F9 Flashcards
J/E to record NFP promises
DR: Pledge receivable
CR: Allowance for doubtful
CR: Contribution rev
How is donated property accounted for under NFP?
is recorded at FV and is recognized as support
Program servces
Relate to functional expenses directly related to the mission of the organization
Support Services:
summarize the functional expenses related to general and admin, membership development and fund-raising
Fundraising
Inducing potential donors to contribute to the entity
Membership Activities
involve seeking prospective members, ensuring current member satisfaction, etc
Investing Activities from NFP in Statement of Cash Flows
should include proceeds from the sale of long lived assets or insurance proceeds associated with the loss of long lived assets
How should a NFP report its expenses in the statement of activities?
By their functional classification (program classification, supporting activities, fund-raising, etc. Helps donors and others in assessing an organization’s service efforts
J/E to record the satisfaction of temp donor restrictions and issuance of scholarships:
J/E to record satisfaction of donor restricted contributions used for scholarships
- DR: Satisf. of program restrictions -temp restricted
CR: Satisf. of program restrictions, unrestricted - DR: Scholarship expense
CR: Tuition Revenue
J/E for the donated services to repair the roof
DR: Expense
CR: Contributions
Where are donations of medicines for NFP Hospitals?
Included as other revenue at their FV of the medicine since the medicine constitutes part of the ongoing major operation of the hospital
What does the net assets balance for a university equal?
Assets- Liabilities (including deferred rev)
Required Govt FS
~Managements Discussion and Analysis (RSI)
~Govt-Wide FS (Statement of Net Position and Activities, No CF)
~Fund FS (major funds shown individually)
~Nots to FS
~RSI (Includes Pension, Budget, Infrastructure)
~Other Supp Info
Optional Reporting ~ CAFR
Comprehensive Annual Report
~Into Section
~Basic FS and Required Supp Info
~Statistical Section
What are primary Government Entities?
~State Governments
~General Purpose Local Govts (city or a county)
~Special purpose local govts (eg hospital authority or a school district) that meet the following criteria
~Separately-elected governing body
~ Legally separate
~Fiscally independent of other state or local govt
Component Unit
is usually an organization for which the elected officials of the primary govt are financially accountable.
Blended Presentation
Component units are so intertwined with the primary govt that they are, in substance, the same as the primary govt
Discrete Presentation
Separate Presentation – is used when the criteria for blended are not met
Required FS for NFP
~Statement of Financial Position (like BS)
~Statement of Activities (like IS)
~Statement of CF
~Statement of Functional Expenses (required by Vol Health and Welfare)
What are the components of Statement of Financial Position
~Assets
~Liabilities
~Net Assets (equity) (*this is not called funds, fund bal, or RE)
What are the Classifications of Net Assets?
P= Permanently Restricted Net Assets = limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the organization
U= Unrestricted Net Assets = *Internal board-designated funds are considered unrestricted
T= Temporary Restricted Net Assets = The donor-imposed stipulations either expire by passage of time or can be fulfilled and removed by actions of the organizations
NFP - what happens with Contributions with donor-imposed restrictions?
-Contributions with donor-imposed restrictions are recorded as restricted rev in the period in which they are received. Increase temp or perm restricted net assets
NFP- What happens when donor restrictions satisfied?
a reclassification is reported on the statement of activities. Reclassification are items that simultaneously increase one net asset class and decrease another
NFP- What happens when donor-imposed restrictions are not met in the same period they are received?
- Donor-imposed restrictions that are not met in same period they are received may be recorded as unrestricted support (contribution rev), provided that the org discloses and consistently applies this acct policy
NFP- What are program services?
~Program - activities for which the org is chartered
Ex: Universities, Hospitals, Union, Day Care
What are support Services?
Include everything not classified as a program service
Ex: Fund-raising, Admin, management & genderal, Membership development
What are included in investing activities on SCF for NFP
- Proceeds from sale of works of art or purchases of work of art
- Investment in equipment
- Proceeds from the sale of assets that were received in prior periods and whose sale proceeds were restricted to investment in equip
What are included in Financing activities for Statement of CF
include cash trans from borrowing and cash trans related to certain restricted contributions
-Proceeds from restricted contricbutions: LT purposes such as increases to an endowment fund, purchases of assets, or annuity agreements
NFP- What is the fourth required statement and the classification of expenses?
Statement of Functional Expenses: 4th required statement for vol health and welfare ~Classification of expenses: -Program Support Expenses -Fund-raising expenses -Management and general costs
How are resource inflows in NFP organizations generally classified?
As either Rev or Other Support
How are NFP contributions accounted for?
- Cash contributions
- Unconditional Promises
- Conditional Promises
- Multi-year pledges
- Allowance for Uncollectible pledges?
