What are the differences in reporting guidance in a for-profit and not-for-profit organization?
What are the similarities in reporting guidance for the above?
How do these differences and similarities affect the comparability of financial reports?
Should these reports be comparable? Why or why not?
First, we know that for profit and not for profit organizations both fall under the auspices of the FASB (as opposed to governmental entities which follow the GASB). Next we can distinguish for profit from not for profit by three characteristics:
1. Receives contribution of resources from providers who are not seeking a return on their contributed amounts.
2. Operating at a profit is not what they do (rather than to accomplish a mission or goal).
3. There is an absence of ownership interests, unlike a for profit entity with shareholders.
The financial statements of both have a statement of financial position (balance sheet), statement of activities (income statement), a statement of cash flows (same name and almost an identical format), and notes to the financial statements (same).
The difference is that the ...
The 548 word solution explains the similarities and the differences between for profit and not for profit entities. There are a surprising number of similarities with only the captions being different in some cases, but the differences are more pronounced and detailed in the solution.