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Non profit accounting Flashcards

1
Q

Conditional promise to give

A

If condition becomes probable -

report revenue as TRA

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2
Q

Financial statements required for NPO

A

Statement of Financial Position
Statement of Activities
Statement of Cash Flows

Statement of Functional expenses - for voluntary health and welfare organizations
- shows expenses by function and natural
classification

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3
Q

Supporting activities

A

management and general expenses
fund raising
membership development

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4
Q

Contributions by NPO’s to other NPO’s are reported as

A

EXPENSES by the donating NPO

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5
Q

Tuition remission for faculty/employee’s dependents - how to account?

A

Tuition costs are included in the tuition revenues and reported as expenses.

-compensation expenses - benefits to faculty

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6
Q

Scholarship tuition costs for students not required to perform services

A

Deducted from tuition revenues

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7
Q

Donations with donor imposed conditions

A

NO ENTRY WHEN DONATION IS MADE if no asset is received

are not recognized until the condition becomes probable.

The condition has to be fulfilled or very probable to be fulfilled before revenue is recognized

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8
Q

Computation of net patient revenue

A 
Gross patient revenue
less: charity care
        contractual adjustments
        allow. for discounts to employees
= Net patient revenue
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9
Q

A promise to contribute this year- where donor contributed in the previous year

A

is a time restricted donation -

recognize as TR revenues

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10
Q

Investments in stocks by non profit organizations are reported at year end

A

at FMV

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11
Q

For hospitals, the Statement of changes in net assets reports

A

the CHANGES in the hospital’s unrestricted, temporarily restricted, and permanently restricted net assets FOR A TIME PERIOD

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12
Q

For hospitals, the Statement of Operations discloses

A

ONLY the CHANGES in UNRESTRICTED net assets FOR A TIME PERIOD,

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13
Q

For hospitals the Balance Sheet discloses

A

discloses the AMOUNTS of unrestricted, temporarily restricted, and permanently restricted net assets as of a SPECIFIC DATE.

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14
Q

For hospitals, charity care are reported

A

ONLY IN THE NOTES TO FS

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15
Q

Statement of Financial Position format

A 
Assets
Liabilities 
Net assets
     Unrestricted
     Temporarily restricted
     Permanently restricted
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16
Q

NPO Statement of Activities format

A

Column headings:

UNA TRNA PRNA Total

Revenues, gains and other support
Net assets released from restrictions
= Total revenues, gains and other support

Expenses and losses
= Total expenses and losses

Changes in net assets - TOTAL CASH FLOW
net assets at beginning of the year
= Net assets at the end of the year

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17
Q

Components of revenues, gains and other support

A 
Contributions
Fees
Income on long term investments
Other investment income
Net unrealized and realized gains on LT 
     investments
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18
Q

Components of net assets released from restrictions

A

Satisfaction of program restrictions
Satisfaction of equipment acquisition restrictions
Expiration of time restrictions

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19
Q

Components of expenses and losses

A 
Program A
Program B
Program C
Management and general expenses - includes
      depreciation
Fund raising
      Total expenses
Fire loss
Actuarial loss on annuity obligations

=Total expenses and losses

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20
Q

Statement of Functional Expenses

A 
Public support
\+ Revenues 
- Program expenses
- Support services
=Excess of revenue over expenses
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21
Q

Statement of Functional Expenses

Public support components

A 
donations from the public
contributions
grants
bequests
pledges
special event revenues
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22
Q

Statement of Functional expenses

Revenues - components

A

membership dues
investment income
client service revenue
fees

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23
Q

Statement of Functional Expenses

Program expenses

A 
expenses to further the mission of the organization
directly related to the program
ex:
research
community services
public health 
education
24
Q

Statement of Functional expenses

Support services

A

secondary to the mission

General, administrative and management expenses

marketing
tax preparation
printing of annual report
business management
budgeting

Fund raising

print and mail pledge cards
donor list
merchandise sent toi potential contributors

25
Q

SUPPORT SERVICES

General, administrative and management

A

marketing
tax preparation
printing of annual report
business management
budgeting
expenses related to soliciting funds other than
contributions and membership dues
promoting sales of goods or services to customers
responding to government or foundation prosposals for customer sponsored contracts for goods and services

26
Q

SUPPORT SERVICES

Fund raising expenses

A

print and mail pledge cards
donor list
merchandise sent toi potential contributors

27
Q

Expenses related to soliciting funds other than contributions and membership dues

A

ARE NOT FUND RAISING EXPENSES

  • General, A & M expenses

promoting sales of goods or services to customers

responding to government or foundation proposals for customer sponsored contracts for goods and services

28
Q

For other NPO’s not VHWO, where should the functional expenses be reported?

