Financial Reporting - Not for Profits Flashcards
What are the required financial statements of a NFP?
- Statement of financial position
- Statement of activities
- Statement of cash flows
What are the only two types of net assets?
Net assets with donor restrictions and net assets without donor restrictions.
What is the definition of net assets?
Residual interest - the assets of the NFP that remain after liabilities are deducted.
What is a promise to give or pledge?
An unconditional agreement to transfer assets to an entity which are accounted for as contributions receivable until collected.
How are investments in equity securites reported on the financial statements of a NFP?
Farket value. Unrealized gains and losses are also measured at FV and increase or decrease net assets.
Is restricted cash considered a current or non-current asset for an NFP?
Restricted as the cash is not expected to be spend int he near-term.
Are prepaids considered a current or non-current asset for a NFP?
The portion that will be expensed in one year or less is current and the portion that will be expenses after one year is non-current.
Waht is the purpose of a statement of financial position for a NFP?
Report the assets, liabilities, and net assets at a point in time.
What are the three options FASB permits for reporting collections (the arts)?
- Capitalize all collections purchased or donated after the effective date of the FASB’s guidance
- Do not capitalize collections
- Capitalize all collections purchased or donated
When are restricted contributions recognized?
When received or promised
When are condition contributions recognized?
Conditional contributions are not recognized until the condition has been met
What are exchange contributions?
Exchange contributions required a recipricol transfer between the donor and recipient. In these situations, the donation is reduced by the fair market value of the consideration given by the NFP.
NFP expenses are broken down by function. What are the the functions?
Functional - expenses associated with the mission of the NFP
Supporting - Management and general expense, fundraising, and membership development
How are contribution revenues recognized?
Donated services are fair value with a matching expense
When are promises to contribute in subsequent years recognized?
Promises to contribute are recognized immediately but are restricted as the funds are not available near term
When is the contribution of services recognized?
Contribution of services are recognized when the services contributed create or enhance non-financial assets or require specialized skill the NFP would need to purchase if not donated
When restricted net assets reclassified?
Restricted net assets are reclassified when there is a change in the donor’s restriction or the restriction has been fulfilled
How is restricted and unconditional support recieved in subsequent years recorded?
PV of the donation
Jurisdiction of government organizations?
Body corporate and politic and entities with the power to enact a tax levy
Jurisdiction of NFP?
Exempt from federal taxation
For NFP’s, how are unrestricted contributions recorded on the statement of cash flows?
Operating activities section of the cash flow statement
For NFP’s, how are restricted contributions recorded on the statement of cash flows?
Financing activities section of the cash flow statement
How are contributions for long-term purposes report on the statement of cash flows?
Financing activities section of the cash flow statement
What are the required quantitative note disclosures for an NFP?
- Availability of financial assets to meet the cash needs for general expenditures within one year
- External limits imposed by donors, laws, and contracts
- Availability of financial assets due to their nature
- Internal limitations
What are the underwater endowment disclosures required for an NFP?
- NFP’s policy and actions taken during the period concerning the underwater endowment
- Aggregate FV of underwater endowment funds
- Total original endowment gifts or required levels to be maintained
- Total fund deficiencies
How is a conditional donation treated on the Statement of Financial Position
Refundable advance
What is a split interest arrangement?
When a trust stipulates and that an oranization must share resources
What are expamples of a split interst arrangment?
- Perpetual trusts held by third parties
- Charitable gift annuities
- Charitable lead trusts
- Pooled income funds
- Charitable remainder trusts
