F6 - Not for Profit

Question 1

Barter received volunteer services to build an addition to the Nursing Home. The addition included work by a skilled carpenter valued at $13,000 and the work of general laborers valued at $12,000.
How much do you recognized?

Answer 1

Accrue for both the skill carpenter valued $13000 and the work of general labor workers at $12000. It comes out to $25000

Question 2

Barter receives volunteer services from doctors valued at $120,000 per year. Barter pays a nominal stipend of $20,000 to doctors. Barter needs the physician coverage provided by the doctors to meet state licensure requirements.

How much would you recognized?

Answer 2

It will accrue 120000 minus the defrayed $20000 for a total of $100000 (bc we paid the 20000)

Question 3

When do we recognized contributed revenue?

Answer 3

• enhance a nonfinancial asset
• SOME (specialized)

Question 4

What increases the net assets with donor restrictions of a nongovernmental, not-for-profit voluntary health and welfare organization?

Answer 4

• contributions with donor-imposed restrictions that may be either in perpetuity or temporary in nature
  EX: Donor contributions to fund a resident camp program - bc its restricted for one purpose use

Question 5

What is a primary purpose and focus of the statement of activities for a non-governmental, not-for-profit organization?

Answer 5

• Income Statement
• To demonstrate how the organization’s resources are used in providing various programs and services is correct.
• To report the change in net assets for the period

Question 6

Azim Services, a nongovernmental not-for-profit organization, received dues of $100 from its members. Azim provided its members with a newsletter that had a $25 value. All other services were valued at $10 per member. What is the amount of contribution made to Azim by each member?

Answer 6

Contribution per member=
Dues for each member +
Newsletter (-)
Other Services(-)
anser $65

Question 7

Statement of Activities (I/S) REVENUE

Answer 7

• Contributions
• Dues
• Grants
• Program Fees

Question 8

Statement of Activities (I/S) EXPENSES

Answer 8

• program expenses
• fundraising expenses

Question 9

How should Donated Services be recorded and how they affect the statement of activities (I/S)?

Answer 9

Donated services should be booked as both an expense(Debit) INCREASE and as contribution revenue(Credit) INCREASE at fair value as long as the services create/enhance a nonfinancial asset or require specialized skills that the provider possesses that would otherwise have to be purchased by the organization

Question 10

Calculate Net Pledges Receivable (legally enforceable)

Answer 10

Total Gross Pledges x ( 1 - %uncollectible)
Ignore the $ restriction bc of the uncollectible

Question 11

Separate fund financial statements

Answer 11

should be presented for governmental and proprietary funds to report additional and detailed information about the primary government

Question 12

Special revenue funds expandable or not ?

Answer 12

expendable (may be entirely used up)

Question 13

Permanent funds expandable or not ?

Answer 13

• nonexpendable (legally restricted to the extent that income and not principal may be used for the restricted purpose)
• limited to earnings

Question 14

A local governmental unit could have funds using which of the following accounting bases?
Accrual or Modified

Answer 14

-Both the Accrual/Modified accraul basis

Question 15

Governmental Funds (Modified Accrual)

Answer 15

• General Fund
• Special Revenue Fund
• Debt Service Fund
• Capital Projects Fund
• Permanent Fund

Question 16

Govermental Fund Primary focus on measurement…

Answer 16

Current Financial Resources

Question 17

Proprietary Fund (Accrual/Economic Resources Measurement)

Answer 17

• Internal Service
• Enterprise

Question 18

Fiduciary Fund (Accrual/Economic Resources Measurement)

Answer 18

• Custodial
• Investment Trust
• Private Purpose Trust
• Pension and Other Employee Trust

Question 19

When should a conditional pledge to a nongovernmental not-for-profit organization be recognized as revenue?

Answer 19

When the pledge conditions are met

Question 20

When a nongovernmental not-for-profit organization, received a contribution in December, Year 1. The donor restricted use of the contribution until March, Year 2. What do we do ?

Answer 20

Report income in year 1, but it will be temporary restricted till March year 2

Question 21

How should a nongovernmental not-for-profit organization report investments in its financial statements?

Answer 21

Fair value(B/S) with gains and losses reported in the statement of activities

Question 22

For pledge revenue, the full amount of contribution/pledge is recognized:

Answer 22

in the year of the pledge regardless of installment payments you recognize the full amount on the first year

Question 23

Funds that are considered internal board-designated funds are classified as:

Answer 23

Net assets without donor restrictions

Question 24

Enterprise Fund is

Answer 24

• will be set up to account for the acquisition and operation of governmental services
• purpose to charge fees and make money

Question 25

Enterprise Fund examples are(charge fees)

Answer 25

• Airports
• Lottories
• Public Hospitals
• Parking Garages
• Transportation system
• Public Univ.
• Water Utilities

Question 26

Capital Project Funds (Gov Fund):

Answer 26

when a fund that consists of various types of resources being used in the acquisition or construction of capital facilities.

Question 27

What measurement focus and basis of accounting does a state or local government employ for its Statement of Activities?

Answer 27

Full accrual accounting and economic resources measurement focus

Question 28

For government-wide financial statements, what is the correct combination of measurement focus and basis of accounting?

Answer 28

• Full accrual accounting and economic resources measurement focus
• Not modified bc it said (wide)

Question 29

how to record a capital asset

Answer 29

• reported as a fixed asset or a general capital asset