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FAR CPA > NFP Accounting > Flashcards

NFP Accounting Flashcards

1
Q

Which financial statements are required for not - for - profit organizations?

A

Statement of Financial Position

Statement of Activities

Statement of Cash Flows

Statement of Functional Expense (Volunteer Health Organizations Only)

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2
Q

What are the major classifications found on a Statement of Financial Position?

A

Similar to Balance Sheet:

Assets
Liabilities
Net Assets
Unrestricted Assets
Permanently Restricted Assets
Temporarily Restricted Assets

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3
Q

What are the major classifications in a Statement of Activities?

A

Similar to an Income Statement - organization - wide:

Revenues
Expenses - ONLY deducted from Unrestricted Revenues
Gains and Losses
Changes in Net Asset classes
Unrestricted
Permanently Restricted
Temporarily Restricted

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4
Q

What are the characteristics of a Statement of Cash Flows for not - for - profits? What are the major classifications?

A

Both direct and indirect methods are OK

Operating Activities - Unrestricted Revenues and Unrestricted Expenses

Investing Activities

Financing Activities - Endowments and restricted contributions

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5
Q

Which organizations are required to present a Statement of Functional Expenses?

A

Volunteer Health Organizations

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6
Q

Which statements are required for non - governmental hospitals?

A

Balance Sheet
Statement of Operations
Statement of Changes in Net Assets
Statement of Cash Flows
Financial Statement Notes

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7
Q

Which basis of accounting is used for revenues and net assets?

A

Accrual basis of accounting is used

Only external parties can restrict the use of assets (permanent or temporary)

Assets earmarked internally by management are still classified as unrestricted

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8
Q

What are the characteristics of unrestricted assets or revenue?

A

No restrictions or conditions placed on entity in order to use the resources

Note: assets earmarked internally by management are still unrestricted

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9
Q

When are revenues on contributions recognized?

A

Revenues on contributions are recognized in the year received - not the year the contribution is spent and are recorded at Fair Value on the date received

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10
Q

When are services rendered considered contributions?

A

If the organization would have otherwise paid for them

or

They increase the value of a non - monetary asset

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11
Q

Is hospital charity care revenue?

A

NO.

It is disclosed in the notes to the financial statements only.

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12
Q

How are unconditional pledges to contribute recorded?

A

Classified as revenue in the current year only - multi - year future contributions fall under Temporarily Restricted.

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13
Q

Which revenues are expenses deducted from?

A

Expenses ONLY deducted from Unrestricted Revenues - not Temporary or Permanently Restricted Revenues/Assets

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14
Q

What are the characteristics of temporarily restricted assets/revenue?

A

Use is restricted to a future time - which could then convert to unrestricted - Class: Temp. Restricted Revenue

Unrestricted contributions promised (including multi - year contributions) - but not yet received are actually restricted by time and are therefore classified as Temporarily Restricted Assets - Multi - year contributions are recorded at the present value of the future contributions

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15
Q

What are the characteristics of an endowment?

A

Use of investment is restricted - but income from investment could be either restricted or unrestricted

Must be under control of receiving entity (Quasi Endowment) in order to be recorded in unrestricted net assets

Otherwise - a memo entry is recorded

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16
Q

When is the donation of an art collection recognized as a contribution or asset?

A

Not recognized as assets or contribution revenue if they are held of display or education’ or their sale results in the purchase of similar items

17
Q

When both Temporarily Restricted Assets and Unrestricted Assets are available for use - which assets are used first?

A

Temporarily restricted assets are used before Unrestricted assets.

18
Q

How is a refundable advance recorded by a not for profit?

A

Classified as a Liability

Promise to contribute assets pending on certain conditions being met

Becomes unconditional once the possibility that it won’t happen is remote

19
Q

How are investments recorded and valued in not - for - profit accounting?

A

Fair Value is mostly used

Exception - Equity method used when significant influence exists

20
Q

How are scholarships recorded?

A

As a reduction of revenue - netted against college’s tuition

21
Q

How is depreciation expense recorded by a not - for - profit?

A

Depreciation expense is allocated proportionately to various functions

22
Q

Permanently Restricted resources

A

Resources such as 1) certain assets, such as artwork etc. that must be maintained or used in a certain way. 2) endowments that represents funds that must be invested permanently. 3) land when it must be held in perpetuity

23
Q

Split-interest agreement

A

An arrangement whereby both a donor (or beneficiary) and a NFP organization receive benefits. (e.g charitable lead trusts, charitable remainder trusts)

24
Q

Temporarily Restricted Resources

A

Resources restricted to be 1) used for a particular purpose, 2) expended at a time in the future, or 3) invested for a period of time.

25
Q

Unrestricted Resources

A

All resources that do not have restrictions by donors or grants

26
Q

Statements Required for NFP

A

1) stmt of Financial Position. 2) Statement of Activities. 3) Statement of CF. in addition: Voluntary Health and welfare Orgs
Required to report a stmt of functional expenses that show expenses by function and by natural classification.

27
Q

NFP: Temp restricted Resources and Depreciation

A

May also be used for the acquisition or receipt of a gift of plant.
Would represent the un-depreciated amount.
As plant is depreciated, the amount depreciated would be reclassed from Temp to Unrestricted Net Assets.
Shown as a deduction from unrestricted revenues, gains, and other support on Stmt of Activities.

28
Q

NFP: Revenues, expenses,Gains, Losses are reported?

A

On the Full accrual Basis
Revenues/Expenses should be reported at GROSS Amounts
Gains/Losses often reported NET
Investment G/L - may be reported NET

29
Q

Unconditional Contributions NFP

A

to be recorded as assets-Contribution Receivable,

and Revenue-Contribution Revenue

30
Q

Donor imposed condition:NFP

A

Causes a NFP to not recognize either a receivable or a revenue. (specifies a future or uncertain event)

31
Q

Multi-Year Contributions Receivable: NFP

A

Recorded at the PV of future collections.
Future year moneys presumed to be temporarily restricted revenues, then reclassified in year of receipt.
Difference between previously recorded temp restricted revenue at PV amounts, and the current value would be recorded as contribution revenue, not interest.
All contributions recorded at FMV as of the date of contribution

32
Q

NFP: FASB requires-regarding fundraising

A

Fund raising expenses be reported either on the face of the financial statements of inthe notes

33
Q

Presumed Fund raising unless 3 criteria exist

A

1) Purpose-has more than 1 purpose
2) audience-if audience selected on basis of likelihood to contribute.
3) content-call to action other than raising money

34
Q

Statement of Activies: Revenue

A

1) Contributions
2) Income on LT investments
3) Net realized and Unrealized Gains on LT investments
- –all may increase unrestricted, permanently, and Temp net assets
- –all increase unrestricted, unless restricted by donors

35
Q

Statement of Activies: Fees, exchange revenues

A

Increase unrestricted net assets

36
Q

Statement of Activies: Net assets released from restrictions(reclassified)

A

This happens because:
1) satisfaction of program restrictions
2) satisfaction of equipment restrictions
3) expiration of time restrictions, term endowments
Note: when net assets are released from restrictions, temp decrease, and unrestricted net assets increase

37
Q

FASB requirements for expenses

A

1) Expenses must be reported by function in the notes, if not in statement.
2) Fund Raising expenses must be disclosed in notes, if not in statement

FAR CPA (19 decks)

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