Not for Profit Organizations

Question 1

Contribution revenue

Answer 1

Recognized based on net realizable value.

If expected to be collected is 90%, then you do

Gross expected x 90%.

Pledge Receivable xxx

    Allowance for doubtful accounts (10%) xxx

     Contribution revenue (90%)   xxx

Question 2

Required financial statements for Not for profits

Question 3

Temporary restriction

Question 4

Release of restricted donation requirements

Answer 4

Restricted donations are released from restriction when conditions or eligibility requirements have been satisfied. Spending the money on program expenses satisfies the restriction.

Question 5

Interrelated organizations

Answer 5

An organization is considered interrelated if it is ableto influence the operating financial decisions of the other and has an ongoing economic interest in the net assets of the other.

Question 6

Donated property

Answer 6

Donated property increases assets and is recorded at fair market

Value and is recognized on the statement of activities as support.

Question 7

Exchange transaction

Answer 7

An exchange that provides commercial benefit to the donor. If Resources are provided in exchange for results, this does not Constitute a contribution.

Question 8

Fundraising expense

Answer 8

Inducing potential donors to contribute to the organization.

This does not include soliciting prospective members, printing

Membership benefits brochures and soliciting membership dues.

Question 9

Cost of membership development (expense)

Answer 9

Membership activities include seeking prospective members,

Ensuring current member satisfaction, etc.

Question 10

Contribution revenue

Answer 10

Contributions to a non-profit include transactions that are

Unconditional (not requiring a future event to occur), non-

Reciprocal, voluntary, and not of an ownership investment.

Question 11

Investing activities on C/F statement

Answer 11

• Investing activities in the statement of cash flows should include
• Proceeds from the sale of long lived assets or insurance proceeds
• Associated with the loss of long lived assets.
• Entities that do not capitalize their permanent collections put insurance
• Proceeds on statement of activities in an appropriate change in net asset classification separate from revenues, gains, and losses.

Question 12

Exchange contribution (i.e, donated money for magazine Subscriptions).

Answer 12

Amount transferred (money given)

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Contribution revenue

Question 13

Functional classification

Answer 13

A not-for-profit needs to report its expenses in the statement

Of activities by their functional classification (program classification,

Supporting activities, fund-raising, etc).

Question 14

Restricted net assets when requirements are met

Answer 14

Unrestricted net assets would increase by the amount of the

Reclassification of temporarily restricted net assets whose

Restrictions have been satisfied and then reduced by scholarship

Expense. This would increase and decrease unrestricted net assets.

Question 15

Donated services J/E

Answer 15

Expense xxx

Contributions  xxx

Question 16

How should a donation to a foundation to be used only on a certain beneficiary be treated?

Answer 16

As a liability, it has no variance power (discretion) relative to the use of the contribution.

Question 17

Restricted donated cash, interest earned

Answer 17

When interest in earned and the donation says any interest earned should be used to finance ongoing operations, the interest amount would be classified as a current asset.

Question 18

Donations of assets that are part of the ongoing major operation of the hospital. How are they classified?

Answer 18

Other operating revenue

Question 19

Combining costs

Answer 19

Non-profits that combine costs (program services and fundraising functions) need to allocate the costs to each category.

Question 20

Deprecation expense, where does it go on statement of activities

(I/S)

Answer 20

Included as an element of expense.

Question 21

Quasi-endowment fund

Answer 21

Assets that have been internally designated for a specific purpose.

Question 22

Question may ask for required financial statements

and use the FASB term.

Answer 22

It will say in addition to statement of financial position, what else is

Required?

Its just the real terms, I/S, Statement of cash flows.

Question 23

Donated services for salary

Answer 23

The value of donated services should be recorded as both a contribution and an expense if the services performed are a normal part of the program services and otherwise would be performed by salaried personal.

Question 24

Tuition is reported as a gross revenue. J/E

Answer 24

Cash xxx

Expenses-scholarships xxx

Expenses- tuiton remission xxx

                        Revenues- tuition and fees xxx

Question 25

Marketable securities are reported how and at what time?

Answer 25

FMV at the balance sheet date.

Question 26

Pool of investments

Answer 26

Not for profit organizations may pool all investments of various internal accounting funds, but must allocate realized and unrealized gains and losses to net classifications as appropriate.

Question 27

Pledges receivable netted

Answer 27

Pledges receivable are netted against the percentage of pledges proved to be uncollectible

Question 28

Revenue related to charity care

Answer 28

Subtracted out of unrestricted revenue.

Question 29

Hospital revenue

Answer 29

Gross patient revenue

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Net patient service revenue

Question 30

Tuition and Fees

Answer 30

Unrestricted cash pledges and restricted cash pledges are both considered contribution revenue.

Question 31

Income and investment appreciation- change in temporarily restricted assets

Answer 31

If income and/or investment appreciation is to go to maintain the services of the organization, then it are temporarily restricted.

You would add/subtract and gains or losses and net it against expenses to find change in temporarily restricted net assets.

Question 32

Borrowing money to Purchase of car, cash flow statement classifications

Answer 32

Cash inflow from financing activities and cash outflow from investing activities

Question 33

Temporarily restricted

Answer 33

A donation that has a purpose that the donor stipulates or a time it is restricted.

Question 34

A grant to another organization is classified as a what?

Answer 34

Expense

Question 35

Contribution revenue for services

SOME

Answer 35

Specialized

Otherwise needed

Measured

Easily

Question 36

Donations that are contingent on a condition occurring. How are they accounted for?

Answer 36

As a refundable advance

Question 37

Statement of functional expense

Answer 37

Required for health and welfare organizations, encouraged for all others.

Question 38

Support services

Answer 38

Typically involve such items as fundraising, administration, management, and membership development.

Question 39

What comprises functional expenses?

Answer 39

Program services, management and general, and fund-raising.

Question 40

How are donor-restricted cash contributions for long-term purposes reported in the Statement of cash flows?

Answer 40

Financing activity inflow

Question 41

How are operating expenses reported?

Answer 41

As a change in unrestricted net assets

Question 42

Not-for profit organizations interrelated with its beneficiary organization. Beneficiary organization would display receipts from not-for profit organization where?

Answer 42

As an equity transaction on the statement of activities

Interest in net assets xxx

       Equity transaction  xxx

Question 43

Donor imposed restrictions that are met in the same period they are received, provided that the organization discloses and consistently applies this accounting policy, qualify revenues as what?

Answer 43

Unrestricted support (contribution revenue), provided that the center discloses and consistently applies this accounting policy.

Question 44

Donor imposed restrictions that are met in the same period they are received, provided that the organization discloses and consistently applies this accounting policy, qualify revenues as what?

Answer 44

Unrestricted support (contribution revenue), provided that the center discloses and consistently applies this accounting policy.

Question 45

Where would the proceeds from the sale of works of art or purchases of works of art be located on the statement of cash flows?

Answer 45

In investing activities

Question 46

PUT

Answer 46

Found in the statement of financial position

Permanent restricted assets

Unrestricted assets

Temporarily restricted net assets

Question 47

Money given to an organization that is pledged to go to another organization does what to its financials?

Answer 47

Increases its assets and increases its liabilities.

Question 48

What is the primary purpose of the statement of activities on a nongovernmental not-for-profit organization?

Answer 48

To report the change in net assets for the period.

Question 49

How should a gift that is stipulated by the board be reported in the statement of activities?

Answer 49

Unrestricted contribution

Question 50

How is donated property recorded?

Answer 50

At FMV and it is recognized on the Statement of Activities (I/S) as support.