F-8 Simulations

Question 1

How to tell the difference between financing activities and investing activities for not for profit

Answer 1

“Contributions” for construction are finance activities while just while just normal construction is investing

Question 2

How to record a gift no matter if its something like office space

Answer 2

Represents revenue without donor restriction at the FV

Question 3

How to value & classify pledges for not for profit

Answer 3

They aren’t restricted or unrestricted and aren’t classified as an asset

Question 4

Conditional promises vs unconditional promises

Answer 4

Conditional promises don’t represent receivable revenue or assets until the condition is met but unconditional promises can be either restricted or nonrestricted

Question 5

Required financial statements for not for profit

Answer 5

Statement if Financial Position
Statement of Activities
Statement of Cash Flows

Question 6

Statement of Financial position for not for profit

Answer 6

• assets, liabilities, and net assets

- assets & liabilities classified as current or noncurrent

Question 7

Statement of Activities for not for profit

Answer 7

• changes in total net assets
• changes in net assets without restriction
• changes in net assets with restriction

Question 8

Not for profit investing activities - CASH FLOW

Answer 8

Investments in PP&E

Proceeds from sale of art or disbursements to purchase art

Proceeds from sale of assets

Question 9

Not for profit financing activities - CASH FLOW

Answer 9

Proceeds from issuing bonds and shit

Repayment on borrowed shit

Receipts for contribution restricted

Question 10

Proceeds from issuing bonds and shit

Repayment on borrowed shit

Receipts for contribution restricted

Answer 10

S.O.M.E

Specialized skills from donor
Otherwise needed by organization
Measurable
Easily at FV

Dr. Expense or Asset
Cr. Contributions - without restriction

Question 11

Contribution without restriction but there is time restriction

Answer 11

Dr. Pledge Receivable - restricted
Cr. Allowance
Cr. Contributions - restricted

When collected
Dr. Cash - restricted
Cr. Pledge receivable - restricted
Dr. Satisfaction of time restriction
Cr. Cash - without restriction

Question 12

Contribution with restriction

Answer 12

Dr. Pledge receivable - restricted
Cr. Allowance
Cr. Donor restricted support

When receivable is collected and money is spent on purpose
Dr. Reclassification
Cr. Cash - restricted

Net assets without restriction increase at the same time
Dr. Cash - unrestricted
Cr. Reclassification 
Dr. Operating expense
Cr. Cash - unrestricted

Question 13

Not for profit healthcare - patient revenue

Answer 13

Gross patient revenue
(Charity care)
(contractual adjustments)
(policy discounts)
(admin adjustments)

Question 14

Not for Profit operating activities - CASH FLOW

Answer 14

Same as normal accounting

Question 15

Program services vs support

Answer 15

Program relates to the mission of the organization while support relates to activities everything else

Question 16

Investment income for debt securities

Answer 16

Net gain or loss on FV of debt security against the interest earned NOT Interest Received

Question 17

Variance Power NFP- Unaffiliated

Answer 17

1. If recipient has variance power he recognizes a contribution & beneficiary recognizes nothing
2. If recipient has no variance power it recognizes refundable liability & beneficiary recognizes contribution

Question 18

Variance Power NFP - Financial interrated

Answer 18

1. If recipient has variance power he recognizes a contribution and beneficiary recognizes nothing
2. If recipient has no variance power then it recognizes a contribution & beneficiary recognizes change in net assets

Question 19

What does variance power mean

Answer 19

If they have variance then they can fund who ever they want but if they don’t they need to fund a specific entity

Question 20

NFP Variance power and increase in net worth or value questions

Answer 20

Recipient has no variance power

Question 21

Classification of governmental expenditures

Answer 21

1. Function: groups expenditures into major services like safety, highways, education and health
2. Program: groups expenditures into activities or operations that attain to a specific purpose or objective like programs for elderly, drug addictions, or education
3. Activity: expenditure per unit of work and activity can be an event, task, or unit of work with specific purpose
4. Character: determining basis of fiscal period like current expenditures, capital outlays, debt service, and intergovernmental
5. Object: groups expenditures into type of items purchased or service provided like supplies or principal & interest payments for debt service expenditures

Question 22

What to include for wages for a nonprofit

Answer 22

Include your staff and any nonspecialized volunteer work and do not include volunteer work that is specialized

Question 23

Functional and Natural expenses for health & welfare organization that is not for profit

Answer 23

1. Functional: categorizes costs by major classes or program & support services
2. Natural: include descriptions like salaries, rent, utilities, etc.

Question 24

Other operating revenue & Nonoperating revenue for hospitals

Answer 24

Other operating revenue from hospitals comes from things like cafeteria revenue, parking fees, donated supplies(not services), specific purpose grants, etc.

While nonoperating comes from dumb shit that has nothing to do with what happens inside a hospital

Question 25

Rule for NFP when you receive a donor restricted contribution and the restriction is met in the same period

Answer 25

May be recorded as Support (contribution revenue)