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Financial Accounting Reporting > GOV & NON-FOR-PROFIT ACCT > Flashcards

GOV & NON-FOR-PROFIT ACCT Flashcards

1
Q

What is a capital fund?

A

it’s a general fund where the account is used to acquire government related projects

For an examples construction of a center rehabilitation of drug addicts

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2
Q

Can a local gov unit use the fiduciary and properietary funds?

A

Yes a gov unit can use both funds which are used by state and local governments

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3
Q

What funds are included in governmental funds?

A

1) General fund
2) Special revenue
3) Capital projects funds
4) debt service
5) Permanent funds

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4
Q

What funds are included in proprietary funds?

A

1) Internal service
2) enterprise funds

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5
Q

What funds are included in fiduciary funds?

A

1) pension and other employee benefits funds

2) investment trust funds

3) private purpose trust

4) custodial funds

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6
Q

What is internal service fund?

A

provides goods and services for subunits of the primary government

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7
Q

Does General funds recognize revenues when its become available and measurable?

A

Yes, because accounted under the modified accrual basis of accounting

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8
Q

What is a permanent fund?

A

it’s a gov fund that is restricted for use of earnings not principals

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9
Q

What is a special revenue fund?

A
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10
Q

What is the primary standards for for GOV Funds?

A

GASB Governmental Accounting Standard Board

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11
Q

What does the accrual basis of accounting focus on for funds?

A

long term results and costs of services

Also, revenue and expenses are measured same way as for profit accounting

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12
Q

Financial statements that NFP report?

A

Financial position at the end of reporting period

Statement of activities and cashflows for the reporting and accompanying notes

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13
Q

Key words for problems that mention “Net Asset released from restriction” we think of?

A

Program expenses which reported under net asset with restrictions

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14
Q

What is included supporting activities?

A

1)Management and general
2)Fundraising and
3)Membership-development activities

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15
Q

What are some natural expense examples?

A

rent, interest, depreciation, salaries

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16
Q

When a NFP receives a donation with donor restrictions how is that processed?

A

1) Classify the donation as a Net Asset with donor restriction

2) When the donation purpose is completed it’s restriction is expired

3) reclassified and the net asset with donor restriction is “decreased”

4) increase the Net asset without restriction

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17
Q

When a NFP recognize depreciation how is it recognized?

A

using the Fair value of the asset not the equipment cost

30,000 fair value / 10 years = 3,000 depreciation that should be recognized

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18
Q

What are the financial statements required at year end for nongovernmental NFPs?

A

1) statement of financial position

2) statement activities

3) statement of cash flows fro the reporting period

4) accompanying notes to financial statements

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19
Q

The statements of position position must report what classes of assets?

A

without donor restriction & with donor restrictions

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20
Q

What is the primary purpose of statement of activities of nongovernmental not for profit?

A

To report the change in the net assets for the period

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21
Q

If a Non-for-profit receives a donation of art how is that recognized?

A

it’s NOT recognized as revenue however, acquired other items for collections

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22
Q

What are major functional expenses of NFPs?

A

Supporting activities & program services

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23
Q

EX - of supporting activities expense for NFP

A

1) Management and general
2) membership development
3) fundraising

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24
Q

EX - of program services for NFP

A

1) salaries
2) interest
3) rent
4) and depreciation

25
Q

What is the statement of activities the same as for profit statement?

A

Balance sheet

26
Q

What is the statement of activities?

A

Income Statement

27
Q

Is a freezer costing depreciated for NFP?

A

Yes

Land and construction isn’t depreciated

28
Q

Calc, the depreciation expense for the vehicle with changes net assets without donor restrictions?

A

Purchase unrestricted cash 15,000
Fair Value of 12,000

15,000 + 12,000 = 27,000 / 5 years

5,400 given no residual value

29
Q

Are interest earned classified as current asset?

A

Yes

30
Q

What do NFP depreciate?

A

Building and equipment vehicle as well however NOT land and property

31
Q

Calc, the operating activities for the cash flows using the direct method?