~Cash Contributions: Received = Revenue (FV at the date of gift)
~Unconditional Promises: Pledge = Revenue (FV when the promise is made)
~Conditional Promises: Earned = Revenue (Recog when conditions are met)
~Multi-year Pledges: Net PV when pledge is made
-Future collections are considered temp restricted rev and net assets (time-restricted)
-Diff b/n the previously recorded PV and the current amount collected is considered rev, not int inc.
~Allowance for uncollectible pledges: should be recorded in accordance to AR for commercial
How are donated services accounted for?
~Donated Services: FV of Services if they meet
- Create or enhance a non-financial asset (land, building, inventory, etc) or - Specialized skills that would be purchased otherwise (attorney, accountant, doctor services)
How are donated collection items accounted for?
~Donated Collections Items: are contributed works of art or historical treasures. Not required to be reported if all the following are met:
- Item is part of a collections - held for public viewing - Collection is cared for - Organization has a policy that requires any proceeds from the sale of donated items to reinvested in other collection items
J/E for NFP Unrestricted contributions
~Unrestricted Contributions: Reported as restricted support (implied time restriction) Unrestricted Pledges- Temp Restricted DR: Pledge receivable-temp restricted CR: Allowance for doubtful accounts CR: Contributed Rev - temp restricted
NFP - Restricted Collections - restricted by donor
- J/E for Restricted net assets
- J/E after receivable is collected and when money is spent on restricted purpose- restricted net assets:
- Unrestricted net assets:
Restricted Net Assets
DR: Pledge Receivable - temp restricted
CR: Allowance for doubtful accounts
CR: Restricted rev- temporarily restricted net assets
After receivable is collected and when money is spent on restricted purpose- restricted net assets:
DR: Reclassification - satisfaction of restrictions
CR: Cash/Restricted net assets
Unrestricted Net assets:
DR: Unrestricted net assets
CR: Reclassification - satisfaction of restrictions
DR: Operating Expense
CR: Cash/Unrestricted net assets
NFP- Agency Transactions:
consist of resources received by the NFP over which the NFP has little or no discretion or variance power.
NFP: Gifts In-kind?
Measured at FV
NFP: Exchange Transaction”
: reciprocal transfers of equal value
NFP: Fundraising Expense
Fundraising Exp: Cost of prem (calendars, coffee mugs, tote bages, etc) given to potential donors
NFP: General Principles: Recipient Accounting
~W/O Variance Power
- Assets = FV
-Assets are recogn as a liability to the beneficiary
DR: Asset
CR: Refundable Advance
NFP: Granted Variance Power and Financially interrelated with Beneficiary-granted variance power
-Assets are valued at FV
-Assets are recognized as contribution rev when received and expensed when distributed to beneficiary
DR: Asset
CR: Contribution Rev
NFP - How are investment in sec accounted for?
FV
NFP - Investments in sec – G/L (realized and unrealized)
- usually reported in the statement of activities as +/- to unrestricted net assets
NFP- Investment in Securities– Derivatives
should recogn the change in FV of all der. in the period of change (not permitted to use special hedge accounting rules)
NFP: Dividends, Interests, and Other investment income-
Reported in period earned as increases to unrestricted net assets
NFP: Endowment Fund
is used to account for donated assets, the principal must be retained intact
NFP:
Permanent Endowment
Term Endowment
Quasi-endowment
~Permanent Endowment: Principal is not permitted to be spent
~Term Endowment: must be held for a specified term
~Quasi-endowment: used when the internal gov board of an institution (not the donor) has determined the funds to be retained and invested for specified (other than loan or plant) purposes - unrestricted net assets
What is fund accounting application to NFP accounting
~Not used for external reporting. GAAP permits NFP org to cont to disclose info based on internal funds ~Seven basic fund types: -Unrestricted Current funds -Restricted Current funds -Plant Funds -Loan funds -Endowment funds -Annuity and Life Income funds -Agency Funds
NFP: Colleges and Universities
Revenues:
es and Universities Revenues: -Student Tuition and Fees: Gross Amt. Scholarships, tuition, waivers, and similar reductions are considered either expenditures or a separately displayed allowance reducing rev -Govt Aid, grants, and contracts -Gifts and Private Grants
NFP: Colleges and Universities
Restricted Revenues and gains:
Reported in statement of activities as changes in temp or perm restrcited net assets
NFP: Healthcare organizations
Revenue
~Patient Service Rev: accrual basis (Include: medical services - doc, surgery, recov room, etc)
-Charity care: is not recorded as a receivable or as reve
-Deductions: Contractual adj for third party, policy discounts, admin adj
~Other operating Rev (Examples: tuition from schools, revs from educ. programs, donated supplies and equipment, specific purpose grants, rev from auxiliary activities, cafe revs, parking fees, gift shop rev, medical transcription fees)
~Non-operating Rev and support G/L = ex. donated services
J/E for Donated supplies to NFP Healthcare organization
DR: Supplies inventory or expense
CR: Unrestricted contributions - other operating rev
