Not-For-Profit Accounting

Question 1

Not-for-profit organizations

Answer 1

-Established to provide goods or services without the primary objective of making a profit for their owners or shareholders.

-Key features of not-for-profit organiztions
* Mission-oriented
* Revenue is generally reinvested into the organization to further its mission
* Tax-exempt status
* Fundraising
* No individual or group of people owns shares of the organization or has a claim on its assets.

Question 2

Types of not-for-profit organizations

Answer 2

Based on Mission
- Charitable Organizations
- Educational institutions
- Religious organizations
- Arts & Culture organizations
- Environmental organizations
- Healthcare providers
- Voluntary health & welfare organizations
- Animal welfare organizations
- Research organizations
- Political organizations

Based on Funding
- Membership organizations
- Private foundations
- Public Charities
- Government-funded charities

Base on population served
- Local/community- based
- National organizations
- International NGOs

Question 3

Accounting for Contributions: Cash Contributions

Answer 3

Journal entry: Cash Contributions
Cash Debit
Contribution Revenue: Net assets with or without donor restrictions Credit

Question 4

Accounting for contributions: Property Contributions

Answer 4

Journal entry: Property Contribution
Property (FMV) Debit
Contribution Revenue: Net assets with or without donor restrictions Credit

Question 5

Accounting for contributions: Based on Form

Answer 5

-Contributed services are reported as both an expense and a revenue if all of the following occur:
* The services would otherwise be purchased
* The value of the services is measurable
*The service requires specialized skills and is provided by an individual possessing those skills.
Journal Entry: Service Contributions
Expense (FMV) Debit
Contribution revenue: Net assets without donor restrictions Credit

Question 6

Accounting for contributions: Unrestricted contributions

Answer 6

Journal entry: Unrestricted Contributions
Cash/ Property Debit
Contribution revenue: Net assets without donor restrictions Credit

Question 7

Accounting for contributions: Temporarily restricted contributions

Answer 7

Journal entry: Temporarily restricted contributions are made
Cash/ Property Debit
Contributions revenue: Net assets with donor restrictions Credit

Journal entry: Temporarily restricted contributions are lifted and money is spent

Net assets with donor restrictions Debit
Net assets without donor restrictions Credit

Expense Debit
Cash Credit

Question 8

Pledges

Answer 8

• A pledge refers to a commitment by a donor to give a specified amount of money.
• Unconditional Pledge
• Not Dependent on future events or actions of either the donor or the organization.
• Conditional Pledge
• Dependent on the occurrence of a specified future and uncertain event.