FAR NFP - Set of 20 Flashcards
What financial statements must not for profits produce?
1.) Statement of Financial Position (like B/S)
2.) Statement of Activities (like I/S)
3.) Statement of Cash Flows
FASB ASC 958 says financial statements of NFP focuses on basic information for the org as a whole. Gives guidance for external reporting.
What is a reciprocal exchange transfer?
Each party receives & sacrifices something of equal value.
What are the not for profit functional expenses?
1.) Program services - directly related to mission
2.) Support services - G&A, Membership Dev, Fundraising
Must report functional expenses in statement of activities by classification above - helps donors assess org’s service efforts.
*Fundraising - inducing donors, e.g. maintaining donor list, merchandise to encourage contributions
What does NFP cash flow statement include regarding long lived assets?
Include proceeds from sale of long lived assets & insurance received from loss of long lived assets. Insurance proceeds from non capitalised assets shown separately on statement of activities.
How is NFP contribution revenue defined?
It’s unconditional (not reliant on future event happening), non-reciprocal, voluntary, and not of an ownership investment. Include payments in excess of FMV as contribution revenue.
On NFP cash flow statement, what’s included in operating activities, financing activities, and investment activities?
1.) Operating: unrestricted cash contributions
2.) Financing: cash restricted for property purchase
3.) Investing: proceeds from sale/purchase of works of art
Follows commercial cash flow format in NFP, e.g. truck purchased = cash inflow from financing, outflow from investing.
If given $1m to purchase endowment securities, how classed?
Restricted cash, non-current asset. Interest earned can go in unrestricted cash, current asset.
How should donation for specific person be reported?
If no variance power (discretion) given, must report as liability, not cash contribution. Variance power = Unilateral authority to redirect assets to another beneficiary.
What are some examples of ‘other operating revenue’?
Donation of medicine, cafeteria revenue - relates to ongoing major operation of hospital
Where is depreciation and grants to other orgs expense recorded in NFP?
As expense in statement of activities
What are quasi-endowment funds?
Quasi-endowment funds are internal funds designated for a specific purpose. They’re called unrestricted net assets externally.
How are donated services classed in a NFP?
Donated services are both an expense and a contribution, but must be a normal part of program/supporting services.
How are tuition & fees for a university reported?
They’re reported as revenues at the gross amount. Only refunds are netted against revenue. Scholarships are shown separately as expenditures.
When are marketable equity securities recorded?
They’re recorded at the balance sheet date, not the receipt date.
What is not included in unrestricted revenues, gains, & other support in a hospital?
Charity care involves providing services, but as it will never result in cash flow, it’s not recorded as revenue receivable. It’s only disclosed. Unrestricted revenue includes income earned and amounts released from restriction.
