NPO TBS Flashcards
Indicate how each transaction should be reported by Philipp University on
(1) the statement of activities and
(2) the statement of cash flows prepared for the year ended December 31, 20X3.
Philipp reports separate columns for the changes in unrestricted, temporarily restricted and permanently restricted net assets on its statement of activities.
In addition, Philipp uses the direct method of reporting its cash flows from operating activities.
Philipp has a policy of not restricting net assets related to plant.
List A or List B effect may be used once, more than once or not at all.
Transactions;
1.A donor contributed $100,000 and stipulated that it be invested permanently.
STATEMENT OF ACTIVITIES:
List A effects
A. Increases unrestricted net assets net assets
B. Increases temporarily restricted
C. Increases permanently restricted net assets
D. Decreases unrestricted net assets
E. Decreases temporarily restricted net assets
F. Decreases permanently restricted net assets
G. Transaction not reported on the statement of activities
STATEMENT OF ACTIVITIES
List B effects
H. Increases cash flows from operating activities
I. Decreases cash flows from operating activities
J. Increases cash flows from investing activities
K. Decreases cash flows from investing activities
L. Increases cash flows from financing activities
M. Decreases cash flows from financing activities
N. Transaction not reported on the statement
O. Transaction reported in the schedule reconciling change in net assets to net cash provided from operating activities
- (C,L) When a donor stipulates that some or all of a contribution is to be retained permanently, such as a requirement that it be invested permanently, the resources will be classified as permanently restricted net assets.
Since they are restricted to be used for the purpose of acquiring permanent assets, the contribution is considered an inflow from financing activities.
Indicate how each transaction should be reported by Philipp University on
(1) the statement of activities and
(2) the statement of cash flows prepared for the year ended December 31, 20X3.
Philipp reports separate columns for the changes in unrestricted, temporarily restricted and permanently restricted net assets on its statement of activities.
In addition, Philipp uses the direct method of reporting its cash flows from operating activities.
Philipp has a policy of not restricting net assets related to plant.
List A or List B effect may be used once, more than once or not at all.
- Donors contributed $500,000 for the acquisition of equipment
STATEMENT OF ACTIVITIES:
List A effects
A. Increases unrestricted net assets net assets
B. Increases temporarily restricted
C. Increases permanently restricted net assets
D. Decreases unrestricted net assets
E. Decreases temporarily restricted net assets
F. Decreases permanently restricted net assets
G. Transaction not reported on the statement of activities
STATEMENT OF ACTIVITIES
List B effects
H. Increases cash flows from operating activities
I. Decreases cash flows from operating activities
J. Increases cash flows from investing activities
K. Decreases cash flows from investing activities
L. Increases cash flows from financing activities
M. Decreases cash flows from financing activities
N. Transaction not reported on the statement
O. Transaction reported in the schedule reconciling change in net assets to net cash provided from operating activities
- (B,L) When contributions are restricted for a particular purpose or for a particular period of time, they are considered temporarily restricted net assets.
When they are used for the intended purpose or retained for the requisite period, then become unrestricted.
Since the resources are to be used to acquire equipment, a long-term asset, the contribution is considered an inflow from financing activities.
- Depreciation expense of $750,000 was recorded for 20X3.
STATEMENT OF ACTIVITIES:
List A effects
A. Increases unrestricted net assets net assets
B. Increases temporarily restricted
C. Increases permanently restricted net assets
D. Decreases unrestricted net assets
E. Decreases temporarily restricted net assets
F. Decreases permanently restricted net assets
G. Transaction not reported on the statement of activities
STATEMENT OF ACTIVITIES
List B effects
H. Increases cash flows from operating activities
I. Decreases cash flows from operating activities
J. Increases cash flows from investing activities
K. Decreases cash flows from investing activities
L. Increases cash flows from financing activities
M. Decreases cash flows from financing activities
N. Transaction not reported on the statement
O. Transaction reported in the schedule reconciling change in net assets to net cash provided from operating activities
- (D, O) All expenses, including depreciation, are considered reductions in unrestricted net assets.