A

in the form of a financial statement

OR

in the Notes to FS

29
Q

CONTRIBUTIONS

Journal Entries

A

UNRESTRICTED DONATIONS:

Cash
Revenues - UNA

TEMPORARILY RESTRICTED DONATIONS:

Cash
Revenue - TRNA

Net assets released from restrictions
Net assets released - UNA

Expenses - UNA
Cash

PERMANENTLY RESTRICTED DONATIONS;

Cash
Revenues - PRNA

Cash
Revenues - TRNA
# interest income

30
Q

DONATED SERVICES

What are the 2 requisites to be recognized as contributions revenue?

A

Recognized if:

services create or enhance a NON-FINANCIAL asset

the services require specialized skills

If recognized, JE:

Expenses - UNA
Contributions Revenue - UNA

DO NOT RECOGNIZE SERVICES OF UNSKILLED VOLUNTEERS

31
Q

DONATIONS OF ART FOR DISPLAY/RESEARCH
What is the criteria?
Journal entry if it doesnt meet the criteria -

A

Are PERMANENTLY RESTRICTED

If the NPO has the right to sell it and the proceeds are strictly used to replace the asset

OR

Exclude the donation in the FS

If it does not meet the criteria above:

Asset
Revenue

32
Q

DONATED MATERIALS
What is the journal entry?
Journal entry for donated clothing -

A

Asset
Revenue

DONATED CLOTHING:

Expense
Unrestricted contribution revenue

33
Q

GIFTS IN KIND

A

recorded at FMV

34
Q

UNCONDITIONAL PLEDGES

A

Unconditional pledges due in the current year

Pledge receivables
Allowance of uncollectible pledges
Revenue - UNA

If due next year:

Pledge receivables (AT PRESENT VALUE)
Allowance for uncollectible pledges
Revenue - TRNA

35
Q

CONDITIONAL PLEDGES

A

Not recognized until they become unconditional
or remote that condition will not be met

Pledges receivable
Allowance
Revenue - UNA
Revenue - TRNA

At lapse of time:

Net assets released from restrictions - TRNA
     Net assets released - UNA
     #reclassification
36
Q

AGENT OR TRUSTEE OF FUNDS

A

If criteria are met:

variance power to redirect money
beneficiary of donation is financially related

Cash
Contribution revenue

Otherwise:

Cash
Refundable advance

37
Q

DEPRECIATION

A

should be recognized by all NPO’s

38
Q

Colleges and universities

A

Cash
Scholarship expense
Tuition remission
Tuition revenue

39
Q

FS of hospitals

A 
Balance Sheet
Statement of Operations
Statement of Changes in Net assets
Cash flows statement
Notes to FS
40
Q

Format of Statement of Operations(Activities)
for hospitals
LONG FORMAT
????

A

PC NO ONE

UNRESTRICTED REVENUES, GAINS AND OTHER SUPPORT:

Patient service revenue
- Contractual adjustments
= Net patient revenue

+ Other operating revenues, gains and losses
- EARNED REVENUES
-non medical - parking
- donated medicines and blankets
- restricted donations
- unrestricted interest and dividends
- net assets released from restriction used for
operations
= TOTAL REVENUE, GAINS AND OTHER SUPPORT

  • Operating expenses - BDDD
    - Bad debts
    - Interest
    - Depreciation
    - doctors, drugs

= RESULTS FROM OPERATIONS/OPERATING
INCOME

\+ Other income/ Non operating revenue
              UNEARNED
       - Investment income
       - unrestricted donations 
       - donated services

