Chapter 9 Section 2: Not-For-Profit Accounting Flashcards
What is the overall emphasis for NFP financial statements?
Basic information for the organization as a whole
What are the required financial statements?
Statement of financial position
Statement of activities
Statement of cash flows
Statement of functional expenses (required for voluntary health and welfare organizations)
What is the NFP version of equity?
Net assets
What are the three classifications of net assets?
PUT
Permanently restricted
Unrestricted (includes board-designated restrictions)
Temporarily restricted
Under what basis are NFP financials stated?
Full accrual
What goes into the statement of activities?
Change in total net assets
Change in each of the PUT accounts
How are expenses reported?
What are the categories?
As reductions in unrestricted net assets
Program services
Support services
Combined costs
Outline the statement of activities
Revenue and gain Net assets from restrictions (reclassifications) Expenses and loss (program, then support, then combine) Changes in net assets Net assets at beginning Net assets at end
What method can be used for the statement of cash flows?
Either direct or indirect
What are the classifications of expenses in the statement of functional expenses?
Program support
Fundraising
Management and general
Multiple cost items
How are resource inflows categorized?
Explain the difference
They are either revenue or other support
Revenue is an exchange transaction
Other support is usually donated
What are the different contributions and pledges, and when are they recognized?
Cash contributions - received = revenue (FV gift date)
Unconditional pledge - pledged = revenue (FV promise date)
Conditional pledge - earned = revenue
Multi-year pledge - PV of pledge, now = revenue, future = temp restricted revenue
In multi-year pledges, what is the difference between PV and amount recorded attributed to?
Contribution revenue - not interest income
How are split-interest agreements reported?
At fair value at acquisition date, and classified as temporarily restricted
How do you record donated services?
SOME
At their fair value as contribution revenue and expense if: Specialized skills Otherwise needed Measurable Easily (at FV)
What if you have a pledge, but aren’t confident that you’ll collect all of it?
Use an allowance for doubtful accounts
Are unconditional pledges restricted or unrestricted?
Temporarily restricted (time)
What do you do with restricted contributions?
Earn it when you spend it. Then remove the restriction.
What does it mean to be with or without variance power
Without variance power means you are accepting assets from a donor and using them on behalf of someone else without any say in how they’re used. Treat like a liability
With variance power means you get to decide how they’re used. Treat it like a donation.
What do you do when you’re the ultimate beneficiary?
Unless the recipient has variance power, recognize the rights to the asset.
How are gains and losses reported?
In the statement of activities as increases or decreases in unresetricted net assets
Define the three types of endowments
Permanent endowment: principal is not permitted to be spent (perm rest.)
Term endowment: must be held for a specified term (temp rest)
Quasi-endowment: internal governing board has determined that the funds should be spent a certain way. (unrest)
What are the seven types of funds?
Are they reported externally?
Do not use funds for external reporting Unrestricted current Restricted current Plant Loan Endowment Annuit and life income Agency
For colleges, how do you report tuition and scholarships?
Report tuition at gross amount (minus cancelled classes)
Scholarships are expenses
