FAR 12 Flashcards
Nongovernmental not-for-profit organizations are required to report their financial statements on
Nongovernmental not-for-profit organizations use full accrual accounting and the flow of economic resources measurement focus.
Not for Profit Operating Activities Include:
Operating Activities section of the Statement of Cash Flows includes unrestricted cash contributions, unrestricted investment earnings, revenue restricted for operating purposes (Program Restrictions), revenue from exchange transactions, and operating expenditures (salaries, supplies, interest expense).
Not for Profit Investing Activities Include:
Investing Activities section includes inflows and outflows from the sale and purchase of capital assets and investment assets.
Not for Profit Financing Activities Include:
The Financing Activities section includes contributions and investment revenues restricted for long-term purposes (e.g., restrictions for acquisition of capital assets, endowments) and debt-related activities (debt proceeds, repayments, lease payments, etc.).
A nongovernmental not-for-profit organization’s Statement of Activities is similar to which of the following for-profit financial statements?
Income statement. According to SFAS No. 117 para. 30(b), the Statement of Activities for not-for-profit organizations is the financial statement that is issued instead of a business entity’s income statement.
Support Services for non governmental NFP include what?
Support services for not-for-profit organizations include the following: management, general administration, fund-raising, and membership development.
What type of NFP must include a Statement of Functional Expenes?
voluntary health and welfare organizations (VHWO)
How should a nongovernmental not-for-profit organization report depreciation expense in its Statement of Activities?
It should be included as a decrease in unrestricted net assets.
Collections (i.e., inexhaustible fixed assets) donated to a not-for-profit organization do not need to be capitalized.
What criteria must be met?
(1) the asset is held for public exhibition, education, or research rather than financial gain; (2) the asset must be protected, unencumbered, cared for, and preserved; and (3) the asset is subject to a policy that requires proceeds from sales of collection items to be used to acquire other items for the collection.
In hospital accounting, restricted funds are:
Restricted as to their use by the donor, grantor, or other source of the resources.
A college has a June 30 fiscal year end. Assume that tuition revenue for the summer session that begins June 1, 20X8 and ends August 31, 20X8 totals $270,000. Tuition is billed and is due at the beginning of the session term. How much revenue should be reported as of the fiscal year ended June 30, 20X8?
$ 90,000
2/3 booked as Revenue in next fiscal year.
According to GASB, what are the 5 elements of the Statement of Financial Position?
GASB Concepts Statement No. 4 identifies the following five elements of the Statement of Financial Position: (1) assets, (2) liabilities, (3) deferred inflows of resources, (4) deferred outflows of resources, and (5) net position. Since net assets are the difference between assets and liabilities, GASB prefers the term “net position,” which is the difference between assets and deferred outflows and liabilities and deferred inflows.
According to GASB, what are the 2 Paramount Objectives of Financial Reporting? What are the 6 characteristics of effective financial reporting?
GASB Concept Statement No. 1 defines two paramount objectives for financial reporting in government: (1) Accountability and (2) interperiod equity. Therefore, “Accountabilty” is the correct answer to this question. Concept Statement No. 1 describes six characteristics of effective financial reporting: (1) understandability, (2) reliability, (3) relevance, (4) timeliness, (5) consistency, and (6) comparability (TRUCCR).
According to GASB, who are the primary users of the external financial statements?
GASB Concepts Statement No. 1 defines the primary users of the general purpose external financial report as the citizenry (e.g., taxpayers), legislative and oversight bodies (e.g., school boards), and investors and creditors (e.g., bond insurers).
GASB Concepts Statement No. 1 lists the following four financial reporting implications associated with the legally adopted annual budget:
(1) expression of public policy, (2) expression of financial intent, (3) form of control, and (4) it may provide a basis for evaluating performance (if the government established service efforts and accomplishment goals as part of its budget process).
