FAR 8-10

Question 1

What is interperiod equity?

Answer 1

Helps users assess whether current year revenues are sufficient to pay for current year services (i.e. balanced budget)

Question 2

Who are users of not-for-profit financial statements?

Answer 2

Donors, members, creditors, and other resource providers

Question 3

What is the emphasis of reporting in a not-for-profit entity?

Answer 3

Sources of and how resources were expended; basic information of the organization as a whole

Question 4

What are the required financial statements for a not-for-profit entity?

Answer 4

Statement of Financial Position
Statement of Activities
Statement of Cash Flows

Question 5

What are program services? (under “functional classification”)

Answer 5

Services that relate to the purpose and mission of the NFP entity

Ex) education and research; patient care; labor negotiations and training; child care

Question 6

What are support services? (under “functional classification”)

Answer 6

Services that relate to activities like management and general (administrative), fundraising, and membership development

Question 7

What are examples of natural classifications of expenses?

Answer 7

Salaries, rent, utilities, interest expense, etc.

Question 8

Internal board-designated funds are considered __________

Answer 8

Net assets WITHOUT donor restrictions

Question 9

When using the direct method to for an NFP entity, what is not required?

Answer 9

Presentation of reconciliation of net income to cash flows from operations

Question 10

How should cash flows from financial activities be presented on the F/S?

Answer 10

Segregated by “Proceeds from Donor-Restricted Contributions” and “Other Financing Activities”

Question 11

Revenues from exchange transactions are classified as __________

Answer 11

Increases to net assets without donor restrictions

Question 12

What are some barriers that indicate a conditional contribution?

Answer 12

Specified levels of service
Specific outputs or outcomes
Matching
Outside event

Question 13

How are unconditional promises recorded?

Answer 13

As revenue when pledged

Dr: Asset (FMV) xxx
Cr: Contribution support revenue xxx

Question 14

How are conditional promises recorded?

Answer 14

As revenue when earned. *Conditional pledges are not recorded.

(Ex: Good faith deposit)
Dr: Cash xxx
Cr: Refundable advance xxx

Question 15

What is the difference between donor restrictions and conditions?

Answer 15

Donor restrictions are satisfied by the NFP by use of the donated resources consistent with restrictions. Conditions are satisfied by the resolution of barriers.

Question 16

How are multiyear pledges recorded?

Answer 16

As revenue at the net present value at the date the pledge is made

Question 17

What are split-interest agreements and how are they reported?

Answer 17

Benefits that are shared with other beneficiaries
Key words: “trust” or “fund”

At FV at the date of acquisition and displayed as donor-restricted

Question 18

When are donated services recognized?

Answer 18

1. Create or enhance a nonfinancial asset (land, building..) OR
2. 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

Question 19

Donated collection items are not required to be recorded if:

Answer 19

1. Item is part of collection
2. Collection is cared for; and
3. Proceeds from sale of donated items are reinvested to collection

Question 20

How are donated materials recorded?

Answer 20

If significant in amount, at FV on date of receipt

Dr: Asset xx
Cr: Contribution- support xx

Question 21

J/E for a governmental fund lease that transfers ownership; lessee side

Answer 21

Dr: Expenditure- capital outlay xx
Cr: Other financing source- lease xx

Question 22

How do proprietary funds (as lessees) record leases?

Answer 22

Dr: ROU Asset xx
Cr: Lease liability xx

Question 23

What are the primary activities of the debt service fund?

Answer 23

To pay interest and principal payments on governmental-fund debt

Question 24

When does a governmental fund recognize interest and principal on debt?

Answer 24

When the debt service payment is legally due, the debt service fund recognizes principal and interest as expenditures

Question 25

What does the unassigned fund balance represent?

Answer 25

The amount of current resources carried forward that will be available for appropriations.

Question 26

When would the unassigned fund balance likely increase?

Answer 26

When appropriations exceed actual expenditures (expenditures are less than appropriations)

Question 27

What is included in total est current cost of MSWLF closure and postclosure care?

Answer 27

a) Cost of equipment to be installed and facilities expected to be constructed (ie. gas monitoring and collection systems)
b) Cost of final cover (capping)

Question 28

What are characteristics of the MD&A?

Answer 28

Reported separately from other required supplementary information

Includes a comparison of current year results to the prior year with emphasis on the current year

Presents condensed financial information from the government-WIDE F/S