FAR 8-10 Flashcards
What is interperiod equity?
Helps users assess whether current year revenues are sufficient to pay for current year services (i.e. balanced budget)
Who are users of not-for-profit financial statements?
Donors, members, creditors, and other resource providers
What is the emphasis of reporting in a not-for-profit entity?
Sources of and how resources were expended; basic information of the organization as a whole
What are the required financial statements for a not-for-profit entity?
Statement of Financial Position
Statement of Activities
Statement of Cash Flows
What are program services? (under “functional classification”)
Services that relate to the purpose and mission of the NFP entity
Ex) education and research; patient care; labor negotiations and training; child care
What are support services? (under “functional classification”)
Services that relate to activities like management and general (administrative), fundraising, and membership development
What are examples of natural classifications of expenses?
Salaries, rent, utilities, interest expense, etc.
Internal board-designated funds are considered __________
Net assets WITHOUT donor restrictions
When using the direct method to for an NFP entity, what is not required?
Presentation of reconciliation of net income to cash flows from operations
How should cash flows from financial activities be presented on the F/S?
Segregated by “Proceeds from Donor-Restricted Contributions” and “Other Financing Activities”
Revenues from exchange transactions are classified as __________
Increases to net assets without donor restrictions
What are some barriers that indicate a conditional contribution?
Specified levels of service
Specific outputs or outcomes
Matching
Outside event
How are unconditional promises recorded?
As revenue when pledged
Dr: Asset (FMV) xxx
Cr: Contribution support revenue xxx
How are conditional promises recorded?
As revenue when earned. *Conditional pledges are not recorded.
(Ex: Good faith deposit)
Dr: Cash xxx
Cr: Refundable advance xxx
What is the difference between donor restrictions and conditions?
Donor restrictions are satisfied by the NFP by use of the donated resources consistent with restrictions. Conditions are satisfied by the resolution of barriers.
How are multiyear pledges recorded?
As revenue at the net present value at the date the pledge is made
What are split-interest agreements and how are they reported?
Benefits that are shared with other beneficiaries
Key words: “trust” or “fund”
At FV at the date of acquisition and displayed as donor-restricted
When are donated services recognized?
- Create or enhance a nonfinancial asset (land, building..) OR
- Require specialized skills that would have been purchased
- (S)pecialized, (O)therwise, (M)easurable, (E)asily, at fair value
Dr: Expense/asset xx
Cr: Contributions -w/out DR xx
Donated collection items are not required to be recorded if:
- Item is part of collection
- Collection is cared for; and
- Proceeds from sale of donated items are reinvested to collection
How are donated materials recorded?
If significant in amount, at FV on date of receipt
Dr: Asset xx
Cr: Contribution- support xx
J/E for a governmental fund lease that transfers ownership; lessee side
Dr: Expenditure- capital outlay xx
Cr: Other financing source- lease xx
How do proprietary funds (as lessees) record leases?
Dr: ROU Asset xx
Cr: Lease liability xx
What are the primary activities of the debt service fund?
To pay interest and principal payments on governmental-fund debt
When does a governmental fund recognize interest and principal on debt?
When the debt service payment is legally due, the debt service fund recognizes principal and interest as expenditures
