F8 Flashcards
What are the 3 characteristics of and NFP org (codification 958)
- Revenues are from contributions
- Purpose does not include profit
- ownership interest are not like business enterprise
What are the industries that use NFP accounting?
Health care
Educational
Volunteer (health and wellness)
Other private non govt NFP ( museums, labor unions)
What is Net Asset without donor restriction
Available to finance general operations (not restricted)
Board designated funds
What is a split interest agreement and what is an example?
Donor contributions of trusts or other arrangements under which the NFP receives benefits shared with other beneficiaries
EX = Charitable remainder trust
What is the Permanent fund?
Used to report resources that are legally restricted to the extent of income. Used for purposes supporting the reporting govt programs for benefit of public.
(i.e gift to be invested to be used to support local library)
What are the two Functional expense categories used by NFP org?
- Program (related to the mission of the org)
- Support services (G&A, Member development, fundraising)
What is the criteria for a fundraising expense?
Inducing potential donors to contribute to the entity ( i.e maintaining donor list)
Under a govt unit - earned revenues should be recognized if what 2 conditions are satisfied?
Measurable (quantifiable) and available (collectible during year 60 days)
Is depreciation recorded in the capital projects fund?
NO - none in the govt funds
What is the JE to initially record a budget and surplus at end of year?
Beg:
DR: Estimated Rev
CR: Appropriations control
CR if surplus: Budgetary Control
End (reverse for the same amount)
DR: Appropriations
DR: Budget control (surplus)
CR: Estimate Rev control
What are the Governmental Funds? (GRaSPP)
General Fund - ordinary operations
special Revenue fund - account for revenues from taxes to finance activities of govt
debt Service Fund - accumulate all debt (restricted principal and interest)
capital Projects fund - restricted/committed/assigned for acquisition of resources
Permanent Fund - Legally restricted to extent of income for supporting the public
What are the Proprietary Funds? (SE)
internal Service Fund - account services by other dept (cost reimbursement basis)
Enterprise Fund - account for operation of govt facilities and services (utilities, airports, transit)
What are the Fiduciary Funds (CIPPoE)
Custodial Funds - temporary custody (taxes collected for another government)
Investment trust Funds - external investment pools
Private Purpose Trust Fund - assets are legally protected from creditors of govt
Pension (and Other Employee Benefit) trust funds -
What funds are Full accrual basis and Economic resources measurement focus
Proprietary and Fiduciary Funds - Govt WIDE F/s too
What funds are Modified accrual basis and Current economic resource measurement focus?
Governmental Funds
What is an example of a “imposed non-exchange revenue”
Property Taxes and fines
If equipment is acquired through a contract that transfers ownership, what is it recorded as?
Equipment
What is the calculation of a Govt activities net position?
Fund balance + Capital assets - A/D - Noncurrent liab
What are the sources of govt resources?
Revenue - Taxes (income, sales, property, real estate), Fines, Penalties
Other Financing sources - Debt Proceeds (bonds and notes), Interfund transfers
For Govt Funds - How are the following activities classified:
Revenue
Expenditures
Assets
Debts
Revenue = Measurable and available
Expenditures = ALL spending
Assets = Expenditures (not carried)
Debts - other financing sources (not LTD)
What are the types of nonexchange rev in govt funds?
Derived Tax rev (rev derived from tax revs - sales tax/income tax)
Imposed non-exchange rev - revenues from imposed taxes (fines, property taxes)
What is the JE in Govt fund to record purchase of FA?
DR: Expenditure - capital outlay
CR: Voucher payable/Cash
For govt funds - how are principal and interest pmts treated?
As expenditures
What are the 3 classifications for leases in govt funds?
Short Term Lease - 12 mths or less ( Lesse rec expenditures, Lessors recognize rent revenue)
Contracts that transfer ownership (sales type) - transfer ownership (Lessee - accounts for acquisition as capital outlay expenditure and other financing source. lease pmts = expenditures… Lessor - Lease Rec, Rev (first year of principal) and deferred inflows )
Leases other than Short Term Leases AND Contracts that Transfer ownership - (direct financing) Lessee/Lessor record ROUA and Lease liability
What are the characteristics of a financially interrelated organization?
- Ability to influence the operating/financing decisions of other
- One org has ongoing economic interest in net assets of the other org
Define variance power
Unilateral authority to redirect assets to another beneficiary
How is charity care accounted for?
Not rec as AR or Rev (removed from patient service rev)
What are the two treatments of bad debt for health care?
Operating expense when BDE resulting from failure to collect
Deduction from revenue - BDE from Inability to collect
How are donated materials classified?
Other operating revenue
In the general fund - where should the amount of a lease pmt at inception of the lease be accounted as?
