NFP Flashcards
Fund Accounting
internal framework use for external reporting
Liabilities must be recognized from the following criteria
A- Unconditional promised to give
B- Amounts received in agency transaction
Investment Returns
Any investment returns not related to the program services must be reported net of external
External Financial Reporting
Helps to Stewardship responsibilities
Other Assests include
Uilities such as electricity
Promise to Give
is a written or oral agreement to contribute assets to another enity
Donor- restricted funds
Investment of the gift in perpetuity
NFPs most likely should report
Financial reporting by an NFP should provide information about economic resources, obligations, net resources, and changes in them. They include (1) performance during a period, (2) nature and relationship of resource inflows and outflows, (3) service efforts and accomplishments, and (4) factors affecting liquidity.
What are the two types of donor-imposed restrictions?
Temporary
Perpetual
What are the two types of temporary donor-imposed restrictions?
Time restrictions
Require resources to be used in a later period or after a specific date
Purpose restrictions
Require resources to be used for specific purposes
When do NFPs recognize liabilities?
An NFP must recognize a liability when
There is an unconditional promise to give or
An amount is received in an agency transaction.
How are gains and losses reported in the statement of activities of an NFP?
Gains and losses on assets or liabilities are changes in net assets without donor restrictions unless their use is restricted explicitly by the donor or by law.
Financing
Receipts of resources that are donor-restricted for long-term purposes
Investing
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Cash flows from purchases, sales, and insurance recoveries of capital assets
Donor-restricted interest and dividends
Operating
Receipts of contributions without donor restrictions
Interest and dividends on investments without donor restrictions
Premium payment on a group life insurance
What are not considered contributions to an NFP?
Investments by, or distributions to, owners
Involuntary nonreciprocal transfers, such as taxes
Exchange transactions
Net Realizable Value
Unconditional promises to give, expected to be collected in less than 1 year, may be recognized at net realizable value (that is, minus an estimated uncollectible amount).
Fair Value
Contributions received ordinarily are accounted for when received at fair value as credits to revenues or gains.
Operating Expenses
General Contributions, Net Assets released from restriction, and fair market value of any vehicle
Not Requirement of NFP
Tax- Exempt must report a statement of functional expenses
Investment Expense
Netted against investment return not related to program services. It is also reported with the same net asset category
Noncash Financing and investing activities
receipt of a contribution of a building, securities, or recognized collection items, must be disclosed separately
Cash Flow from Operating Activities
Include receipts of contributions without donor restrictions and receipt of cash from a donor
Trade Receivable
The allowance for credit losses is subtracted from the amortized cost basis of the financial asset(s) to present the net amount to be collected. At each reporting date, an entity records an allowance for credit losses reflecting any change in expected credit losses. This change (credit loss expense or a reversal) is included in net income. Moreover, the allowance for credit losses is separately presented on the statement of financial position.
