FAR 30 - NFP Accounting Flashcards
Which financial statements are required for not - for - profit organizations?
- Statement of Financial Position
- Statement of Activities
- Statement of Cash Flows
- Statement of Functional Expense
- (Volunteer Health Organizations Only)
What are the major classifications found on a Statement of Financial Position?
(Assets = Liabilities + Net Assets)
Assets
Liabilities
Net Assets (3 Categories)
- Unrestricted Assets
- Permanently Restricted Assets - Time/Use/Purpose
- Temporarily Restricted Assets - Endowment
What are the major classifications in a Statement of Activities?
Similar to an Income Statement - organization - wide
Rows:
- Revenues, gains and other support
- Net assets released from restrictions
- Expenses & losses (EXPENSES - ALL UNRESTRICTED)
Columns:
- Unrestricted
- Temporarily Restricted
- Permanently Restricted
What are the characteristics of a Statement of Cash Flows for not - for - profits?
What are the major classifications?
Both direct and indirect methods are OK
-
Operating Activities
- Direct/Indirect method
- Unrestricted & Temporary restricted revenues
- Interest income & Dividend Income
-
Investing Activities
- Buying & selling assets
-
Financing Activities - Borrowings/Repmts
- Endowments - Permanent restricted revenues
- _Money Restricted for acq of PP&E***_
Which four statements are required for non - governmental hospitals?
- Balance Sheet
- Statement of Changes in Net Assets
- Statement of Cash Flows (Like GAAP)
- Statement of Operations (Activities)
- Financial Statement Notes
Which basis of accounting is used for revenues and net assets?
- Accrual basis of accounting is used
- Only external parties can restrict the use of assets (permanent or temporary)
- Assets earmarked internally by management are still classified as unrestricted
What are the characteristics of unrestricted assets or revenue?
No restrictions or conditions placed on entity in order to use the resources
Note: assets earmarked internally by management are still unrestricted
When are revenues on contributions recognized?
Revenues on contributions are recognized in the year received - not the year the contribution is spent and are recorded at Fair Value on the date received
When are services rendered considered contributions?
If the organization would have otherwise paid for them or They increase the value of a non - monetary asset
Is hospital charity care revenue?
NO.It is disclosed in the notes to the financial statements only.
How are unconditional pledges to contribute recorded?
- A revenue in period when pledge is made (net of allowance); Recorded as an Receivable
- Record at PV if annuity
JOURNAL ENTRY:
DR: Pledge Receivable
CR: Allowance for Uncollectible Pledges
CR: Revenues - Unrestricted
CR: Revenues - Temprorary Restricted
Which revenues are expenses deducted from?
Expenses ONLY deducted from Unrestricted Revenues - not Temporary or Permanently Restricted Revenues/Assets
What are the characteristics of temporarily restricted assets/revenue?
Use is restricted to a future time - which could then convert to unrestricted - Class: Temp. Restricted Revenue
Unrestricted contributions promised (including multi - year contributions) - but not yet received are actually restricted by time and are therefore classified as Temporarily Restricted Assets - Multi - year contributions are recorded at the present value of the future contributions
What are the characteristics of an endowment?
- Permanently restricted revenues
- Income from investment could be either restricted or unrestricted.
- Must be under control of receiving entity (Quasi Endowment) in order to be recorded in unrestricted net assets
- Otherwise - a memo entry is recorded
When is the donation of an art collection recognized as a contribution or asset?
Not recognized as assets or contribution revenue if they are held for display, education, or their sale results in the purchase of similar items.
When both Temporarily Restricted Assets and Unrestricted Assets are available for use - which assets are used first?
Temporarily restricted assets are used before Unrestricted assets.
How is a refundable advance recorded by a not for profit?
Classified as a Liability
Promise to contribute assets pending on certain conditions being met
Becomes unconditional once the possibility that it won’t happen is remote
How are investments recorded and valued in not - for - profit accounting?
- Fair Value is mostly used
- Exception - Equity method used when significant influence exists
How are scholarships recorded?
As a reduction of revenue - netted against college’s tuition
How is depreciation expense recorded by a not - for - profit?
Depreciation expense is allocated proportionately to various functions
Which organizations are required to present a Statement of Functional Expenses?
What are the components of a Statement of Functional Expense?
For VHWO - Red Cross/Greenpeace
Statement of Activities
+Public Support (donated,contributed,pledges)
+Revenues (earned,membership dues,fees)
- Program Expenses (program core expenses)
- Support Svc (secondary: Gen/Admin,Fund Raising)
=Excess of revenue over expenses
What are pledges and how are they recorded?
Pledges - an unconditional or conditional promise that have been made to an NPO, may be accrued as a receivable net of allowance of uncollectible.
Journal Entry:
DR: Pledge receivable (at P.V)
CR: Allowance of Uncollectible Receivable
CR: UNA Revenues
CR: TRNA Revenues
Statement of Operations (UNA) (Activities) - Hospital
PP NO ONE
+Patient Svc (hotel type,medical,lab)
-Prov Contractual adj (medicare,employee disc,not charity)
=Net Patient Service Revenues
+Other Operating Rev (non medical,parking,cafe)
-Operating Expenses (bad debts,drugs,gen & admin)
+Non Operating Rev (unearned/donations)
=Excess of Rev over Expenses (Performance Indicator)
Contributions J/Es for TRNA
Temporarily Restricted Net Assets:
Get Money
DR: Cash
CR: Donated Revenue (TRNA)
Use Money - 2 Step
DR: Expense
CR: Cash
DR: Temprarily Restricted NA
CR: Unrestricted NA
NOTE: No Net Effect on Unrestricted NA, Increase from Temp NA, but decrease from Expense
