Accounting Terms to Know

Question 1

Change in Net Assets =

Answer 1

Revenues - Expenses

Question 2

Total Expenses =

Answer 2

Program Expenses + Fundraising Expenses + Administrative Expenses

Question 3

Change in Cash =

Answer 3

Cash from Operations + Cash from Investing + Cash from Financing

Question 4

Cash and Cash Equivalents

Answer 4

These are the funds in the bank or in highly liquid and secure securities, such as US treasury bills.

Question 5

Prepaid Expenses

Answer 5

Costs, such as insurance, that are paid in advance of receiving benefits. This asset declines in value (and is recorded as an expense) as the benefit associated with this cost is consumed.

Question 6

Liabilities

Answer 6

outstanding debts

Question 7

Assets

Answer 7

Things of value that the non-profit owns

Question 8

Net Assets

Answer 8

Portion of the assets funded by the nonprofit’s own resources

Question 9

Change In Net Assets =

Answer 9

Revenues - Expenses

Question 10

Accrual method requires that…

Answer 10

revenues be recorded when earned and expenses when incurred.

Question 11

The assets always balance the liabilities and net assets because…

Answer 11

each asset must be funded by resources provided by others or by the organization itself.

Question 12

Assets are listed in order of their…

Answer 12

Liquidity

Question 13

Cash and Cash Equivalents (in terms of liquidity)

Answer 13

are the most liquid funds possessed by a non-profit

Question 14

Fixed Assets may also be called…

Answer 14

Property, Plant, and Equipment

Question 15

Pledges or Grants Receivable are an…

Answer 15

Asset

Question 16

Account Payable are…

Answer 16

A liability representing amounts owed to vendors or creditors for goods or services rendered. Unpaid bills (Salaries Payable)

Question 17

Grants Payable are….

Answer 17

a liability that the organization promises to individuals or other organizations.

Question 18

Net Assets are Divided into three categories.

Answer 18

1. ) Unrestricted
2. ) Temporarily Restricted
3. ) Permanently Restricted

Question 19

The Statement of Activities Provides

Answer 19

information on the operating activities of a nonprofit between one date and another. The statement provides information on the mix of revenues and expenses.

Question 20

Most Common Revenues for Non Profits are…

Answer 20

1. ) Contributions

2. )

Question 21

If the asset is received in advance of the condition being fulfilled, then the asset is recorded as a …

Answer 21

liability (refundable advance) rather than a revenue. When the conditions are met, then this liability is eliminated, and revenues are recorded.

Question 22

When in kind contributions are recognized they are recorded as…

Answer 22

equal and offsetting revenues and expenses.

Question 23

Special Events Revenues

Answer 23

Revenues raised by special fundraising events are recorded separately from contributions.

Question 24

In the statement of activities what are the three functional categories of expenses?

Answer 24

1. ) Program Expenses
2. ) Fundraising Expenses
3. ) Administrative Expenses

Question 25

Cash From Financing Activities

Answer 25

This section depicts the cash inflows and outflows associated with receipts and repayment of funds provided by creditors and by donors whose permanently restricted contributions are recognized in the statement of activity.
(The issuance of long term debt would fall under this)