A

Prepaid insurance 75,000 + insurance expense 30,000 - 50,000 = 55,000

31
Q

Calc, the equipment amount at Jan 1, Year 5 when the error was discovered?

A

For the equipment we can just include the purchase of the equipment as when error was discovered

31
Q

Calc, the total accumulated depreciation Jan 1, 2024 when the error was discovered?

A

750,000 equipment cost / 5 years x 4 years

750,000 / 5 * 4 = 600,000

32
Q

Calc, the required adjustment to the net asset without donor restriction Jan 1, 2024 when the error was discovered?

A

Step 1 - calc the Accumulated depreciation

Equipment cost 450,000 / 5 years x 4 years

450,000 / 5 x 4 = 360,000

450,000 - 360,000 = 90,000 credit

33
Q

When we restate prior period statements do we include the non-cash items on the change in net assets for the cashflows statements?

A

Yes we do include the net change in cash flows.

34
Q

What are program services?

A

they provide services to beneficiaries, customers, and members

Ex- are research, medicine & biomedical services

35
Q

Does fundraising belong in the program services category?

A

No it belongs in the supporting activities

36
Q

What are some examples of “Supporting activities?”

A

Fundraising
Management of donor lists
Conducting campaign
Data processign

essentially anything that is all over activities

37
Q

Which financial statement includes revenues and expenses for NFP?

A

Statement of activities

38
Q

A nongovernmental NFP must report infor for expenses in

A

Functional and natural classifications

39
Q

Primary purpose of statement of activities for a nongovernmental NFP?

A

To demonstrate how the organization resources are used in providing various programs

40
Q

Primary resource NFP entities provide useful information?

A

1) services provided by the NFP entity

2) the continuing ability of NFP entity to provide services

41
Q

The primary purpose of statement of position

A

to resource providers so they can use the infor from the statement to make good decisions

42
Q

Should NFP entity record legal services as expense?

A

Yes

43
Q

Where are expenses reported for Net assets classes?

A

Net assets without donor restrictions

44
Q

Calc, the increase net assets without donor restrictions that en entity recognize?

A

Step 1

Voluntary health and welfare entity received (without donor imposed restrictions) 300,000

Designed by donors support operations 100,000

300,000 - 100,000 = 200,000

Step 2

200,000 x 15% rate = 30,000

200,000 - 30,000 = 150,000

45
Q

Calc, the amount of the pledges receivable? since the pledge is unconditional promises to give expected to be collected in less than 1 year?

A

Unrestructed 500,000
Restricted 200,000

700,000 x 5% = 35,000

700,000 - 35,000 = 665,000

46
Q

When are contribution services recognized?

A

when the service requires a special skills like fixing the roof of the nongovernmental

create nonfinancial assets

47
Q

How are contribution revenues recognized?

A

They must meet the following items

1) Require special skills

2) If the skill wasn’t donated then the would have to purchase

3) Create nonfinancial assets

4) Provided by those having skills (Board member preparing the books for the audit)

47
Q

How are contribution reported on the statement of activities?

A

as an expense which would increase both expenses and contributions

47
Q

How are pledged receivable valued?

A

Present Value

47
Q

What is a promise?

A

Oral or written agreement to contribute assets to another entity

48
Q

If there is condition where there is a barrier can the conditions be met?

A

No the conditions barrier need to resolved first before any conditions can be met

49
Q

If a Nongovernemental NFP receives contribution on Year 1 which won’t be available until Year 2, how would that be recognized?

A

It would be recognized in Year 1

49
Q

Calc, the interest receivable the loans to dale?

A

Money lend yorla corp lent 500,000 x 12% note x 2/12 = 10,000

50
Q

Calc, the net income for the investment?

A

Fair Value 410,000 - 400,000 = 10,000

Dividends 20,000 x 30% 6000

10,000 + 6000 = 16,000 net income attributed to investment

51
Q

Calc, the payment record as debit to real estate taxes payable?

A

12,000 first installment x 2 / 12 months = 8000

52
Q

Calc, investment value of investment in debt securties?

A

They are measured at “Fair value”

52
Q
A

Financial Accounting Reporting (24 decks)

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