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FAR CPA Exam > FAR 8 - NFP and Governmental Part 1 > Flashcards

FAR 8 - NFP and Governmental Part 1 Flashcards

1
Q

NFP required financial statements

A

1) Statement of Financial Position (BS)
2) Statement of Activities (IS)
3) Statement of Cash Flows

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2
Q

Internal board-designated funds

A

Classified as net assets w/o donor restrictions

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3
Q

What is included on the Statement of Financial Position

A 
Assets
Liabilities
Net Assets
-w/o donor restrictions
-with donor restricitions
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4
Q

What is included on the Statement of Activities

A

1) Change in total net assets
2) Change in net assets w/o donor restrictions
3) Change in net assets with donor restrictions
4) Revenues, gains
5) Expenses, losses

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5
Q

Program services

A

Expenses of specific activities (ex. Universities = education and research)

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6
Q

Support services

A

Expenses not classified as a program service (ex. Fundraising and administrative expenses)

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7
Q

Functional classifications

A

Expenses categorized by major classes of program and support services

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8
Q

Natural classifications

A

Specific expense categories, similar to general ledger titles (ex. salaries, rent, supplies, etc)

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9
Q

Money spent

A

Equals money earned! Released from restrictions

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10
Q

Revenues from exchange transactions (earning of resources for a performance of service)

A

Classified as net assets w/o donor restrictions (ex. student tuition, membership fees)

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11
Q

Unconditional promises

A

Also known as a pledge, this is a contribution and is recorded at fair value of the promise made

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12
Q

Conditional promises

A

Depends on occurrence. Do not recognize until conditions are met

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13
Q

Donated collection items (art or statue)

A

Not required to be recorded by the NFP

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14
Q

Donated materials

A

Record revenue at FV

Dr: Asset
Cr: Contribution - support

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15
Q

Gross revenue from tuition and fees

A

Assessed student tuition and fees - canceled classes

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16
Q

Revenue recognition in health care organizations

A

1) Patient service revenue = Gross patient service revenue - charitable services
2) Other operating revenue = Tuition, donated supplies, etc
3) Nonoperating revenue and support G/L = interest and dividen income, donated services, income from endowment funds, etc

17
Q

Recipient accounting (when a NFP accepts assets from a resource provider and agrees to use on behalf of, or transfer to a specified beneficiary)

A

1) Not financially interrelated / without variance power
Dr: Asset (FV)
Cr: Refundable advance liability

2) Not financially interrelated / with variance power
Dr: Asset (FV)
Cr: Contribution revenue

3) Financially interrelated / with or without variance power
Dr: Asset (FV)
Cr: Contribution revenue

18
Q

Financially interrelated organizations

A

1) One organization has the ability to influence the operating and financial decisions of the other and
2) one organization has an ongoing economic interest in the net assets of the other

19
Q

Beneficiary accounting

A

1) Not financially interrelated / no beneficial interests
Dr: Receivable
Cr: Contribution revenue

2) Not financially interrelated / beneficial interests
Dr: Beneficial interest
Cr: Contribution revenue

3) Financially interrelated
Dr: Interest in recipient net assets
Cr: Change in interest in recipient net assets (Equity)

20
Q

Endowment Funds

A

Assets established to provide income for a NFP (principal off limits but interest income used)

1) Board-designated endowment fund (without restrictions)
2) Donor-restricted endowment funds (with restricitons)

21
Q

Underwater endowments

A

A donor-restricted endowment fund for which the fair value of the fund at the reporting date is less than the original gift amount (reported as deficiency)

22
Q

Governmental fund overall structure

A

1) Governmental funds (GRaSPP)
2) Proprietary funds (SE)
3) Fiduciary funds (CIPPOE)

23
Q

Governmental funds accounting

A
  • Modified accrual basis

- Current financial resources focus (no fixed assets or long term debt)

24
Q

Governmental fund types

A

GRaSPP

  • General fund
  • special Revenue fund
  • debt Service funds
  • capital Projects funds
  • Permanent fund
25
Q

Proprietary / Fiduciary (Trust) funds accounting

A
  • Full accrual basis

- Economic resources focus (include everything like fixed assets and LTD)

26
Q

Proprietary fund types

A

SE

  • internal Service funds
  • Enterprise funds
27
Q

Fiduciary (trust) fund types

A

CIPPOE

  • Custodial funds
  • Investment trust funds
  • Private purpose trust funds
  • Pension and Other Employee benefit trust funds
28
Q

Modified accrual revenues and expenses

A

1) Revenue is recognized when measurable and available (year + 60 days)
2) Expenditures are generally recorded when the related fund liability is incurred. Most notably, both interest and principal are not recognized until either due or paid

29
Q

Budgetary accounting journal entries

A

These budget accounts are opposite to normal accounts and only get booked twice a year (beg and close)

Beg:
Dr: Estimated revenue control
Cr: Appropriations control
Dr/Cr: Budgetary control (deficit (dr) or surplus(cr)

**Entry reverse at the end of the year +/- any adjustments

30
Q

Types of non-exchange revenues (giving/receiving value without directly receiving equal value)

A

1) Derived tax revenues (sales tax, income tax)
2) Imposed non-exchange revenues (property tax, levied tax)
3) Government mandated
4) Voluntary

  • 1 and 2 will always recognize if time requirements are met (collected within 60 days of year-end)
31
Q

Modified accounting fixed assets purchases and long term debt

A

EXPENSE

Fixed asset:
Dr: Expenditure - capital outlay
Cr: Vouchers pay or cash

Long term debt proceeds:
Dr: Cash
Cr: Other financing sources - bonds issued

Paying interest and principal:
Dr: Expenditure - principal
Dr: Expenditure - interest
Cr: Cash

32
Q

Short term leases entry for government wide FS (lessor and lessee)

A

Lessor
Dr: Receivable
Cr: Revenue

Lessee
Dr: Lease expense
Cr: Cash/Payable

33
Q

Contracts that transfer ownership

A

look at chart

34
Q

Leases other than short term and contracts that transfer ownership

A

look at chart

FAR CPA Exam (9 decks)

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