FAR NFP Flashcards
What are the 3 different types of F/S for NFP
- Statement of financial position
- Statement of activities
- Statement of cashflows
How does a NFP report donor- restricted cash contributions for long term purpose on statement of cashflows
- Financing activities
these include
- permanently restricted contribution ( endowments)
- contributions restricted for long-term purposes ( like payment of debt, bonds, and money restricted for acquisition of PP&E)
The statement of Financial Position is what kind of F/S
B/S
Listed in order of liquidity
Net assets divided between with and without donor restrictions
What are the three sections of the Statement of financial position
Assets, liabilities and net assets
assets = liabilities + net assets
Net assets are broken down into :
Net assets without donor restrictions
Net assets with donor restriction
What is net assets with donor restrictions
These are net assets with either a time restriction, purpose restriction, or permanent restriction
ALL are set by the donor at the time of the donation
Statement of activities - 3 sections
This is like the income statement
on the accrual system
1 - Changes in net assets without donor restrictions
- include net assets released from restrictions
- All expenses for the NFP will be listed in the unrestricted section
2 - Changes in net assets with donor restrictions
3- Changes in permanently restricted net assets
Instead of Net Income the NFP it has “Changes in Net a Assets”
What is on the Statement of Activities instead of Net Income
Changes in Net Assets
What is the statement of functional expense Analysis
This is now required by by every NFP -
It reports expenses by nature and function
- This can be done within the statement of activities
- As a separate schedule in the notes
- As a separate financial statement
What is meant by broken out by “nature and function”
- Expenses are broken out to show what was spent on program services and support service
Program services - further the mission the organization
- directly related to program
Support services
- Secondary to the mission
- Management and general costs, fundraising costs, membership development
What are the disclosures in a NFP
- Info on endowment funds - asset classification, composition and charges
- Boards understanding of how NPO’s classification of restricted and not work
- Spending policies with the endowment funds
How do you calculate excess of revenues over expenses
\+ Public support \+ revenues - program expenses - support services = excess of revenue over expenses
How do you accrue for pledges
Pledges can be accrued as receivables (net of allowance for uncollectible pledges)
Example: Pledges 300,000
15% uncollectible
100,000 is restricted
So:
100,00 is included in net assets with donor restrictions
200,000*15% = 170,00 is included as Net assets without donor restrictions
When you have donations with restrictions and the assets generate revenue how do you report?
the earnings in donor restricted endowments stays in donor restrictions
So at the end of the year the amount in donor- restricted contribution revenue will include:
- the contributed amount + earnings 1M +80K
1080 = donor restricted contribution revenue
Where are contributions that are free from donor restrictions captures on the statement of cashflows
- These are inflows from operating activities
What is included in financing activities - statement of cashflows
- liability transactions
- proceeds from loans an loan repayments
AND contribution that are restricted by the donor for buying something specific - asset or property
If someone give you money for an endowment or permanent - inflow is here
What is included in investing activities - statement of cash flows
asset transactions -
buying and selling investments and fixed assets
If you get $ to buy an asset - financing - but then you actually go out and buy it - spend the money - investing
What is the rule that determines is assets are to be reported as net assets with donor restrictions
They MUST be imposed by parties OUTSIDE the organization.
If say the BoTrust imposed a restriction - then it is not permanent and the money would be reported as without donor restrictions
How are operating expenses reported
As changes in net assets WITHOUT donor restrictions
- included are unrestricted cash contributions
$ from tuition Pledges received that were recorded LY Interets and dividend income cash paid to employees grants fulfilled interest paid
How do you classify an investment that is required by the donor to be used to make investments to be held in perpetuity
endowment fund - with restrictions
How are pledges collected in the future reported
Pledges are accrued as pledges receivable in the period in which they are made
- they are NET of allowance for uncollectibles
- If the pledges will be collected over more than 1 year - they should be reported at their present values
How do you treat if you get a donation and then given them something of value in return - like tickets
NFP is accrual accounting
So you must account for the tickets as revenue - ticket sales revenue
So if you get contribution of 50,000 and give 25 tickets wroth $100 each - how do you calculate
dr cash 50,000
cr Contributed revenue 47,500
cr ticket sales revenue 2500
What do you do if you sell investments from an endowment fund and have a gain or loss
- they are reported in the statement of activities as increases or decreases in net assets without donor restrictions
- If there were donor restrictions then they would be an increase WITH donor restrictions
Just because you have an endowment fund doesn’t NECESSARILY restrict the use of gains or losses
How is depreciation captured on the statement of activities
It is like any expense - reported as a decrease in net assets WITHOUT donor restrictions
How do you report investments at years end
Fair Value at end of year
What is included in other revenues and gains on a hospital’s statement of operations
Other Revenues and Gains are amounts received for reasons other than the performance of healthcare related services that can be used at the discretion of the board
- so $ from sale at gift shop
- dividend revenue that is not restricted
What items are include in the financing section of the statement of cashflows
- proceeds from loans or repayments
- restrictions permanently restricted by donor
- or if you get money strictly used for the acquisition of a specific asset
Do NFP have statement of RE
No - its reports changed to its net asset balances on the statement of activities
What are JE for essential services
they are recognized at their Fair Values
dr. expense
cr. contributions from donated services
if could also be an increase in an asset if the cost should be capitalized
dr. asset
cr. contributions revenue
The work need stop be skilled - if unskilled it is not recognized as contributed revenue
In which statement do the changes in reclassifications show
- statement of activities
It shows things being reclassified from restrictions to without restrictions
Its the I/S - accrual basis
What is a refundable advance
This is how you report donation that is given with conditional promises (matching funds)
A Conditional promise is not revenue until the condition is met
they are reported as liabilities until the condition is met and then they are revenues
this is when funds can be refunded
What is the primary purpose and focus of statement of activities
to demonstrate how the organization’s resources are used in providing various programs and services
What is included in a hospital statement of operations as total revenues, gains and other support
- Net patient service revenues
- NOT include revenue from charity work
- Assets released from restrictions and used for operations
- Other Revenues
How do you record getting money that was specifically speeded to anoretic non profit
Dr Asset
cr Liability
Because you get cash and an obligation to pay at the same time
What is the primary purpose and focus of the statement of activities for a nongovernmental, NFP
It is to demonstrate how the organizations resources are used in providing various programs and services
Are depreciation and grants to other organizations in the statement of activities
Yes - they are both expenses
on all capital assets - same as commercial enterprises
What are donations called -in NFP
They are called contributions revenue
What do you do when you get $150 from a donor and you give them $100 on tickets
When you have an exchange for goods - the amount received in excess of the fair value of the goods and service is revenue
dr. cash 150
cr tickets sales 100
cr contribution revenue 50
What do you do - or how do you report when your endowment fund is underwater - has a loss for the year - unrealized loss of 60,000
The 60,000 in unrealized loss is required to be presented along with the actual value of the fund in net assets with donor restrictions
the result is that a unrealized loss does not decrease net assets with donor restrictions
