FAR 1B1 SFP Flashcards
🏗️ What is included in the Plant Fund of an NFP?
✅ Equipment
❌ Fuel inventory is NOT included
🏦 Where can board-designated net assets be reported?
✅ On the face of the balance sheet (BS)
✅ In the notes to the financial statements
📑 What does “face of financials” mean?
✅ It refers to the balance sheet (BS) section
✅ If something like “board-designated net assets” can be shown on the face of financials, it means it must appear as a separate financial statement line item (FSLI) on the BS
💰 When is a contribution receivable recognized?
✅ When it is unconditional OR when conditions are met
✅ Recognized in the period when the contribution is made
📊 How are donated debt securities valued?
✅ At fair value (FV) at the end of the period
✅ Interest earned is added to determine the total change in net assets
🎨 When can an NFP opt NOT to capitalize a donated work of art?
✅ If the item is:
1️⃣ Held for exhibition 🖼️
2️⃣ Protected and preserved 🏛️
3️⃣ Sales proceeds are used for acquisitions, direct care, or both
📑 How should a work of art donation be reported on the financial statements?
✅ A note describing the collection must be referenced on the face of the BS
🔄 How must restricted assets be disclosed?
✅ The nature and amount of different types of restricted assets must be disclosed on the face of the BS, in the notes, or both
📈 How are earnings on restricted investments recorded?
✅ As an increase in assets without donor restrictions
❌ Unless the donor specifies a restriction on earnings
🎓 Does GASB apply to private universities?
❌ No, FASB applies to private universities
✅ GASB applies only to governmental entities
💵 How is investment income from a restricted endowment reported?
✅ If undisbursed, both principal and income contribute to net assets with donor restrictions
🏦 What is a refundable advance in an NFP?
✅ A liability 💳
✅ Example: A university receives a donation that is conditional upon raising matching funds
✅ Not recognized as revenue until conditions are met
🔄 What are the three options for reporting purchased or donated collections in an NFP?
1️⃣ Capitalize collections
2️⃣ Do not capitalize collections
3️⃣ Capitalize all collections
📝 When should an unconditional promise (pledge) be recorded?
✅ As revenue when the promise is made, at net realizable value (NRV), net of an allowance for uncollectible pledges
📌 What should you check when answering a financial statement classification question for an NFP?
✅ Read carefully to determine where the item belongs (P&L, BS, or other statement)
🛠️ When are contributed services recognized as revenue in an NFP?
✅ Only if the service:
1️⃣ Creates or enhances nonfinancial assets
2️⃣ Requires specialized skills (e.g., licensed professionals like CPAs, doctors, law
📊 What affects net assets with donor restrictions?
✅ Gains on investment value
✅ Investment revenue
🎭 What do collections consist of in an NFP?
✅ Works of art, historical treasures, or similar assets
🏛️ What are the basic financial statements required for state and local governments?
✅ Government-wide financial statements
✅ Fund financial statements
✅ Notes to the financials
📊 What is a “fund” in governmental accounting?
✅ A self-balancing set of accounts
✅ Tracks cash, liabilities, equity, and changes in financial resources for a specific purpose
🔄 What types of restrictions can be placed on NFP net assets?
1️⃣ Support of specific operating activities
2️⃣ Use in a future period
3️⃣ Acquisition of long-lived assets 🏗️
4️⃣ Investment for a specific term 📈
5️⃣ Perpetual donor-restricted endowments 💰
6️⃣ Preserved assets (e.g., land, artwork) that cannot be sold
📑 How should an NFP value a donation of equity securities?
✅ At fair value at the date of the financial statements
❌ NOT at the lower of donation date FV and financial statement date FV
📉 How are investment gains and losses reported in an NFP?
✅ Changes in net assets without donor restrictions
❌ Unless the donor specifies a restriction
📊 How are debt and equity investments reported?
✅ Debt securities → Market value
✅ Equity securities → Fair value (FV)
📈 How are revenues reported in an NFP?
✅ As increases in unrestricted net assets, unless restricted by the donor
📉 How are expenses reported in an NFP?
✅ As decreases in unrestricted net assets
✅ Investment expenses must be reported net of investment returns
📊 What must an NFP disclose about allocated costs?
✅ A description of the allocation method for program and support functions
🏦 What happens when donor-restricted contributions are used in the same year?
✅ No impact on net assets at year-end since they were released from restriction
💳 What is the difference between a refundable advance and unearned revenue?
✅ Refundable advance: Received conditionally and may be returned if conditions are not met
✅ Unearned revenue: Payment received for future services
🏛️ What defines net assets in an NFP?
✅ Residual interest in assets after deducting liabilities
❌ Unlike for-profit equity, NFP net assets do not represent ownership interests
💵 When is a promise to give (pledge) recognized in an NFP?
✅ When it is unconditional or when conditions are met
📑 Where can board-designated net assets be reported?
✅ On the face of the BS or in the notes
How are conditional contributions accounted for by nongovernmental not-for-profit (NFP) entities?
✅ Recorded as a refundable advance (liability) until conditions are met
✅ Not recognized as revenue until the barrier is overcome and donor lacks discretion
✅ Example: A matching gift requiring the NFP to raise funds is conditional and stays a liability until matched
