FAR-Non Profit

Question 1

How many groups are covered by Nonprofit accounting and what are they?

Answer 1

Health care
Colleges and Universities
Voluntary Health and Welfare
All others not above (Fraternities, labor unions, libraries, museums, etc)

Question 2

What are the three basic financial statements in nonprofit accounting?

Answer 2

Statement of Financial Position
Statement of activities
Statement of cash Flows

Question 3

What is the formula for the nonprofit Statement of Financial Position?

Answer 3

Assets = Liabilities and Net Assets

Question 4

What three groups make up NPO net assets?

Answer 4

Unrestricted Net Assets?
Temprarily Restricted Net Assets
Permanently Restricted Net Assets

Question 5

What three categories are shown in NPO Statement of Activities?

Answer 5

Revenues/Gains
Net assets released from restriction
Expenses/Losses

Question 6

In Non-Profit, what kind of cash flow activity are restricted and temporarily restricted assets?

Answer 6

An operating activity

Question 7

In Non-Profit, what kind of cash flow activity is a permanently restricted asset?

Answer 7

A financing activity

Question 8

In NPO, what goes into the financing portion of the Statement of Cash Flows?

Answer 8

Proceeds from restricted contributions
Other Fianancing Activities
Permanently restricted revenue
Money restricted for a LT purpose
*PMT of Bonds, etc
* Money restricted for acquisition of PP&E

Question 9

What is the fourth financial statement in nonprofit accounting?

Answer 9

VHWO Statement of Functional Expense

Question 10

What is a VHWO?

Answer 10

Voluntary health and welfare organization

Question 11

What is reported in the VHWO Statement of Activities?

Answer 11

Public Support
\+Revenues
-Program Expenses 
-Support Servics
=Excess of revenue over expenses

Question 12

When are donations of services accounted for?

Answer 12

When they are a service that are a professional service that would normally require compensation. Entry as an expense and revenue which offsets.

Question 13

With NPOs, which financial statements show equity and debt instruments per ASC 320?

Answer 13

Trading - FMV Gains/Losses on Statement of Activities
AFS - FMV Gains/Losses on Statement of Activities
HTM: Bonds

Question 14

What are the statements used by non-for-profit Hospitals?

Answer 14

Statement of Financial Position
Statement of Operations
Statement of Change in Net Assets
Statement of Cash Flows

Question 15

On the statement of financial position, how should the net assets of each type of endowment be reported?

Answer 15

Term Endowments: Temporarily restricted

Regular Endowments: Permanently restricted

Question 16

Do public and private not-for-profits have to recognize depreciation expense?

Answer 16

Yes to both

Question 17

Where should the amount of charity care from a hospital appear in the financial statements?

Answer 17

It should appear as a note in the financial statements.

Question 18

What kind of asset are artworks to be maintained, and land that must be held permanently?

Answer 18

Restricted Assets

Question 19

Under what basis are revenues, gains, expenses, and losses reported?

Answer 19

Under the full accrual basis

Question 20

How are multi-year contributions recorded?

Answer 20

They are recorded at present value, with the money to be collected recorded as a temporarily restricted asset.

Question 21

What kind of asset is created from an exchange revenue? Example: Tuition

Answer 21

An unrestricted net asset is recognized in accordance with GAAP as applied to business enterprises

Question 22

How are expenses to be reported in the financial statements?

Answer 22

Expenses are to be reported by function in either the financial statements or the notes.

*Functions are either program or supporting

Question 23

One of two things have to happen to recognized conditional promises are revenue. What are they?

Answer 23

• The conditions on which the promise depends have been substantially met
• There is only a remote likelihood that the conditions on which the promise depends will not be met

Question 24

What is the restricted Net Position?

Answer 24

Restricted Assets - liabilities and deferred inflows of resources that are related to restricted assets.

Question 25

What are program services?

Answer 25

Expenses that are directly related to the program. For example: emergency releif, community education, training, research, etc

Question 26

What are supporting services?

Answer 26

Secondary to the mission. Fund raising and general and administrative expenses. Ex: Management and General; Fund raising; membership development

Question 27

Are donations of services recorded?

Answer 27

No, but donations of professional services are recorded as contribution revenue