Accounting is generally tedious and not dramatic unless accountants are faced with the release of restrictions if they are not profitable. This is where you see accounting types like CPAs and auditors, especially those who do not have a non-profit background, somewhat nervously laughing. You blame everything on FASB 117!
"Non-Restricted Net Assets" (NARFR) is not just an account. These accounts are all net assets or funds. Basically, these accounts are part of a FASB 117 mechanism that will reduce temporarily limited net assets because most, if not all, costs appear in the unlimited fund.
For example, we received $ 5,000 donation the following year
Debit Cash-Temp limited to 5000
Privilege – Temporarily Restricted – 5,000
It's up next year and you can now spend money on the expense. The money held on a separate account can be transferred. You can create three log entries:
Payout cash-unlimited 5000
Credit Cash-Temp limited to 5000
Deposit Cost – Unlimited 5000
Credit NARFR – unlimited – 5,000
If the organization does not follow this and the FASB 117 has to be changed at the end of the year, things may be confusing. Usually, the accountants summarize all the published expenses, and the number is used for NARFR.
Year-end reports can be made in a different style than regular books. Many are not profitable because it is easier to understand the costs as part of any temporary fund than the NARFR entries. You can compile a yearly report and leave the books as they are. Thus, NARFR is only reported at reporting level.
*** NARFR accounts will NOT appear and have a zero impact on the financial statements of the organization, which they see together. Always increase one of your net assets and reduce the other amount by the same amount.
Source by sbobet