NPO

Question 1

NPOs follow…

Answer 1

Part III, ASNPO.

If topic not addressed, refer to ASPE

Question 2

Types of funds

Answer 2

General fund

Restricted funds

Capital asset funds

Endowment funds

Question 3

3 types of contributions

and how can they be accounted for

Answer 3

Unrestricted

Restricted

Endowments

*contributions are accounted for using the restricted fund method or the deferral method

Question 4

Unrestricted contributions

Answer 4

can be used for any purpose. recognized in revenue when

• the amount to be received can be reasonably esitmated
• ultimate collection is reasonably assured

Question 5

Restricted contributions

Answer 5

subject to externally imposed stipulations that specify the purpose for which the contributed asset is to be used.

Question 6

Endowment contributions

Answer 6

contributions where the contributor specifies that the principal contribution must be maintained permanently

• the interest earned on it could be an endowment, restricted, or unrestricted contribution

Question 7

Deferred contribution method:
Unrestricted contributions

Answer 7

Record when they meet the revenue criteria:

• amount can be reasonably esitmated
• collection is reasonably assured

DR Cash

CR Contribution revenue

Question 8

Deferred contribution method:

Restricted contributions

Answer 8

Deferred and recognized in the period where releated expenses occur

When received:

DR Cash

CR Deferred contribution revenue

When expense incurred

DR Expense

CR Cash

DR Deferred contribution

CR Contribution revenue

Question 9

Deferred contribution method:

Contribution of capital assets

Answer 9

Record as revenue when asset depreciates

DR Asset

CR deferred contribution

DR Amort expense
CR Accum amort

DR Deferred contribution

CR Contribution revenue

non-depreciable assets:
DR Asset
CR Net assets

Question 10

Deferred contribution method:

Endowment contributions

Answer 10

direct increase to net assets

When contributed:

DR Cash

CR Net assets

When cash invested:

DR Investment

CR Cash

*income earned from endowment can be unrestricted, restricted, or endowment contribution

Question 11

Restricted fund method. when is revenue recognized?

Answer 11

Revenue is recognized in the period received/receivable in the appropriate restricted fund

Question 12

Restricted fund method

Unrestricted contribution

Answer 12

DR Cash

CR Contribution revenue (general fund)

Question 13

Restricted fund method:

Restricted contribution

Answer 13

DR Cash

CR Contribution revenue (specify fund)

When separate fund not set up:

DR Cash

CR deferred contribution

Question 14

Restricted fund method:
Capital asset

Answer 14

DR Capital asset

CR contribution revenue (capital asset fund)
*also entry to purchase asset, y/e entry to record depreciation expense

Question 15

Restricted fund method:
Endowments

Answer 15

DR Cash

CR Contribution revenue (endowment fund)

Question 16

How to record for donated goods/services

Answer 16

Has a choice to report for them. can only be reported for if:

• fair value of the contributed g/s can be reasonably estimated
• g/s are used in the normal course of operations and would have been purchased otherwise

**Record at fair value

DR Expense

CR contribution revenue.

Question 17

Capital asset rules:
Small NPOs with revenue under $500,000 can either:

Answer 17

• directly expense the costs of tangible capital assets
• capitalize the cost of the tangible capital assets and not amortize
• capitalize + amortize

Once goes above $500K, must capitalize and amortize. if goes under 500K, cannot revert back.