NOT for Profit

Question 1

Is FASB or GASB used for Not-for-Profits?

Answer 1

FASB

Question 2

What is the NFP equivalent of the BS?

Answer 2

Statement of Financial Position

Question 3

What is the NFP equivalent of the IS?

Answer 3

Statement of Activities

Question 4

What is the NFP equivalent of the CF Statement?

Answer 4

Statement of Cash Flows (Same Name)

Question 5

Components of the Statement of Financial Position for NFPs

Answer 5

Assets, Liabilities, and Net Assets

Question 6

Which is the only party that can make restrictions for NFPs?

Answer 6

Donors

Question 7

What do you find under Operating Activities for NFPs Stmt of CF?

Answer 7

Agency Transactions and Receipts of Resources W/O donor restrictions

Question 8

Which method should be used for NFP Stmt of CFs?

Answer 8

Direct and Indirect are both allowed

Question 9

What do you find under Investing Activities for NFPs Stmt of CF?

Answer 9

Investment in equipment and proceeds of sale of assets or other LTA

Question 10

What do you find under Financing Activities for NFPs Stmt of CF?

Answer 10

Cash received with donor-imposed restrictions (disbursements for assets are classified as investment)

Question 11

NFP: When are conditional promises recorded as revenue? How does this change if money is given in advance?

Answer 11

Until the condition has been performed, it cannot be counted as revenue. If given money in advance, it is recorded as a liability.

Question 12

NFP: How are unconditional promises over multiple years recognized?

Answer 12

At Present Value: Net Assets WITH Donor Restrictions (due to time)

Question 13

NFP: How are gifts-in-kind recorded?

Answer 13

Support and Offsetting Expense

Question 14

NFP: When can donations WITH restrictions be classified as contributions WITHOUT restrictions?

Answer 14

If the obligation will be satisfied within the year of the donation.

Question 15

NFP: What are Program Expenses?

Answer 15

Expenses that relate to the NFP’s mission

Question 16

NFP: What are Support Services? Examples?

Answer 16

Relate to the NFP organization’s Administrative, Membership Development, and Fundraising Expenses

Question 17

How are all expenses classified in NFP Accounting?

Answer 17

ALL Expenses are W/O donor restrictions

Question 18

NFP: How are split-interest agreements displayed and measured? Journal Entry?

Answer 18

Displayed separately on the NFP F/S and measured at FV or PV

DR: Assets Held in Trust
CR: Liability to Beneficiary
CR: Contribution Revenue WITH donor restrictions

Question 19

NFP: How are donated services accounted for? (Requirements)

Answer 19

They must:

1) Enhance a Physical Asset
2) SOME (require Specialized skill, Otherwise needed, Measured Easily)
3) Compensation is subtracted from revenue

Question 20

NFP: Journal Entry for Donated Services

Answer 20

DR: Expense/Asset
CR: Contributions - Nonoperating Revenue

Question 21

How are NFP Investments are measured? How are G/L accounted for?

Answer 21

1) At their FV

2) Increases in net assets WITH OR WITHOUT donor restrictions

Question 22

NFP: What are Endowments?

Answer 22

Assets with restrictions that are perpetual

Question 23

NFP: What is an Underwater Endowment and how is it treated?

Answer 23

FV at the reporting date is less than the original or the amount required to be maintained by the donor. Accumulated losses should be reported together in net assets WITH donor restrictions

Question 24

NFP: Pass-Through Contributions for Recipient WITHOUT Variance Power (GR)

Answer 24

Donor decides where it goes, donation is recorded as an asset and a refundable advance liability

Question 25

NFP: Pass-Through Contributions for Recipient WITH Variance Power

Answer 25

Recipient decides where it goes, donation is recorded as an asset and as revenue

Question 26

NFP: Pass-Through Contributions for Beneficiary WITHOUT Variance Power (GR)

Answer 26

Beneficiary does not have any discretion where the money goes, recorded as a receivable and as revenue.

Question 27

NFP: Pass-Through Contributions for Beneficiary WITH Variance Power

Answer 27

Beneficiary has discretion, but is NOT recorded on the books UNLESS a financial relationship exists

Question 28

NFP: Financially Interrelated Recipients and Beneficiaries - Journal Entry

Answer 28

DR: Interest in Net Assets
CR: Change in Interest in Recipient Net Assets

Question 29

NFP: Health Care Organization Patient Service Revenue Equation

Answer 29

Gross Patient Revenue/Fees - Contractual Allowances (Insurance) - Bad Debts (If not assessing patient’s willingness to pay) - Charity Care

Question 30

NFP: Health Care Organization - How is Bad Debt treated?

Answer 30

1) If Assessing Patient’s Willingness to Pay: Operating Expense
2) If NOT: Reduction in Revenue

Question 31

NFP: University Revenue Equation

Answer 31

Tuition + Scholarships - Cancelled Classes

Question 32

NFP: Treatment for Donated Works of Art

Answer 32

NOT RECORDED

Question 33

What types of classifications do NFP Expenses fall into?

Answer 33

Functional and Natural

Question 34

NFP: What happens to net assets when assets with donor restrictions are used in conformity with a donor’s requirement?

Answer 34

They are expensed as expenses W/O donor restrictions AND released from net asset restrictions

Question 35

NFP: Contribution revenue and fundraising expenses should NEVER be ???

Answer 35

Netted together

Question 36

How should an NFP classify gains/losses on investments purchased with endowment assets with donor restrictions?

Answer 36

G/L should be reported on the Stmt of Net Activities as Increases/Decreases in Net Assets W/O Restrictions unless specified by the donor or law.

IF RESTRICTED losses are absorbed by the endowment