Not for Profit Accounting

Question 1

Not For Profit Accounting

What are the statement requirements for non- governmental hospitals?

Answer 1

1. Balance Sheet
2. Statement of Operations
3. Statement of Changes in Net Assets
4. Statement of Cash Flows
5. Financial Statement Notes

Question 2

Not For Profit Accounting

True or False

Discrete presentation should be used unless the financial activities of the two entities are so intertwined as to make them substantially the same entity.

Answer 2

True

Discrete presentation should be used unless the financial activities of the two entities are so intertwined as to make them substantially the same entity.

Question 3

Not For Profit Accounting

According to the FASB Accounting Standards Codification, a full set of financial statements for a private not-for-profit college or university would include the following:

Answer 3

1. Statement of financial position
2. Statement of activities
3. Statement of cash flows

Question 4

Not For Profit Accounting

True or False

the Statement of Activities for a not-for-profit entity shall report the amount of change in permanently restricted net assets, temporarily restricted net assets, and unrestricted net assets for the period.

Answer 4

True

The Statement of Activities for a not-for-profit entity shall report the amount of change in permanently restricted net assets, temporarily restricted net assets, and unrestricted net assets for the period.

Question 5

Not For Profit Accounting

How are works of art and collections accounted for in a NFP entity?

Answer 5

If not capitalized, the acquisition or donation for collections and works of art in a NFP would be recorded by recognizing an expense within the government-wide statement of activities.

General government expense XXX
Grants and contributions XXX

Question 6

Not For Profit Accounting

What are the natural/ functional classifications required for NFP entities?

Answer 6

Functional Classification (i.e., program services, management, fundraising, etc.)- required by all NFP entities including Voluntary Health and Welfare organizations.

Natural Classification- Only those not-for-profits that are VOLUNTARY HEALTH AND WELFARE entities must augment the FUNCTIONAL classification of expenses that appears in the statement of activities with a NATURAL classification of expenses.

Question 7

Not For Profit Accounting

True or False

Charity care does not qualify for recognition as revenues in the financial statements.

Answer 7

True

Charity care does not qualify for recognition as revenues in the financial statements. These are services provided without expectation of payment.

Question 8

Not For Profit Accounting

True or False

In an NFP, Temporarily restricted and permanently restricted net assets report revenues, reclassifications, and expenses.

Answer 8

Temporarily restricted and permanently restricted net assets report revenues and reclassifications, but not expenses.

Question 9

Not For Profit Accounting

True or False

All expenses reported on the statement of activities by a not-for-profit are reported as decreases in unrestricted net assets

Answer 9

True

All expenses reported on the statement of activities by a not-for-profit are reported as decreases in unrestricted net assets

Question 10

Not For Profit Accounting

True or False

Investment gains and losses are reported as unrestricted revenues in the statement of activities unless the donor of the principal investment amount has explicitly instructed otherwise.

Answer 10

True

Investment gains and losses are reported as unrestricted revenues in the statement of activities unless the donor of the principal investment amount has explicitly instructed otherwise.

Question 11

Not For Profit Accounting

True or False

A budgetary comparison statement is required only for the General Fund and for each major special revenue fund

Answer 11

True

A budgetary comparison statement is required only for the General Fund and for each major special revenue fund

Question 12

Not For Profit Accounting

Cash flows related to revenues and expenses that are unrestricted should be reported where on the statement of cash flows?

Answer 12

Operating activities section

Question 13

Not For Profit Accounting

Cash flows related to restricted contributions for long-term purposes should be reported where on the statement of cash flows?

Answer 13

Financing activities section

Question 14

Not For Profit Accounting

True or False

A Voluntary health and wealth welfare organization should prepare a statement of functional expenses.

Answer 14

True

A Voluntary health and wealth welfare organization should prepare a statement of functional expenses, IN addition to the following items

1. Statement of financial position
2. Statement of activities
3. Statement of cash flows

Question 15

Not For Profit Accounting

True or False

An entity need not recognize the contributions of works of art and historical artifacts if the collection is held for public exhibition rather than financial profit, cared for and preserved, and ii sold, the proceeds are used to acquire other items for collection.

Answer 15

True

An entity need not recognize the contributions of works of art and historical artifacts if the collection is held for public exhibition rather than financial profit, cared for and preserved, and ii sold, the proceeds are used to acquire other items for collection.

Question 16

Not For Profit Accounting

True or False

The change in net assets for each class must be reported in a Statement of Activities report.

Answer 16

True

The change in net assets for each class must be reported in a Statement of Activities report.

Question 17

Not For Profit Accounting

True or False

All NFP organizations must classify expenses according to their function in either the financial statement or in the notes to the financial statements.

Answer 17

True

All NFP organizations must classify expenses according to their function in either the financial statement or in the notes to the financial statements.

Question 18

Not For Profit Accounting

Describe quasi endowment funds

Answer 18

Quasi endowment funds are established by the governing board of an organization using unrestricted net assets.

Question 19

Not For Profit Accounting

How should the receipt of cash from a donor to establish a permanent endowment be reported on the statement of cash flows?

Answer 19

Financing activity

Question 20

Not For Profit Accounting

True or False

Voluntary health and wealth organizations should provide a statement of functional expenses

Answer 20

True

Voluntary health and wealth organizations should provide a statement of functional expenses

Question 21

Not For Profit Accounting

When are donations of services recognized on the statement of activities?

Answer 21

1. The services create or enhance a nonfinancial asset
   or
2. The services require specialized sills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation.

Question 22

Not For Profit Accounting

Define contribution revenue

Answer 22

Contribution revenue is the amount given above the FMV.

Question 23

Not For Profit Accounting

True or False

When a resource provider transfers assets to a non-profit entity and (1) does not grant the recipient organization variance power and (2) the recipient organization and the beneficiaries are not financially interrelated, the recipient entity should record an increase in assets and liabilities as a result of the donation

Answer 23

True

When a resource provider transfers assets to a non-profit entity and (1) does not grant the recipient organization variance power and (2) the recipient organization and the beneficiaries are not financially interrelated, the recipient entity should record an increase in assets and liabilities as a result of the donation

Question 24

Not For Profit Accounting

Define capital additions in NFP accounting.

Answer 24

Capital additions include non-expendable gifts restricted to endowment, plant, or loan funds and the legally restricted investment income on investment in such funds.

Question 25

Not For Profit Accounting

How is patient service revenue to be reported?

Answer 25

Patient service revenue is to be reported net of contractual adjustments.

Question 26

Not For Profit Accounting

True or False

Cash contributions that are donor-restricted for long-term purposes are reported as financing activities on the SCF.

Answer 26

True

Cash contributions that are donor-restricted for long-term purposes are reported as financing activities on the SCF.

Question 27

Not For Profit Accounting

True or False

The statement of operations discloses only the changes in unrestricted net assets for a time period, while the balance sheet discloses the amounts of unrestricted, temporarily restricted, and permanently restricted net assets as of a specific date.

Answer 27

True

The statement of operations discloses only the changes in unrestricted net assets for a time period, while the balance sheet discloses the amounts of unrestricted, temporarily restricted, and permanently restricted net assets as of a specific date.

Question 28

Not For Profit Accounting

True or False

Investment returns, whether realized or unrealized, that are restricted by donors are reported on the statement of changes in net assets.

Answer 28

True

Investment returns, whether realized or unrealized, that are restricted by donors are reported on the statement of changes in net assets.