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Finally, the investing activity and financing activity sections are prepared using the direct method, so it makes intuitive sense that the operating activity section should be prepared on the same basis. Many not-for-profit entities receive donations for which the donor has placed a stipulation that they must be used for long-term nonprofit cash flow statement […]

Typically, nonprofits use accrual accounting, which recognizes revenue when it is earned instead of when the cash is received, and vice versa for expenses. While this method is very helpful to understanding some aspects of your organization’s financial position, it is not relevant to the statement of cash flows. The statement of cash flows is