Expenditures control
What value is reported stock contributed to NFP at?
FV at year end
Where are reclassifications of net assets from satisfaction of donor restriction on the FS?
in the statement of activities (I/S)
What is the appropriate characterization of net assets (interest) of NFP?
Residual interest
What are the three required statements for an NFP?
Statement of finanical position
Statement of activities
Statement of cash flows
What classification of expenses should be reported for ALL NFPS?
Function (major classes of programs and support activities) and natural (types like salaries, supplies)
What concept defines contribution rev rec for NFP?
Satisfying conditions
What is the criteria of a NFP to recognize services donated? (SOME)
recorded nonoperating
Only recognize if:
Specialized skill that is
Otherwise needed that can be
Measured
Easily
how are donor restricted cash contributions for LT purposes classified on the SCF?
Cash inflow from financing
If and NFP beneficiary receives funds from its parent - how is this recorded in the F/S?
As a change in interest on statement of activities
DR: Interest in NA
CR: Interest in parent
How intergovt revenues and transfers from other funds accounted for in the general fund?
Intergovt rev = Revenue
Transfer from other funds = other financing sources
How do you calc fund balance for govt entities?
Current financial assets + deferred outflows - CL - Deferred inflows
What is the JE for a govt entity that has $1M in rev from property taxes and estimates $100k uncollectable?
DR: Tax REC for 1 M
CR: Sales rev for $900k
CR: Allowance for uncollectible for $100k
What type of fund would most likely be used by a municipality undertaking construction of utility plant financed by rev bond?
Enterprise fund - set up account for operation of govt and self supported
Which fund is used to account for “Maintenance pool” for support to all county vehicles?
Internal service fund
If there is a unconditional pledge in yr 1 for 1M saying that $200k will be collected over 5 years. What is the amounts recorded in Yr1 - yr 5
Yr1: Only year that rev is recorded
DR: Pledge Rec
CR: Pledge Rev (PV of pledge)
Yr 2 - 5
DR: Cash
CR: Pledge rec
What is the JE to record a purchase of Fixed asset through a contract that transfer ownership for a govt unit?
DR: Expenditure - Capital outlay
CR: Other financing source - Lease
How should NFP report interest payments on CFO?
As a supplemental disclosure of cash flow information
What method of accounting is used by NFP?
full accrual
What are the three ways that functional expenses can be reported?
- Face of statement of activities
- Schedule to Notes to the Fs
- Separate F/S
What are the three required elements for statement of activities?
- Change in total net assets
- Change in net assets without donor restriction
- Change in Net asset with donor retriction
What is the JE to record a satisfaction of restriction of net assets?
DR: Satisfaction of program restriction - donor restricted
CR: Satisfaction of program restriction - W/o donor restricted
How are restricted vs unrestricted contributions represented in the Cash flow statement?
Restricted = Financing inflow, Investing outflow
Unrestricted = Operating inflow/outflow
What is the JE to record an unconditional pledge
DR: Cash
CR: Refundable advance
What are the 3 requirements to NOT record donated art/historical treasure:
- Items is part of collection for public viewing (not for investment/financial gain)
- collection is cared for/ preserve/protected by org
- org has policy that if sold –> money reinvested to other collection items
How do you calc gross rev tuition and fees?
Assessed Tuition and fees
LESS: Canceled classes
______________________________
Gross rev from tuition and fees (unrestricted net assets)
How is a pledge rec recorded from pledge w/o restriction and pledge w/ donor restriction?
DR: pledge rec
CR: ADA
CR: Contributions - with donor restricted (unrestricted
Vs
DR: Pledge rec
CR: ADA
CR; donor Support restricted
How are functional and natural expenses reported
functional expense –> statement of activities
Natural –> notes to the F/S
If an NFP receives contribution and provides services in return –> how is this classified and what is the entry?
This is an exchange transaction
Cash
NA w/o donor restrictions
What is the purpose of presenting separate fund financial statements for govt and proprietary funds?
To report additional and detailed info about primary govt
What is the impact of income from designated investments not previously accrued for is rec on NFP ?
Increase in rev/gains/w/o restriction
When is the estimated rev account closed?
When budgetary accounts are closed
How is a promise to contribute money to an NFP considered?
As revenue w/ donor restriction (time restriction)
What are Matching and cost eligibility requirements represent in a grant to an NFP?
Both are examples of measurable performance-based barriers or other barriers that could indicate the existence of a condition
When is a conditional pledge to an NP recognized as revenue?
NEVER - only when they pledge becomes unconditional (when the conditions are met)
What is the unassigned balance and what would increase this balance?
Amount of current resources to be carried forward into the next year available
if appropriations exceeded actual expenditures (meaning funds that were assigned something were underbudget to CFWD to next year)