= EXCESS OF UNRESTRICTED REVENUES OVER EXPENSES

____________________________________________
PERFORMANCE INDICATOR

Unrealized gains and losses in OTHER THAN
    TRADING securities
Net assets released from restrictions 
Change in interest in net assets 
Transfers to parent

INCREASE IN UNRESTRICTED NET ASSETS, BEFORE EXTRAORDINARY ITEM

Extraordinary loss

INCREASE IN UNRESTRICTED NET ASSETS

41
Q

Other revenues, gains and losses included in operating revenues:

Hospital

A
  1. Investment income - Unrestricted investment in trading securities
  2. Fees from educational programs
  3. Proceeds from sale of cafeteria meals
  4. Proceeds from gift shop, parking lot revenue, etc
42
Q

Operating expenses

Hospital

A

Operating expenses - BDDD

  - Bad debts 
  - Interest
  - Depreciation
  - doctors, drugs
  - other operating expenses
43
Q

What items are reported separately below the performance indicator?

A

PERFORMANCE INDICATOR
Excess of Unrestricted revenues over expenses
___________________________________________

  1. equity transfers
  2. receipt of restricted contributions
  3. contributions of (assets released from donor restrictions related to ) long live ASSETS
  4. unrealized gains and losses in investments not restricted by donors or by law, except for those investments classified as trading securities
  5. investment returns restricted by donors or by law
  6. other items required by GAAP to be reported separately (extraordinary items, discontinued ops, accounting changes)

Disclosures must indicate the policies adopted by the entity to determine what is and what is not included in the performance indicator

44
Q

HOSPITALS
Statement of changes in net assets
All items below the performance indicator
page 32-12

A

Unrestricted net assets
Temporarily restricted net assets
Permanently restricted net assets

45
Q

Net patient revenue components

A

Patient service revenue
Less: charity care
allowance for contractual adjustments
allowance for employee discounts
ALLOWANCE FOR UNCOLLECTIBLE
ACCOUNTS

NOTE: BAD DEBTS AND PROVISION FOR BAD DEBTS ARE NOT DECUTED HERE!!!

Net patient revenue
Revenue under capitation agreements
Other revenues
Net assets released from restrictions used for
operations
= Total revenues, gains and other support

46
Q

Statement of operations - hospitals

Contributions restricted to long term purposes like plant acquisition, endowments, term endowments should be presented

A

in the Statement of Changes in net assets as PR or TR revenues
NOT IN THE STATEMENT OF OPERATIONS as unrestricted revenue

47
Q

REVIEW FINANCIAL STATEMENTS FORMATS IN WILEY

48
Q

What does the Financial Statements of Not for Profit Organizations focus on?

A

Basic information for the organization as a whole

49
Q

Pledge receivables not yet received are classified as

A

temporary restricted - time restriction

50
Q

Cash flows - operating

A 
from unrestricted contributions
from services
interest and dividends - unrestricted/short term investments
grants paid
payment to suppliers and employees
51
Q

cash flows - investing

A

proceeds from insurance fire loss
proceeds from sale of ppe
purchase of ppe
purchase of investments

52
Q

cash flows - financing

A

interest and dividends - restricted
contributions received RESTRICTED for:

investment in term and regular endowments
investment in annuity agreements
acquisition of plant assets
payments of annuity obligations
payments for long term debt/note payable
53
Q

Reconciliation format

A

Change in net assets

Adjustments:

depreciation
fire loss
actuarial gains and losses
interest and dividends for long term investments
contributions for long term investments
net realized and unrealized gain or loss on long term investments
increase/decrease in receivables
increase/decrease in prepayments
increase/decrease in refundable advances
increase/decrease in grants payable
54
Q

Below performance indicator

A

change in interest in net assets - additional investment

change in unrealized gains and losses in other than trading securities

bet assets released from restrictions for ppe

transfers to parent

contributions received that cannot be used until next year

equity transfers
contributions for long lived assets

55
Q

Financial statements of standard private non profit and educational institutions

A

Statement of activities
Statement of Financial Position
Statement oif Cash Flows

56
Q

FS of private non profit hospitals

A

Statement of Financial Position
Statement of Operations
Statement of Changes in net Assets
Statement of Cash Flows

FAR (41 decks)

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