What is the primary authoritative source for GAAP for non-profit (NFP) organizations?

• A. American Institute of CPAs (AICPA)
• B. Financial Accounting Standards Board (FASB)
• C. Governmental Accounting Standards Board (GASB)
• D. National Council of Nonprofits (NCN)

Answer: (B)

The primary authoritative source for Generally Accepted Accounting Principles (GAAP) for non-profit organizations is the Financial Accounting Standards Board (FASB). FASB establishes and maintains the standards for financial reporting in the United States, including those applicable to non-profits.

For non-profit organizations, FASB Statement No. 117, "Financial Statements of Not-for-Profit Organizations," provides specific guidance on the presentation of financial statements, which is crucial for ensuring transparency and accountability in financial reporting. This guidance helps non-profits effectively communicate their financial position and activities to donors, stakeholders, and the general public.

While other organizations, such as the American Institute of CPAs (AICPA) and the Governmental Accounting Standards Board (GASB), contribute to accounting standards and guidance, they do not serve as the primary standard-setting body for non-profits. The AICPA primarily focuses on CPA practices and auditing standards, whereas GASB specifically addresses accounting and financial reporting for state and local governments. The National Council of Nonprofits (NCN) serves more as an advocacy organization and resource for non-profits, rather than a standard-setting body. Hence, FASB remains the cornerstone for GAAP relevant to non-profit entities.