NP-Stmnt of Fin Position

Question 1

Nongovernmental not-for-profit entities (either voluntary health and welfare organizations or other not-for-profit organizations) are required to provide which of the following external financial statements?

Answer 1

The correct listing of required statements is:
•statement of financial position,
•statement of activities, and
•statement of cash flows.

Question 2

During the current year, Mill Foundation, a nongovernmental not-for-profit entity, received $100,000 in unrestricted contributions from the general public. Mill’s board of directors stipulated that $75,000 of these contributions would be used to create an endowment. At the end of the current year, how should Mill report the $75,000 in the net assets section of the statement of financial position?

Answer 2

states that the amounts for each of the three classes of net assets are based on donor-imposed (not board of directors–imposed) restrictions.

Question 3

Gridiron University is a private university. A successful alumnus has recently donated $1,000,000 to Gridiron for the purpose of funding a “center for the study of sports ethics.” This donation is conditional upon the university raising matching funds within the next 12 months. The university administrators estimate that they have a 50% chance of raising the additional money. How should this donation be accounted for?

Answer 3

In this case, the donor has provided resources to Gridiron University before the conditions attached to the donation, the raising of matching funds, have been met. “Temporarily restricted” and “unrestricted support” (which would increase the related category of net assets) are not correct because the contribution cannot be recognized as support (revenue) until conditions have been met. “As a memorandum entry reported in the footnotes” is not correct because the cash received must be recorded in the books and records. “As a refundable advance,” considering the conditional donation as a liability called “refundable advance,” is the only correct answer.

Question 4

Which of the following types of information would be included in total net assets in the statement of financial position for a nongovernmental not-for-profit organization?

Answer 4

. The equity is reported in three categories: unrestricted, temporarily restricted, and permanently restricted, depending on whether there are donor-imposed constraints on asset use.

Question 5

Which of the following financial categories are used in a nongovernmental not-for-profit entity’s statement of financial position?

Answer 5

The statement of financial position is the term for the balance sheet reported by private not-for-profit (NFP) entities. . Its accounting equation is assets equal liabilities plus net assets.