F6 Flashcards
(25 cards)
Tuition Revenue is reported
net of refunds.
Note: Scholarships however, would either be reported as a separately displayed reduction to revenue on the statement of activities or an an expense.
Reclassifications of net assets resulting from satisfaction of donor restrictions temporary in nature are displayed on
on the face of the statement of activities.
Net patient service revenues reported on a hospital statement of activities are comprised of
of gross earnings net of contractual allowances and exclude charity care.
The expense categories used by not-for-profit organizations generally fall under two main headings
program services and support services.
Program services relate to
functional expenses directly related to the mission of the organization.
Support services summarize
the functional expenses related to general and administrative costs, costs of membership development, and fundraising.
Fundraising contemplates
inducing potential donors to contribute to the entity.
Membership activities involve
seeking prospective members, ensuring current member satisfaction, etc.
Membership activities mimic marketing activities (a general and administrative expense) in commercial settings.
Soliciting prospective members is a
membership development expense, not fundraising.
Soliciting membership dues are
an administrative collection function
Reclassifications of net assets resulting from satisfaction of donor restrictions temporary in nature are displayed on
the face of the statement of activities.
Matching and cost eligibility requirements are both examples of
measurable performance-based barriers or other barriers that could indicate the existence of a condition.
Not-for-profit organizations record donated services for
Specialized skill, Otherwise needed, Measured Easily.
Services are also recognized when a long-lived asset is enhanced.
A notice naming NPE as beneficiary in will is
not definite enough for the recording of revenue. (the person may change will anytime).
Net assets of a nongovernmental not-for-profit organization are most appropriately characterized as
the residual interest of the not-for-profit entity.
Resources do not belong to a defined class of owners, only the not-for-profit entity itself and the mission for which it was formed.
For a voluntary health-and-welfare organization (charities) and all not-for-profit organizations expenses must be reported
by both functional and natural classifications
Functional classifications group expenses by
major classes of program (aligned with mission and purpose) and support services.
Natural classifications group expenses by
individual types that align to an entity’s chart of accounts, such as salaries, supplies, utilities, etc.
Endowment funds, donor restricted in perpetuity, are classified as
non-current
Earnings with donor restrictions used in a manner that satisfies the donor’s stipulations are reclassified out of
net assets with donor restrictions into net assets without donor restrictions to fund the expense.
Cumulative losses on underwater endowments (fair value < carrying value) are
absorbed by the endowment and are classified consistent with donor restrictions.
Cash contributions restricted by the donor for long-term purposes must be reported as
a cash inflow in the financing activities section of the statement of cash flows, segregated from other financing activities.
MAC - GRaSPP =
Modified accrual accounting - current fin resource measurement focus
G = General Fund
Special Revenue Fund
and
Debt Service fund
Capital Projects fund
Permanent fund
(Governmental type funds)
SCARE =
SE = Internal Service Fund/Enterprise funds (Proprietary type fund)
CIPPOE = Custodial fund, Investment trust funds, Private purpose trust funds, Pension trust fund, Other employee benefit trust funds (Fiduciary type fund)
Accrual accounting
Record non-current assets and liabilities
Econ resource measurement focus
