity under the NFP reporting model is comprised of two broad classes: net assets without donor restrictions (see NP 2.5.1) and net assets with donor restrictions (see NP 2.5.2).

In addition, most NFPs utilize an unclassified balance sheet, whereas most business entities present classified balance sheets. This is discussed in NP 2.3.