F6 M1 Not For Profit Financial Reporting Part 1 Flashcards
(20 cards)
what are three financial statements of not for profit entities?
1) Statement of Financial Position (B/S)
2) Statement of Activities (I/S)
3) Statement of Cash Flows
what type of accounting does GAAP require not for profit entities use?
full accrual basis of accounting used to disclose sources of income and how they are used
what are the general principles per FASB ASC for not for profit F/S reporting?
1) consistent external reporting
2) fund accounting not used for external reporting
3) external F/S focus on basic info of org. as a whole
4) governmental not for profits governed by GASB
where can the nature and function of expenses be reported on the F/S?
1) face of statement of activities
2) schedule on notes to F/S
3) separate F/S
what are functional classifications of expenses?
include program and support service type expenses
program: relate to purpose and mission of org.
support: relate to mgmt and general, fundraising, and membership and development
what are natural classification of expenses?
include operating expenses like salaries, utilities, interest expense, supplies, rent etc.
what are the components of the statement of financial position?
1) Assets
2) Liabilities
3) Net Assets (equity)
what is net assets without donor restrictions?
funds available to use at org. discretion with no donor barriers of use in place, such as contributions, internal board-designated funds, or funds that have met donor restrictions
what is net assets with donor restrictions? what are examples of net assets with donor restrictions
limits set by a donor of how funds are to be used and when they can be used, such as:
1) support of particular operating activity 2) investment for specified period of time
3) use in specified period
4) acquisition of long-lived assets
5) assets used for specified purpose and not sold
6) donor-restricted endowments permanent in nature
name some statement of financial position disclosures (qualitative and quantitative)
1) description of asset that is limited in use
2) nature and amt of limits
3) contractual limits
4) how and when resources can be used
5) nature of resources
6) external limits imposed by donors
7) internal limits imposed by governing boards
what are three elements in the statement of activities?
1) change in total net assets
2) change in net assets without donor restrictions
3) change in net assets with donor restrictions
what is the format of the statement of activities?
1) revenues
2) expenses
3) gains and losses
4) reclassifications of net assets
5) prior period adjustments and changes in accounting principle to beg. net assets
6) comprehensive income after operating income
7) totals of operating income disclosed in notes to F/S
name some revenues classified as without donor restrictions (3)
1) fees from rendering services
2) contributions with no stipulations
3) gains and losses recognized on investment with no restrictions (net of expenses)
name some revenues classified as with donor restrictions (4)
1) contributions to be spent for particular purpose (capital projects or programs)
2) contributions subject to passage of time
3) contributions with temporary restrictions
4) contributions requiring investment in perpetuity
explain reclassification of net assets
these are assets that when a restriction has been satisfied, it will decrease the with donor restriction class and increase the without donor restriction class
what are expenses in not for profit accounting?
excluding investment expenses, they decrease net assets without donor restrictions
explain investment expense
netted against investment returns and classified based on investment revenue
examples of program services for universities, hospitals, unions, and daycare
universities: education and research
hospitals: patient care and education
union: labor negotiations and training
daycare: childcare
what are combined costs and how are they treated?
where program and fundraising services are combined; these costs should be allocated between these functions
are gains and losses and investment expenses included in the functional expense analysis?
No
