FAR - 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?
“Similar to Balance Sheet:
Assets Liabilities Net Assets Unrestricted Assets Permanently Restricted Assets Temporarily Restricted Assets"
What are the major classifications in a Statement of Activities?
“Similar to an Income Statement - organization - wide:
Revenues Expenses - ONLY deducted from Unrestricted Revenues Gains and Losses Changes in Net Asset classes Unrestricted Permanently Restricted Temporarily 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 - Unrestricted Revenues and Unrestricted Expenses
Investing Activities
Financing Activities - Endowments and restricted contributions
”
Which organizations are required to present a Statement of Functional Expenses?
Volunteer Health Organizations
Which statements are required for non - governmental hospitals?
"Balance Sheet Statement of Operations Statement of Changes in Net Assets Statement of Cash Flows 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?
Classified as revenue in the current year only - multi - year future contributions fall under Temporarily 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?
“Use of investment is restricted - but 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”