Since it is an expense that does not involve the use of cash, it is a reconciling item on the reconciliation of the change in net assets to cash flows from operating activities, as required to be included with the statement of cash flows.
- $3,000,000 was received, representing tuition for the spring, summer and fall semesters.
STATEMENT OF ACTIVITIES:
List A effects
A. Increases unrestricted net assets net assets
B. Increases temporarily restricted
C. Increases permanently restricted net assets
D. Decreases unrestricted net assets
E. Decreases temporarily restricted net assets
F. Decreases permanently restricted net assets
G. Transaction not reported on the statement of activities
STATEMENT OF ACTIVITIES
List B effects
H. Increases cash flows from operating activities
I. Decreases cash flows from operating activities
J. Increases cash flows from investing activities
K. Decreases cash flows from investing activities
L. Increases cash flows from financing activities
M. Decreases cash flows from financing activities
N. Transaction not reported on the statement
O. Transaction reported in the schedule reconciling change in net assets to net cash provided from operating activities
- (A,H) Amounts received for tuition are considered revenues and, in general, are increases in unrestricted net assets. They represent inflows of funds from the core operations of the college and are classified as inflows from operating activities.
- Investments of $100,000 were acquired with the cash received from the donor in transaction 1.
STATEMENT OF ACTIVITIES:
List A effects
A. Increases unrestricted net assets net assets
B. Increases temporarily restricted
C. Increases permanently restricted net assets
D. Decreases unrestricted net assets
E. Decreases temporarily restricted net assets
F. Decreases permanently restricted net assets
G. Transaction not reported on the statement of activities
STATEMENT OF ACTIVITIES
List B effects
H. Increases cash flows from operating activities
I. Decreases cash flows from operating activities
J. Increases cash flows from investing activities
K. Decreases cash flows from investing activities
L. Increases cash flows from financing activities
M. Decreases cash flows from financing activities
N. Transaction not reported on the statement
O. Transaction reported in the schedule reconciling change in net assets to net cash provided from operating activities
- (G,K) The purchase of securities represents the use of one permanently restricted asset, cash, to acquire another permanently restricted asset, investments.
As a result, there is no change in permanently restricted net assets.
The use of cash to acquire investments would be classified as an outflow for investing activities.
- Interest and dividends of $8,000 were received from the investments acquired in transaction.5. The donor stipulated that earnings be used for student scholarships in 20X3.
STATEMENT OF ACTIVITIES:
List A effects
A. Increases unrestricted net assets net assets
B. Increases temporarily restricted
C. Increases permanently restricted net assets
D. Decreases unrestricted net assets
E. Decreases temporarily restricted net assets
F. Decreases permanently restricted net assets
G. Transaction not reported on the statement of activities
STATEMENT OF ACTIVITIES
List B effects
H. Increases cash flows from operating activities
I. Decreases cash flows from operating activities
J. Increases cash flows from investing activities
K. Decreases cash flows from investing activities
L. Increases cash flows from financing activities
M. Decreases cash flows from financing activities
N. Transaction not reported on the statement
O. Transaction reported in the schedule reconciling change in net assets to net cash provided from operating activities
- (B,H) Since the donor stipulated that interest and dividends be used for scholarships, those funds are considered restricted until such time as they are used for that purpose, when they become unrestricted.
As a result, they are temporarily restricted funds and the receipt would represent an increase in temporarily restricted net assets.
Interest and dividends received are considered cash inflows from operating activities.
- $75,000 was received from donors in 20X3 who had pledged that amount in 20X2. The cash will be used to pay for a marketing campaign that aimed at increasing enrollment. The marketing cost was incurred in 20X3 and will be paid in 20X4.
