Chapter 20

Question 1

Not for profits have 3 characteristics

Answer 1

1. Contributors of significant resources to the NFP do not expect a proportionate return.
2. The NFP has operating purposes other than providing goods or services for profit.
3. The NFP has no ownership interests similar to those of a business entity.

Question 2

net assets model.

Answer 2

equals the residual interest in the assets of an NFP that remains after subtracting its liabilities.

Question 3

net assets are classified as the following

Answer 3

1. Unrestricted,
2. Temporarily restricted,
3. Permanently restricted.

Question 4

The following are an NFP’s general-purpose financial statements:

Answer 4

1. statement of financial position
2. statement of activities
3. statement of cash flows

Question 5

Define program services for a not for profit

Answer 5

Program services result in goods and services being distributed to beneficiaries, customers, or members to fulfill the purposes of the entity

Question 6

Define permanently restricted net assets

Answer 6

Permanently restricted net assets result from asset increases and decreases subject to restrictions not removable by passage of time or by the NFP’s actions.

Question 7

List nfp supporting actvities

Answer 7

(1) management and general,
(2) fundraising,
(3) membership-development activities

Question 8

Who is required to create a statement of functional expenses?

Answer 8

Voluntary health and welfare entities (VHWEs)

Question 9

Thus, a conditional promise to give is not recognized until

Answer 9

until the condition is substantially met.

Question 10

unconditional promises to give expected to be collected in less than 1 year may be recognized at

Answer 10

net realizable value

Question 11

Contributions of services are recognized

Answer 11

if they create or enhance nonfinancial assets (they also are recognized if they require special skills

Question 12

Define SIA

Answer 12

split-interest agreements (SIAs), such as trusts or other arrangements, NFPs may share benefits with the donor or third-party beneficiaries.

Question 13

Voluntary health and welfare entity (VHWEs) must report information about expenses by

Answer 13

Functional and natural classification.

Question 14

What is the designation or donations to be received in the subsequent year?

Answer 14

Temporarily restricted net assets

Question 15

if you receive a donation in a SIA, How do you book the JE if you have no variance power?

Answer 15

Dr. Cash

Cr. Liablity

Question 16

How do hospitals record services that wont be paid

Answer 16

Dr. revenue

Cr. AR