Not for Profit Organizations Flashcards
Contribution revenue
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
Required financial statements for Not for profits
Temporary restriction
Release of restricted donation requirements
Restricted donations are released from restriction when conditions or eligibility requirements have been satisfied. Spending the money on program expenses satisfies the restriction.
Interrelated organizations
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.
Donated property
Donated property increases assets and is recorded at fair market
Value and is recognized on the statement of activities as support.
Exchange transaction
An exchange that provides commercial benefit to the donor. If Resources are provided in exchange for results, this does not Constitute a contribution.
Fundraising expense
Inducing potential donors to contribute to the organization.
This does not include soliciting prospective members, printing
Membership benefits brochures and soliciting membership dues.
Cost of membership development (expense)
Membership activities include seeking prospective members,
Ensuring current member satisfaction, etc.
Contribution revenue
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.
Investing activities on C/F statement
- 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.
Exchange contribution (i.e, donated money for magazine Subscriptions).
Amount transferred (money given)
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Contribution revenue
Functional classification
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).
Restricted net assets when requirements are met
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.
Donated services J/E
Expense xxx
Contributions xxx
How should a donation to a foundation to be used only on a certain beneficiary be treated?
As a liability, it has no variance power (discretion) relative to the use of the contribution.
Restricted donated cash, interest earned
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.
Donations of assets that are part of the ongoing major operation of the hospital. How are they classified?
Other operating revenue
Combining costs
Non-profits that combine costs (program services and fundraising functions) need to allocate the costs to each category.
Deprecation expense, where does it go on statement of activities
(I/S)
Included as an element of expense.