STATEMENT OF ACTIVITIES:
List A effects
A. Increases unrestricted net assets net assets
B. Increases temporarily restricted
C. Increases permanently restricted net assets
D. Decreases unrestricted net assets
E. Decreases temporarily restricted net assets
F. Decreases permanently restricted net assets
G. Transaction not reported on the statement of activities
STATEMENT OF ACTIVITIES
List B effects
H. Increases cash flows from operating activities
I. Decreases cash flows from operating activities
J. Increases cash flows from investing activities
K. Decreases cash flows from investing activities
L. Increases cash flows from financing activities
M. Decreases cash flows from financing activities
N. Transaction not reported on the statement
O. Transaction reported in the schedule reconciling change in net assets to net cash provided from operating activities
- (E,H)The amounts pledged from donors were recognized as revenues when received in 20X2, increasing temporarily restricted net assets at that time.
In 20X3, the costs were actually incurred, and the funds became unrestricted, resulting in a decrease in temporarily restricted funds and an increase in unrestricted net assets.
At the same time, the expense is recognized, which decreases unrestricted net assets resulting in no net change.
The reclassification of the cash from temporarily restricted to unrestricted is considered an inflow of unrestricted cash and, as a result, an inflow from operating activities.
- $900,000 was paid to faculty for salaries incurred during the year.
STATEMENT OF ACTIVITIES:
List A effects
A. Increases unrestricted net assets net assets
B. Increases temporarily restricted
C. Increases permanently restricted net assets
D. Decreases unrestricted net assets
E. Decreases temporarily restricted net assets
F. Decreases permanently restricted net assets
G. Transaction not reported on the statement of activities
STATEMENT OF ACTIVITIES
List B effects
H. Increases cash flows from operating activities
I. Decreases cash flows from operating activities
J. Increases cash flows from investing activities
K. Decreases cash flows from investing activities
L. Increases cash flows from financing activities
M. Decreases cash flows from financing activities
N. Transaction not reported on the statement
O. Transaction reported in the schedule reconciling change in net assets to net cash provided from operating activities
- (D,I)All expenses are recognized as decreases in unrestricted net assets.
The payment of expenses, including salaries, is an outflow from operating activities
- $25,000 was given to the faculty for summer research grants. The grants came from donations made by alumni in 20X2.
STATEMENT OF ACTIVITIES:
List A effects
A. Increases unrestricted net assets net assets
B. Increases temporarily restricted
C. Increases permanently restricted net assets
D. Decreases unrestricted net assets
E. Decreases temporarily restricted net assets
F. Decreases permanently restricted net assets
G. Transaction not reported on the statement of activities
STATEMENT OF ACTIVITIES
List B effects
H. Increases cash flows from operating activities
I. Decreases cash flows from operating activities
J. Increases cash flows from investing activities
K. Decreases cash flows from investing activities
L. Increases cash flows from financing activities
M. Decreases cash flows from financing activities
N. Transaction not reported on the statement
O. Transaction reported in the schedule reconciling change in net assets to net cash provided from operating activities
- (E, I) When the donations were received in 20X2, they were recognized as an increase in temporarily restricted net assets.
When they are used for their intended purpose, they are first reclassified to unrestricted, representing a decrease in temporarily restricted net assets.
The increase in unrestricted net assets is offset by the decrease resulting from payment of the research grants, so there is no net change in unrestricted net assets.
The payments of grants is considered a cash outflow from operating activities.
- $40,000 of donations were received from alumni who did not stipulate how their donations were to be used.
STATEMENT OF ACTIVITIES:
List A effects
A. Increases unrestricted net assets net assets
B. Increases temporarily restricted
C. Increases permanently restricted net assets
D. Decreases unrestricted net assets
E. Decreases temporarily restricted net assets
F. Decreases permanently restricted net assets
G. Transaction not reported on the statement of activities
STATEMENT OF ACTIVITIES
List B effects
H. Increases cash flows from operating activities
I. Decreases cash flows from operating activities
J. Increases cash flows from investing activities
K. Decreases cash flows from investing activities
L. Increases cash flows from financing activities
M. Decreases cash flows from financing activities
N. Transaction not reported on the statement
O. Transaction reported in the schedule reconciling change in net assets to net cash provided from operating activities
- (A,H) Contributions received that are not restricted by external parties are considered unrestricted resources and result in an increase in unrestricted net assets.
Contributions received are considered cash inflows from operating activities
