FAR 8 - NFP and Governmental Part 1 Flashcards
NFP required financial statements
1) Statement of Financial Position (BS)
2) Statement of Activities (IS)
3) Statement of Cash Flows
Internal board-designated funds
Classified as net assets w/o donor restrictions
What is included on the Statement of Financial Position
Assets Liabilities Net Assets -w/o donor restrictions -with donor restricitions
What is included on the Statement of Activities
1) Change in total net assets
2) Change in net assets w/o donor restrictions
3) Change in net assets with donor restrictions
4) Revenues, gains
5) Expenses, losses
Program services
Expenses of specific activities (ex. Universities = education and research)
Support services
Expenses not classified as a program service (ex. Fundraising and administrative expenses)
Functional classifications
Expenses categorized by major classes of program and support services
Natural classifications
Specific expense categories, similar to general ledger titles (ex. salaries, rent, supplies, etc)
Money spent
Equals money earned! Released from restrictions
Revenues from exchange transactions (earning of resources for a performance of service)
Classified as net assets w/o donor restrictions (ex. student tuition, membership fees)
Unconditional promises
Also known as a pledge, this is a contribution and is recorded at fair value of the promise made
Conditional promises
Depends on occurrence. Do not recognize until conditions are met
Donated collection items (art or statue)
Not required to be recorded by the NFP
Donated materials
Record revenue at FV
Dr: Asset
Cr: Contribution - support
Gross revenue from tuition and fees
Assessed student tuition and fees - canceled classes
Revenue recognition in health care organizations
1) Patient service revenue = Gross patient service revenue - charitable services
2) Other operating revenue = Tuition, donated supplies, etc
3) Nonoperating revenue and support G/L = interest and dividen income, donated services, income from endowment funds, etc
Recipient accounting (when a NFP accepts assets from a resource provider and agrees to use on behalf of, or transfer to a specified beneficiary)
1) Not financially interrelated / without variance power
Dr: Asset (FV)
Cr: Refundable advance liability
2) Not financially interrelated / with variance power
Dr: Asset (FV)
Cr: Contribution revenue
3) Financially interrelated / with or without variance power
Dr: Asset (FV)
Cr: Contribution revenue
Financially interrelated organizations
1) One organization has the ability to influence the operating and financial decisions of the other and
2) one organization has an ongoing economic interest in the net assets of the other
Beneficiary accounting
1) Not financially interrelated / no beneficial interests
Dr: Receivable
Cr: Contribution revenue
2) Not financially interrelated / beneficial interests
Dr: Beneficial interest
Cr: Contribution revenue
3) Financially interrelated
Dr: Interest in recipient net assets
Cr: Change in interest in recipient net assets (Equity)
Endowment Funds
Assets established to provide income for a NFP (principal off limits but interest income used)
1) Board-designated endowment fund (without restrictions)
2) Donor-restricted endowment funds (with restricitons)
Underwater endowments
A donor-restricted endowment fund for which the fair value of the fund at the reporting date is less than the original gift amount (reported as deficiency)
Governmental fund overall structure
1) Governmental funds (GRaSPP)
2) Proprietary funds (SE)
3) Fiduciary funds (CIPPOE)
Governmental funds accounting
- Modified accrual basis
- Current financial resources focus (no fixed assets or long term debt)
Governmental fund types
GRaSPP
- General fund
- special Revenue fund
- debt Service funds
- capital Projects funds
- Permanent fund
Proprietary / Fiduciary (Trust) funds accounting
- Full accrual basis
- Economic resources focus (include everything like fixed assets and LTD)
Proprietary fund types
SE
- internal Service funds
- Enterprise funds
Fiduciary (trust) fund types
CIPPOE
- Custodial funds
- Investment trust funds
- Private purpose trust funds
- Pension and Other Employee benefit trust funds
Modified accrual revenues and expenses
1) Revenue is recognized when measurable and available (year + 60 days)
2) Expenditures are generally recorded when the related fund liability is incurred. Most notably, both interest and principal are not recognized until either due or paid
Budgetary accounting journal entries
These budget accounts are opposite to normal accounts and only get booked twice a year (beg and close)
Beg:
Dr: Estimated revenue control
Cr: Appropriations control
Dr/Cr: Budgetary control (deficit (dr) or surplus(cr)
**Entry reverse at the end of the year +/- any adjustments
Types of non-exchange revenues (giving/receiving value without directly receiving equal value)
1) Derived tax revenues (sales tax, income tax)
2) Imposed non-exchange revenues (property tax, levied tax)
3) Government mandated
4) Voluntary
- 1 and 2 will always recognize if time requirements are met (collected within 60 days of year-end)
Modified accounting fixed assets purchases and long term debt
EXPENSE
Fixed asset:
Dr: Expenditure - capital outlay
Cr: Vouchers pay or cash
Long term debt proceeds:
Dr: Cash
Cr: Other financing sources - bonds issued
Paying interest and principal:
Dr: Expenditure - principal
Dr: Expenditure - interest
Cr: Cash
Short term leases entry for government wide FS (lessor and lessee)
Lessor
Dr: Receivable
Cr: Revenue
Lessee
Dr: Lease expense
Cr: Cash/Payable
Contracts that transfer ownership
look at chart
Leases other than short term and contracts that transfer ownership
look at chart
