Concepts CH 20

Question 1

FASB’s net asset model requires NFPs to report amounts of

Answer 1

1) Net Assets without donor restriction

2) Net Assets with Donor restriction

Question 2

NFP Financial Statements

Answer 2

1) Financial Position
2) Statement of Activities
3) Statement of C-flows

Question 3

Statement of Activities

Answer 3

Changes in net assets - Primary Purpose
Changes in categories of assets
Revenues increase assets
Expenses decrease assets

Question 4

Contributions Received

Answer 4

Ordinarily accounted for when received at FV

Question 5

Guidance for reporting F/S of NFP focuses on

Answer 5

basic information for entity as whole

Question 6

Guidance also focuses on

Answer 6

1) Reporting assets, liabilities, and net assets
2) Changes in net assets
3) Flows of econ resources
4) Cash flows borrowing and repayment other factors affecting liquidity
5) Service efforts

Question 7

SIA

Answer 7

May be revocable/irrevocable
Distributions to beneficiary during of agreement
Assets at end of agreement retained by NFP or other beneficiary

Question 8

Total revenues, gains, and other support subtotal include HCEs

Answer 8

1) Net patient service revenue
2) Premium Revenue
3) Other revenue
4) Net assets released from restrictions used for ops of NFP

Question 9

Contributions made by business donor should be recognized as

Answer 9

1) Expenses

2) decrease in asset or increase in liability

Question 10

HCE other revenues, gains or losses

Answer 10

1) Donated medicine or supplies
2) Donated Labor
3) Fees for educational programs
4) Proceeds for cafeteria meals
5) Grants and gifts

Question 11

Contribution to perpetual endowment

Answer 11

net assets with donor restriction

Question 12

Income from donor restricted support

Answer 12

net assets with donor restriction. however, if restriction expires in period income and gain recognition it may be reported without donor restriction if entity

1) has policy for reporting contribution received
2) Reports consistently
3) discloses accounting policy

Question 13

Support Program (3)

Answer 13

Management & General
Fundraising
Membership Development

Question 14

Support Program - Management & General

Answer 14

Oversight & Business
Budget and Financial
Management Administration
Record Keeping

Question 15

Support Program - Fundraising

Answer 15

Publicity
Maintaining Donor List
Prepare Distribution Materials
Other Solict

Question 16

Support Program - Membership Development

Answer 16

Solicit Member Dues

Member Relations

Question 17

Program Services

Answer 17

Distribute goods and services to beneficiaries, customers, or members to fulfill purpose of entity

Question 18

NFP must report expenses

Answer 18

Functional and natural classification

Question 19

Major Classification of expenses for NFP are

Answer 19

Program Services

Supporting Activities

Question 20

Pledge Receivables

Answer 20

Unconditional promise to give, with amounts due in future periods

Question 21

The expiration of restriction is recognized when

Answer 21

1) stipulated time has lapsed
2) restriction has been fulfilled
or both

Question 22

Contribution of services

Answer 22

reported as both expense and contribution

Question 23

Contribution of service recognized if

Answer 23

1) Create or enhance non-financial assets or
2a) Require special skills
2b) are provided by those having such skills
2c) would be purchased if not donated

Question 24

NFP is subject to UPMIFA

Answer 24

Statute extends a donor restriction to use of assets including return, until appropriation is made by governing board. An appropriation reduces assets with donor restriction

Question 25

If donation will not be received with a year

Answer 25

PV may be used to measure FV of an unconditional promise to give

Question 26

The purpose of statement of activities of NFP

Answer 26

To report change in net assets for the period

Question 27

Net patient revenue is recognized for

Answer 27

fees charged for patient care, minus contractual adjustments and discounts

Question 28

An NFP may classify its assets and liabilities as

Answer 28

current or noncurrent.

Question 29

Information about the nature and amounts of donor-imposed restrictions must be provided

Answer 29

on the face of the statement of financial position or in the notes. Also, to report different types of restrictions, separate line items may be included in (1) net assets with donor restrictions or (2) the notes. Examples are (1) assets to be used for a specific purpose, to be preserved, and not to be sold and (2) assets to be invested to provide permanent income

Question 30

A statement of activities reports

Answer 30

reclassifications of net assets, which are simultaneous increases in one class of net assets and decreases in another class of net assets. They usually result from expiration of donor-imposed restrictions.

Question 31

donor-imposed restriction is

Answer 31

a stipulation that is more specific than the limits resulting from (a) the nature of the entity, (b) its environment, or (c) its organizational objectives (e.g., those stated in bylaws).

Question 32

If an NFP does not capitalize collections,

Answer 32

No assets or contribution revenues or gains are recognized. The costs (proceeds) of the collection items purchased (sold) are recognized separately as a decrease (increase) in the appropriate class of net assets. The proceeds from insurance recoveries for collection items are recognized as an increase in the appropriate class of net assets Cash flows from purchases, sales, and insurance recoveries of uncapitalized collection items are reported in the investing activities section of the statement of cash flows.

Question 33

Works of Art, Treasure An NFP may choose to

Answer 33

a) capitalize its collections, (b) capitalize prospectively items acquired after a certain date, or (c) not capitalize collections. Capitalization of part of the collections is not permitted.

Question 34

Pledges - Receivable in next year

Answer 34

Unconditional promise to give, with amounts due in future periods, are reported as net assets with donor restrictions unless action indicate donor intended support of current year

Question 35

Amounts recognized for services rendered that are later derecognized because they are not expected to be received.

Answer 35

Charity Care

Question 36

Amounts received by an integrated healthcare delivery system under contract to provide services on a subscription basis.

Answer 36

Premium Revenues

Question 37

Initial recognition of patient service revenue.

Answer 37

Gross Amounts

Question 38

Amounts receivable from third-party payors recognized at net realizable value.

Answer 38

Contractual Adjustments

Question 39

Works of art or historical treasure is non-depreciable only is verifable evidence supports the conclusion that

Answer 39

1) Cultural, aesthetic, or historical value worth perserving perpetually, and 2) the holder has means to do so

Question 40

Cost of preservation of works of art and historical treasures capitalize costs

Answer 40

should be depreciated

Question 41

Revenues are reported as

Answer 41

increases in net assets without donor restriction unless use of asset is restricted by donor

Question 42

Resources received in exchange transactions must be classifed as

Answer 42

Revenues in net assets without donor restriction even if the provider limits their ues

Question 43

A donor-imposed condition specifies a future and uncertain event. Its occurrence or nonoccurrence gives

Answer 43

the donor a right of return or releases the donor from an obligation.

Question 44

a conditional promise to give is not recognized until

Answer 44

the condition is substantially met. | If the condition is not substantially met, a receipt of assets is accounted for as refundable.

Question 45

An NFP must recognize the expiration of a donor-imposed restriction on a contribution in the period when

Answer 45

it expires. Expiration occurs when (a) the time stipulated has lapsed, (b) the purpose stipulated has been fulfilled, or (c) both.

Question 46

Grants, awards, or sponsorships are contributions if

Answer 46

(1) the resource providers receive no value or (2) the value is incidental to the public benefit. The transfers are exchange transactions if the public benefit is secondary.