NPO Flashcards
- Candy Land, a nongovernmental not-for-profit organization, is preparing its year-end financial statements.
Which of the following statements is required?
a. Statement of changes in financial position.
b. Statement of cash flows.
c. Statement of changes in fund balance.
d. Statement of revenue, expenses and changes in fund balance.
- (b) A not-for-profit organization is required to include a statement of financial position as of the reporting date, and statements of activities and of cash flows for the reporting period ending on that date whenever presenting a complete set of financial statements.
Answer (a) is incorrect because a statement of changes in financial position, which would be similar to a statement of cash flows with a definition of funds that is different than cash and cash equivalents, is not required.
Answer (c) is incorrect because a statement of changes in fund balance is not required.
Answer (d) is incorrect because a statement of revenues, expenses, and changes in fund balance are not required.
STATEMENT OF OPERATIONS (UNA) ACTIVITIES- HOSPITAL
P
P
N
O
O
N
E
STATEMENT OF OPERATIONS (UNA) UNRESTRICTED NET ASSET - HOSPITAL
Patient service revenue (hotel type, medical, lab)
- (Provision for contractual adjustments) Medicare, employee, Discounts, not charity
======= NET PATIENT SERVICE REVENUES
+ Other Operating revenues, gains & losses ( earned)
_______▪ Non medical –Parking, gift shop, cafeteria,
________tuition (auxiliary activities)
_______▪ Donated medicines and blankets (supplies &
________equipment)
_______▪ Restricted grants
_______▪ Net assets released from restriction used for
_______operations
- (Operating Expenses) Bad debts, drugs, doctors, Gen & admin, Dep, Int.
======= RESULTS FROM OPERATIONS
+ Nonoperating Revenues (Other Income) (unearned)
_______▪ Unrestricted donations, gifts, bequests
_______▪ Unrestricted Interest & Dividend income
_______▪ Unrestricted grants
_______▪ Donated services
======= EXCESS OF REV/GAIN OVER EXP/LOSSES (PERFORMANCE INDICATOR)
(operating income, performance earnings, earned income)
Items reported separately from performance indicator
- Restricted donations/contributions
- Assets released from donor restrictions for long lived assets (PP&E)
======= INCREASE IN UNA
2.The Jackson Foundation, a private not-for-profit organization, had the following cash contributions and expenditures in 20X3:
Unrestricted cash contributions of $500,000.Cash contributions of $200,000 restricted by the donor to the acquisition of property.
Cash expenditures of $200,000 to acquire property with the donation in the above item.Jackson’s statement of cash flows should include which of the following amounts?
Oper activities / Invest activities / Financing activities
a. $700,000 / $(200,000) / $0
b. $500,000 / $0 / $0
c. $500,000 / $(200,000) / $200,000
d. $0 / $500,000 / $200,0003
- (c) Unrestricted cash contributions of $500,000 are cash inflows from operating activities as they may be used for whatever purpose the board deems appropriate.
Contributions that are designated by the donor for the funding of a long-term project, such as the $200,000 received that is restricted to the acquisition of property is considered an inflow from financing activities.
When the funds are used for the acquisition of property, since property is a capital asset, the expenditure would be an outflow for investing activities.
- On December 30, 20X3, Leigh Museum, a not-for-profit organization, received a $7,000,000 donation of Day Co. shares with donor-stipulated requirements as follows:Shares valued at $5,000,000 are to be sold, with the proceeds used to erect a public viewing building.
Shares valued at $2,000,000 are to be retained, with the dividends used to support current operations.
As a consequence of the receipt of the Day shares, how much should Leigh report as temporarily restricted net assets on its 20X3 statement of financial position (balance sheet)?
a. $0
b. $2,000,000
c. $5,000,000
d. $7,000,000
- (c) Since the shares valued at $5,000,000 were stipulated to be used for the erection of a public viewing building, they become unrestricted when used for that purpose and are, therefore, temporarily restricted.
The shares valued at $2,000,000 are to be retained with no provision for their sale or other disposal. As a result, they are permanently restricted.
Temporarily restricted funds would be $5,000,000.
- The Jones family lost its home in a fire.
On December 25, 20X3, a philanthropist sent money to the Amer Benevolent Society, a not-for-profit organization, to purchase furniture for the Jones family.
During January 20X4, Amer purchased this furniture for the Jones family.
How should Amer report the receipt of the money in its 20X3 financial statements?
a. As an unrestricted contribution.
b. As a temporarily restricted contribution.
c. As a permanently restricted contribution.
d. As a liability
- (d) When the recipient of funds has little or no discretion as to how funds will be used, the funds are received by the NPO in the capacity of an agent.
They are recognized as a liability, not as revenue, until such time as they are disbursed according to the donor’s instructions.
- A not-for-profit organization receives $150 from a donor. The donor receives two tickets to a theater show and an acknowledgment in the theater program. The tickets have a fair market value of $100.
What amount is recorded as contribution revenue?
a. $0
b. $ 50
c. $100
d. $150
- (b)When a not-for-profit receives contributions and provides goods or services in exchange, the amount received in excess of the fair value of the goods or services is recognized as revenues.
Of the $150 received, $100 was for the fair value of the tickets and $50 was contributions revenue.
- Bryant Hospital, a nonprofit hospital affiliated with a religious group, reported the following information for the year ended December 31, 20X5:
– Gross patient service revenue at the hospital’s full established rates = $980,000
– Bad debts expense = 10,000
– Contractual adjust with third-party payors = 100,000
– Allowance for disc. to hospital employees = 15,000
On the hospital’s statement of operations for the year ended December 31, 20X5, what amount should be reported as net patient service revenue?
a. $865,000
b. $880,000
c. $855,000
d. $955,000
- (a)Net patient service revenue is the amount that the health care organization expects to collect subject to credit risk.
Of the $980,000 billed at full rates, the hospital does not expect to collect the reductions due to contractual adjustments of $100,000 or the employee discounts of $15,000, resulting in $865,000 that the hospital expects to collect.
This is subject to credit risk in that some patients or insurance companies may not be able to pay.
The result is bad debt expense, on operating expense, of $10,000.
- Rosenthal Hospital, a nonprofit hospital affiliated with a private university, reported the following information for the year ended December 31, 20X5:
– Cash contributions received from donors for capital additions to be acquired in 20X6 = $150,000
– Proceeds from sales at hospital gift shop and snack bar = $75,000
– Dividend revenue not restricted by donors or by law = $25,000
Using the information provided, what amount should be reported as “other revenue and gains” on the hospital’s statement of operations for the year ended December 31, 20X5?
a. $ 25,000
b. $ 75,000
c. $100,000
d. $250,000
- (c)On a hospital’s statement of activities, other revenues and gains represent amounts received for reasons other than the performance of health care related services that is available to be used at the discretion of the board.
It would not include contributions that are to be used for capital additions but would include revenues from gift and snack sales of $75,000 and dividend revenue that is not restricted of $25,000 for a total of $100,000
