F6 - Not for Profit Flashcards
Barter received volunteer services to build an addition to the Nursing Home. The addition included work by a skilled carpenter valued at $13,000 and the work of general laborers valued at $12,000.
How much do you recognized?
Accrue for both the skill carpenter valued $13000 and the work of general labor workers at $12000. It comes out to $25000
Barter receives volunteer services from doctors valued at $120,000 per year. Barter pays a nominal stipend of $20,000 to doctors. Barter needs the physician coverage provided by the doctors to meet state licensure requirements.
How much would you recognized?
It will accrue 120000 minus the defrayed $20000 for a total of $100000 (bc we paid the 20000)
When do we recognized contributed revenue?
- enhance a nonfinancial asset
- SOME (specialized)
What increases the net assets with donor restrictions of a nongovernmental, not-for-profit voluntary health and welfare organization?
- contributions with donor-imposed restrictions that may be either in perpetuity or temporary in nature
EX: Donor contributions to fund a resident camp program - bc its restricted for one purpose use
What is a primary purpose and focus of the statement of activities for a non-governmental, not-for-profit organization?
- Income Statement
- To demonstrate how the organization’s resources are used in providing various programs and services is correct.
- To report the change in net assets for the period
Azim Services, a nongovernmental not-for-profit organization, received dues of $100 from its members. Azim provided its members with a newsletter that had a $25 value. All other services were valued at $10 per member. What is the amount of contribution made to Azim by each member?
Contribution per member=
Dues for each member +
Newsletter (-)
Other Services(-)
anser $65
Statement of Activities (I/S) REVENUE
- Contributions
- Dues
- Grants
- Program Fees
Statement of Activities (I/S) EXPENSES
- program expenses
- fundraising expenses
How should Donated Services be recorded and how they affect the statement of activities (I/S)?
Donated services should be booked as both an expense(Debit) INCREASE and as contribution revenue(Credit) INCREASE at fair value as long as the services create/enhance a nonfinancial asset or require specialized skills that the provider possesses that would otherwise have to be purchased by the organization
Calculate Net Pledges Receivable (legally enforceable)
Total Gross Pledges x ( 1 - %uncollectible)
Ignore the $ restriction bc of the uncollectible
Separate fund financial statements
should be presented for governmental and proprietary funds to report additional and detailed information about the primary government
Special revenue funds expandable or not ?
expendable (may be entirely used up)
Permanent funds expandable or not ?
- nonexpendable (legally restricted to the extent that income and not principal may be used for the restricted purpose)
- limited to earnings
A local governmental unit could have funds using which of the following accounting bases?
Accrual or Modified
-Both the Accrual/Modified accraul basis
Governmental Funds (Modified Accrual)
- General Fund
- Special Revenue Fund
- Debt Service Fund
- Capital Projects Fund
- Permanent Fund
Govermental Fund Primary focus on measurement…
Current Financial Resources
Proprietary Fund (Accrual/Economic Resources Measurement)
- Internal Service
- Enterprise
Fiduciary Fund (Accrual/Economic Resources Measurement)
- Custodial
- Investment Trust
- Private Purpose Trust
- Pension and Other Employee Trust
When should a conditional pledge to a nongovernmental not-for-profit organization be recognized as revenue?
When the pledge conditions are met
When a nongovernmental not-for-profit organization, received a contribution in December, Year 1. The donor restricted use of the contribution until March, Year 2. What do we do ?
Report income in year 1, but it will be temporary restricted till March year 2
How should a nongovernmental not-for-profit organization report investments in its financial statements?
Fair value(B/S) with gains and losses reported in the statement of activities
For pledge revenue, the full amount of contribution/pledge is recognized:
in the year of the pledge regardless of installment payments you recognize the full amount on the first year
Funds that are considered internal board-designated funds are classified as:
Net assets without donor restrictions
Enterprise Fund is
- will be set up to account for the acquisition and operation of governmental services
- purpose to charge fees and make money
