Not for Profit

Question 1

When should a conditional pledge to a NFP be recognized as revenue?

Answer 1

Never.

Question 2

What is the accounting treatment for unconditional pledges?

Answer 2

Unconditional pledges should be recognized as revenue the year the cash is received.
Dr. Pledge receivable
Cr. Revenue

Question 3

How should a NFP report depreciation in its statement of activities?

Answer 3

Depreciation should be recorded as without donor restrictions and will decrease net assets without donor restrictions.

Question 4

What are the bases of accounting to be used for government wide financial statements?

Answer 4

Accrual basis of accounting for both government activities and business type activities

Question 5

What are the required financial statements for NFP?

Answer 5

1. Statement of financial position
2. Statement of activities and
3. Statement of cash flow

Question 6

In a NFP how are expenses reported in the statement of activities and the notes to the financial statements?

Answer 6

1. On the statement of activities expenses are reported by function:
   a. Programs services
   b. Management and general and,
   c. Fundraising cost.
2. Expenses in the notes to the financial statements are reported by nature of expense and function.

Question 7

What type of expenses are consider supporting services for the NFP?

Answer 7

1. Management and general expenses and, (Management salaries, printing cost for annual reports)
2. Fundraising costs (Publicity cost for fundraising)
3. Membership development

Question 8

How should internal designated resources from the board of directors of a NFP be classified in the statement of position and statement of activities?

Answer 8

As Net assets/contribution without restrictions.

Question 9

in a NFP how should quasi endowment donations be classified?

Answer 9

As a donation without donor restrictions.

Question 10

In a NFP how should proceeds from a sale of works of art or the purchases of works of art be classified in the statement of cash flows ?

Answer 10

As an investing activity

Question 11

What are the typical items reported on the operating section of the statement of cash flows in a NFP?

Answer 11

1. Non cash items (gain on sale of equipment, D&A)
2. Changes in working capital account
3. Contributions restricted for long term investment.
4. Interest and dividends restricted for reinvestment.

Question 12

WWhat are the typical items reported on the investing section of the statement of cash flows in a NFP?

Answer 12

1. Proceeds/ purchase on sale of equipment.
2. Insurance proceeds from loss of a long lived asset.
3. Proceeds/ purchases from investment.

Question 13

WWhat are the typical items reported on the financing section of the statement of cash flows in a NFP?

Answer 13

1. Proceeds from restricted contributions for the purpose of acquiring pp&e
2. Proceeds from contributions to establish a perpetual endowment fund.
3. Proceeds/ Payments of loans
4. Proceeds / payments from issuing bonds

Question 14

How should interest income from donor restrictions investments and appreciation of investments be considered in the statement of activities?

Answer 14

As a contributions with donor restrictions.