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FAR > NFP Accounting > Flashcards

NFP Accounting Flashcards

2
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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3
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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4
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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5
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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6
Q

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

A

Volunteer Health Organizations

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7
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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8
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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9
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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10
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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11
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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12
Q

Is hospital charity care revenue?

A

NO.

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

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13
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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14
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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15
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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16
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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17
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

18
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.

19
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

20
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

21
Q

How are scholarships recorded?

A

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

22
Q

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

A

Depreciation expense is allocated proportionately to various functions

23
Q

Equity categories (NFP)

A

Permanently restricted
Temporarily restricted
Unrestricted

24
Q

Expense classification in statement of activities

A

Program services = why the org exists
Support services = support the core business
Combined costs

25
Q

Classifications in SCF

A

Operating
Financing
Investing

(GASB = 4, FASB = 3)

26
Q

Statement of functional expenses

A

4th required statement for voluntary health and wellness orgs

27
Q

Contributions for statement of functional expenses & when revenue is recognized for each

A

Cash contrib - when received
Unconditional promises - when pledged
Conditional promises - when earned

  • multi year pledge - PV pledge - now = rev, later = temp restricted rev
28
Q

Exchange transaction contributions

A

Amt transferred
(FV dues/purchase)
= contribution rev

29
Q

Types of funds

A 
Unrestricted current
Restricted current
Plant
Loan
Endowments 
Annuity & life income
Agency
30
Q

What FS are req’d?

A 
1. Statement of Net Pos 
    (A, L, net assets)
2. Statement of Activities
    (Similar to IS)
3. SCF
31
Q

How to account for a contribution (even if restricted)

A

Income in year recd & recorded at FV

32
Q

How to account for unconditional promises?

A
  • recorded at NRV
  • collected over more than 1 yr:
    = contrib receivable @ PV

FAR (29 decks)

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