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.
Quasi-endowment fund
Assets that have been internally designated for a specific purpose.
Question may ask for required financial statements
and use the FASB term.
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.
Donated services for salary
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.
Tuition is reported as a gross revenue. J/E
Cash xxx
Expenses-scholarships xxx
Expenses- tuiton remission xxx
Revenues- tuition and fees xxx
Marketable securities are reported how and at what time?
FMV at the balance sheet date.
Pool of investments
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.
Pledges receivable netted
Pledges receivable are netted against the percentage of pledges proved to be uncollectible
Revenue related to charity care
Subtracted out of unrestricted revenue.
Hospital revenue
Gross patient revenue
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Net patient service revenue
Tuition and Fees
Unrestricted cash pledges and restricted cash pledges are both considered contribution revenue.
Income and investment appreciation- change in temporarily restricted assets
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.
Borrowing money to Purchase of car, cash flow statement classifications
Cash inflow from financing activities and cash outflow from investing activities
Temporarily restricted
A donation that has a purpose that the donor stipulates or a time it is restricted.
A grant to another organization is classified as a what?
Expense
Contribution revenue for services
SOME
Specialized
Otherwise needed
Measured
Easily
Donations that are contingent on a condition occurring. How are they accounted for?
As a refundable advance
Statement of functional expense
Required for health and welfare organizations, encouraged for all others.
Support services
Typically involve such items as fundraising, administration, management, and membership development.
What comprises functional expenses?
Program services, management and general, and fund-raising.
How are donor-restricted cash contributions for long-term purposes reported in the Statement of cash flows?
Financing activity inflow
How are operating expenses reported?
As a change in unrestricted net assets
Not-for profit organizations interrelated with its beneficiary organization. Beneficiary organization would display receipts from not-for profit organization where?
As an equity transaction on the statement of activities
Interest in net assets xxx
Equity transaction xxx
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?
Unrestricted support (contribution revenue), provided that the center discloses and consistently applies this accounting policy.
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?
Unrestricted support (contribution revenue), provided that the center discloses and consistently applies this accounting policy.
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?
In investing activities
PUT
Found in the statement of financial position
Permanent restricted assets
Unrestricted assets
Temporarily restricted net assets
Money given to an organization that is pledged to go to another organization does what to its financials?
Increases its assets and increases its liabilities.
What is the primary purpose of the statement of activities on a nongovernmental not-for-profit organization?
To report the change in net assets for the period.
How should a gift that is stipulated by the board be reported in the statement of activities?
Unrestricted contribution
How is donated property recorded?
At FMV and it is recognized on the Statement of Activities (I/S) as support.
