Section 30 - NFP Accounting Flashcards
What 4 groups do not-for-profit accounting cover?
1) Health care
2) Colleges and universities (non-governmental)
3) Voluntary health and welfare (United Way, Red Cross, Salvation Army)
4) All other not above (fraternities, labor unions, museums, libraries, non profit orgs)
What are the 3 basic financial statements required for not-for-profit accounting?
1) Statement of Financial Position (B/S)
2) Statement of Activities (I/S + RE)
3) Statement of Cash Flows
What method of accounting is used for not-for-profit accounting?
ACCRUAL
What is reported on the Statement of Financial Position (B/S)?
Assets = liabilities + net assets
What are the three accounts reported in the Net Assets section of the Statement of Financial Position (B/S)?
1) Unrestricted net assets - Resources available for general use. May include asset set aside by the Board of Trustee, however, this is not a true restriction since it may be reversed.
2) Temporarily restricted net assets - Use is restricted to a future time, which could then convert to Unrestricted
3) Permanently restricted net assets - Use is restricted
What is reported on the Statement of Activities (I/S)?
1) Revenues/Gains
- Contributions from donors and investment income
- Property - included FMV at date of gift
- Services - only include if professional and NPO would otherwise paid for them
2) Net assets released from restriction - temporarily restricted net assets that became unrestricted during the year
3) Expenses - only unrestricted net assets
4) Changes in all three Net Assets classes
What is the JE to record a unrestricted cash contribution received by a NPO (revenue)?
Cash (operating activity)
Revenues (UNA - unrestricted net assets)
What are the JE to record a temporarily restricted cash contribution received by a NPO (revenue)?
TESTED A LOT
Cash received
Cash (operating activity)
Revenues (TRNA)
Money is spent
Net assets released (TRNA)
Net assets released (UNA)
Report actual cost
Expenses (UNA)
Cash
Does the net increase in UNA and the increase in expenses (decrease UNA) has any net effect on unrestricted Net Assets?
No
What are the 3 activities in the Statement of Cash Flows?
1) Operating activities
2) Investing activities
3) Financing activities
What is included in the Operating activities for the Statement of Cash Flows?
- Unrestricted revenue
- Temporarily restricted revenue
- Revenue and expense
- INTEREST INCOME/EXPENSE
- DIVIDEND INCOME
***may use direct or indirect method
What is included in the Investing activities for the Statement of Cash Flows?
Flow from buying and selling assets
- investments acq/sold
- PPE acq/disposal
What is included in the Financing activities for the Statement of Cash Flows?
Flow from borrowings and repayments
- Endowments
- Restricted contributions/revenues
- $$ restricted for LT purposes
- Pmt on bonds, N/P, $$ restricted for acq of PPE
What is the additional F/S Volunteer Health and Welfare Organizations must provide?
Statement of Functional Expense
Public support (donations) \+Revenues (earned) -Program expenses (further mission of org) -Support services (secondary to mission) =Excess of revenue over expenses
What are the specific activities in the line items for the Statement of Functional Expense?
Public support - contributions, grants, bequests, pledges, special events revenues
Revenues (earned) - membership dues, investment income, client service revenue, fees
Program expenses - further mission of org - research, community services, public health and education
Support services - secondary to mission - G. A. M (marketing, tax prep, print annual report), fundraising
