1Ci Statement of Financial Position Flashcards by Jeffrey Sarmiento

How are Non Cash contributions or Gifts Recorded For Non Govt NFP - In other words, what amount are they recorded at?

FMV as the date of donation

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Non Cash contributions are recoded at FMV for Non Govt NFP Organizations - But what point in time is the FMV taken?

At the date of the donation

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Classifications of Net Assets Section of Statement of Financial Position for a Non Govt NFP?

Assets with and without donor resticted

Unrestricted and restricted

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How are temporarily restricted assets treated in Statement of Financial Position for Non Gvt NFP

Temporarily restricted is no longer a classification

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Who can put Restrictions on Donated Assets for Non Bov NFP?

The donors themselves, not the board members of organization

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What if a NFP Board of Trustees Restricts Assets for a Specific Purpose (Ex: uses bond interest money to pay reimburse faculty)? How is that Classified

It’s still in unrestricted assets

Because the restrictions come from donors, not the board of trusteed

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Appropriate Characterization of net assets of a non govt NFP?

Residual Interest

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Purpose of Statement of Financial Position of Non Govt NFP

Provide relevant info on assets, liabilities, net assets, and about their relationships to one another at a moment in time.

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What does the Statement of Activities Non Govt. NFP show?

Changes in net assets with donor restrictions and net assets without donor restrictions for a period of time

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Someone Donates endowment that generates income to NFP. That income is to be used for a specific purpose (ex: a new building). How are the assets treated?

The principle is treated as a restricted asset

The income made is restricted

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When Restricted assets are going to be used for their indeed purpose - how are they classified

They are classified as unrestricted assetds

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If an endowment (in which the generated income is restricted for a new building)for a Non Govt NFP generates income (ex: 40k) and that income used for a new building in the same year.

what is the change in Net Assets?

$0 change

Because when the $40k is going to be used from the building, it goes from restricted to unrestricted asset’

but it’s still part of net assets so the amount of net assets technically does not change

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A non govt NFP, receives bond where interest is restricted to fund a a pre school
It makes 10k in interest
When the bond matures, you designate 50k to the preschool
How much is designated for the preschool

Only the 50k,

the 10k interest is restricted (even if they are going towards the same purpose)

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How does designating funds differ from restricted funds? - In Non Gov NFP

The board of the NON Gov NFP designates the funds

while the restricted assets are restricted by the donors

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Permanent Restriction vs Temporary Restriction

Ex: Someone donates 100k with the interest it earns restricted to fund scholarships

End of yr 1, it earns 15k in interest and will be paid out in year 2

Which accounts are permanently restricted vs temporarily restricted ??

The 100k principle is permanently restricted

The 15k interest is temporarily restricted

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If a bond held by a Non Gov NFP organization (where the income is used for scholarships) earns 15k in yr one but will be paid in year 2

How is it classified in yr 1?

Restricted asset

Because it hasn’t been paid out

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If a bond held by a Non Gov NFP organization (where the income is used for scholarships) earns 15k in yr one but will be paid in year 2

How is it classified in yr 2?

Unrestricted asset,

Because it is paid out then and is intended to be used in yr 2

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How is a restriction removed from a donation to Non Govt NFP?

When it is used for its intended purpose

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When a donation is going to be used for its intended purpose - How does it affect Statement of Activities for Non Govt NFP?

Decrease in restricted assets

Increase in Unrestricted Assets

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Plant Fund Group for Colleges and Universities include 4 subgroups

1. ??????
2. Funds for renewals and replacements
3. Funds for retirement of indebtedness
4. Investment in plant fund

Unexpected Plant Funds

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Plant Fund Group for Colleges and Universities include 4 subgroups

1. Unexpected Plant Funds
2. ?????
3. Funds for retirement of indebtedness
4. Investment in plant fund

Funds for renewals and replacements

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Plant Fund Group for Colleges and Universities include 4 subgroups

1. Unexpected Plant Funds
2. Funds for renewals and replacements
3. ??????
4. Investment in plant fund

Funds for retirement of indebtedness

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Plant Fund Group for Colleges and Universities include 4 subgroups

1. Unexpected Plant Funds
2. Funds for renewals and replacements
3. Funds for retirement of indebtedness
4. ?????

Investment in plant fund

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What is a Quasi Endowment Fund?

Used by colleges/universities themselves to serves as the function of an endowment, usually to fund stuff like grants for scholarships

Ex: A University board of trustees sets aside 100k to be retained and invested for scholarship grants. It earns 6k in interest

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A non gov NFP University board of trustees sets aside 100k to be retained and invested for scholarship grants. It earns 6k in interest What type of fund is the setting aside of 100k?

Quasi Endowment Fund

When a Quasi Endowment Fund of 100k is set by University Board of Trustees and the fund earns interest to fund scholarships What type of assets are the principle and interest

Unrestricted funds because it was set up by the school itself and not a third party.

