Government and Non Profit

Question 1

Whitestone, a nongovernmental not-for-profit organization, received a contribution in December year 1. The donor restricted use of the contribution until March year 2. How should Whitestone record the contribution?

Answer 1

Report as income in year 1.

The contribution has a time restriction and will be recognized contribution revenue in the temporarily restricted net asset category for year 1. When the time restriction is met in year 2, the amount will be recorded as a decrease in temporarily restricted net assets and as an increase in unrestricted net assets - essentially a reclassification of net assets.

Question 2

Which of the following funds of a governmental unit recognizes revenues in the accounting period in which they become available and measurable?

General fund  	  Enterprise fund  
	 Yes                  	 No 
	 No 	                        Yes 
	 Yes 	                        Yes 
	 No                   	 No

Answer 2

General fund Enterprise fund
Yes No
The general fund uses the modified accrual basis of accounting. Under this basis, revenues are recognized in the accounting period when they become available and measurable.
An enterprise fund uses the accrual basis of accounting. Under this basis, revenues are recognized in the period in which they are earned and measurable.

Question 3

At which of the following amounts should a nongovernmental not-for-profit organization report investments in debt securities?

Answer 3

Quoted market prices.

Unlike for-profit entities, not-for-profit entities do not break debt securities into trading, available-for-sale, and held-to-maturity categories. Following ASC 958-320-35-1, not-for-profits value debt securities at fair value (quoted market price).

Question 4

The basis of accounting for a Capital Projects Fund is the:

Answer 4

Modified accrual basis.

A Capital Projects Fund is a type of Governmental Fund. All Governmental Funds and Expendable Trust Funds use a modified accrual basis of accounting.