GOV & NON-FOR-PROFIT ACCT

Question 1

What is a capital fund?

Answer 1

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

Question 2

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

Answer 2

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

Question 3

What funds are included in governmental funds?

Answer 3

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

Question 4

What funds are included in proprietary funds?

Answer 4

1) Internal service
2) enterprise funds

Question 5

What funds are included in fiduciary funds?

Answer 5

1) pension and other employee benefits funds

2) investment trust funds

3) private purpose trust

4) custodial funds

Question 6

What is internal service fund?

Answer 6

provides goods and services for subunits of the primary government

Question 7

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

Answer 7

Yes, because accounted under the modified accrual basis of accounting

Question 8

What is a permanent fund?

Answer 8

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

Question 9

What is a special revenue fund?

Question 10

What is the primary standards for for GOV Funds?

Answer 10

GASB Governmental Accounting Standard Board

Question 11

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

Answer 11

long term results and costs of services

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

Question 12

Financial statements that NFP report?

Answer 12

Financial position at the end of reporting period

Statement of activities and cashflows for the reporting and accompanying notes

Question 13

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

Answer 13

Program expenses which reported under net asset with restrictions

Question 14

What is included supporting activities?

Answer 14

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

Question 15

What are some natural expense examples?

Answer 15

rent, interest, depreciation, salaries

Question 16

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

Answer 16

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

Question 17

When a NFP recognize depreciation how is it recognized?

Answer 17

using the Fair value of the asset not the equipment cost

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

Question 18

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

Answer 18

1) statement of financial position

2) statement activities

3) statement of cash flows fro the reporting period

4) accompanying notes to financial statements

Question 19

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

Answer 19

without donor restriction & with donor restrictions

Question 20

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

Answer 20

To report the change in the net assets for the period

Question 21

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

Answer 21

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

Question 22

What are major functional expenses of NFPs?

Answer 22

Supporting activities & program services

Question 23

EX - of supporting activities expense for NFP

Answer 23

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

Question 24

EX - of program services for NFP

Answer 24

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

Question 25

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

Answer 25

Balance sheet

Question 26

What is the statement of activities?

Answer 26

Income Statement

Question 27

Is a freezer costing depreciated for NFP?

Answer 27

Yes Land and construction isn't depreciated

Question 28

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

Answer 28

Purchase unrestricted cash 15,000 Fair Value of 12,000 15,000 + 12,000 = 27,000 / 5 years 5,400 given no residual value

Question 29

Are interest earned classified as current asset?

Answer 29

Yes

Question 30

What do NFP depreciate?

Answer 30

Building and equipment vehicle as well however NOT land and property

Question 31

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

Answer 31

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

Question 31

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

Answer 31

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

Question 31

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

Answer 31

750,000 equipment cost / 5 years x 4 years 750,000 / 5 * 4 = 600,000

Question 32

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

Answer 32

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

Question 33

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

Answer 33

Yes we do include the net change in cash flows.

Question 34

What are program services?

Answer 34

they provide services to beneficiaries, customers, and members Ex- are research, medicine & biomedical services

Question 35

Does fundraising belong in the program services category?

Answer 35

No it belongs in the supporting activities

Question 36

What are some examples of "Supporting activities?"

Answer 36

Fundraising Management of donor lists Conducting campaign Data processign essentially anything that is all over activities

Question 37

Which financial statement includes revenues and expenses for NFP?

Answer 37

Statement of activities

Question 38

A nongovernmental NFP must report infor for expenses in

Answer 38

Functional and natural classifications

Question 39

Primary purpose of statement of activities for a nongovernmental NFP?

Answer 39

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

Question 40

Primary resource NFP entities provide useful information?

Answer 40

1) services provided by the NFP entity 2) the continuing ability of NFP entity to provide services

Question 41

The primary purpose of statement of position

Answer 41

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

Question 42

Should NFP entity record legal services as expense?

Answer 42

Yes

Question 43

Where are expenses reported for Net assets classes?

Answer 43

Net assets without donor restrictions

Question 44

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

Answer 44

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

Question 45

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

Answer 45

Unrestructed 500,000 Restricted 200,000 700,000 x 5% = 35,000 700,000 - 35,000 = 665,000

Question 46

When are contribution services recognized?

Answer 46

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

Question 47

How are contribution revenues recognized?

Answer 47

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)

Question 47

How are contribution reported on the statement of activities?

Answer 47

as an expense which would increase both expenses and contributions

Question 47

How are pledged receivable valued?

Answer 47

Present Value

Question 47

What is a promise?

Answer 47

Oral or written agreement to contribute assets to another entity

Question 48

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

Answer 48

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

Question 49

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

Answer 49

It would be recognized in Year 1

Question 49

Calc, the interest receivable the loans to dale?

Answer 49

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

Question 50

Calc, the net income for the investment?

Answer 50

Fair Value 410,000 - 400,000 = 10,000 Dividends 20,000 x 30% 6000 10,000 + 6000 = 16,000 net income attributed to investment

Question 51

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

Answer 51

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

Question 52

Calc, investment value of investment in debt securties?

Answer 52

They are measured at "Fair value"