What is a Loan Fund of a College used for?

Used to Account loans to students faculty and staff.

What is an encumbrance in Non Gov NFP?

Basically reserving funds for a specific purpose. This can be in the form of a purchase order to buy something so you reserve those funds to be used for the specific purpose

What part of the balance sheet are outstanding Encumbrances reported?

Equity Section

2 Types of Funds for NFP Healthcare entities (Ex: Hospital) 1. ????? 2. Donor Restricted Funds

General Funds

2 Types of Funds for NFP Healthcare entities (Ex: Hospital) 1. General Funds 2. ??????

Donor Restricted Funds

2 Types of Funds for NFP Healthcare entities (ex: Hospital)

1. General Funds | 2. Donor Restricted Funds

What is the general fund - in NFP Healthcare entities - used for

To account for assets and liabilities not required to be accounted for in the donor restricted fund. Ex Bonds issued by the hospital are general liabilities

In which period are pledges -made to a Non Gov NFP - Reported?

The period in which they are made

In what amount are pledges - made to a non gov nfp - reported?

The amount of the pledge net of any allowance for uncollectible accounts

If a pledge - made to a non gov nfp - is to be used for a future period - what kind of revenue is reported?

Reported as restricted revenue

Journal Entry for Pledges (Non Govt NFP)

Dr. Pledge receivables Dr. Allowance for uncollectible Cr. Contribution revenue *Look this up to confirm, I'm not 100% sure*

How are Multi year pledges recorded? Ex: Someone pledge to donate $20,000 for the next 4 yrs at the beginning of each year staring next year

You find the present value of that in the current year

A church is classified as what type of NFP?

Other Nonprofit Organization | ONPO

Other Nonprofit Organizations (ONPO) may establish ( blank ) Pools?

Investment Pools

For Other Non Profit Organizations (ONPOs) - How should investment pools be accounted for - What value?

Market Value

For Conditional Donations to a Non Gov NFP - When is revenue recorded?

When it is earned When they either become unconditional or the conditions are substantially met

For Conditional Donations to a Non Gov NFP - How is it recorded - before the conditions are met

As a liability "Refundable Advance"

What type of account is "refundable advance"

Liability

If a man donates $100k to university on the condition that university is able to match it. University estimates it has a 50% chance of matching it. How is this conditional pledge recorded?

As a refundable advance

When the conditions of a conditional pledge to a non gov NFP are met - How is the refundable advance treated

It becomes revenue

if someone makes a pledge to donate money in 3 years, how is the pledge recorded as

A conditional pledge

if someone makes a pledge to donate money in 3 years, - Is that revenue in the current year

if someone makes a pledge to donate money in 3 years - When is revenue recorded

When the pledge is met, or becomes unconditional

When are donated services to a Non Gov NFP recognized as Revenue? 1. ?????? 2. Special skills are required that would otherwise be purchased 3. Value is measurable 4. Entity controls the employment and duties of the service donors

Non financial assets are created or enhanced

When are donated services to a Non Gov NFP recognized as Revenue? 1. Non financial assets are created or enhanced 2. Special skills are required that would otherwise be purchased 3. Value is measurable 4. Entity controls the employment and duties of the service donors

??????

Entity controls the employment and duties of the service donors

When are donated services to a Non Gov NFP recognized as Revenue?

1. Non financial assets are created or enhanced 2. Special skills are required that would otherwise be purchased 3. Value is measurable 4. Entity controls the employment and duties of the service donors

how should a Non Gov NFP report investments in its F/S

At Fair Value

Which Financial Statement should Non Gov NFP report Gains and losses on investments

Statement of Activities

How should Non Gov NFP record income generated from assets with donor restrictions

Net assets without donor restrictions Unless the income is explicitly restricted by donor or law

Donor Donates land to a non gov NFP subject to a mortgage, no donor restrictions what is the journal entry?

Land Mortgage Payable Unrestricted Revenues *I think, confirm to see if the debits and credit are right

When a NFP Museum Receives a contribution of Historical facts - When do they NOT have to be recognized?? 1. ?????? 2. If sold, then proceeds used to buy other items for its collections

If they are held as a collection

When a NFP Museum Receives a contribution of Historical facts - When do they NOT have to be recognized?? 1. If they are held as a collection 2. ?????

If sold, then proceeds used to buy other items for its collections

When a NFP Museum Receives a contribution of Historical facts - When do they NOT have to be recognized??

1. If they are held as a collection | 2. If sold, then proceeds used to buy other items for its collections

Statement of Cash Flows for Non Gov NFP - What are considered operating activities?

Unrestricted cash from contributors

Statement of Cash Flows for Non Gov NFP - What are considered Investing Activities

Sale and purchase of investments and PP&E

Statement of Cash Flows for Non Gov NFP - For Financing Activities the definition expands to include.....

donor restricted cash that must be used for long term purposes