FAR - Deck 2

Question 1

What is the Acid-Test Ratio?

Answer 1

(Cash + AR + ST - Investments)
___________________________
Current Liabilities

**Also, Known as the Quick Ratio.

Question 2

In NFP what are Pledges?

Answer 2

A pledge is a promise to give or contribute to a not-for-profit entity. While the term is commonly used, the Financial Accounting Standards Board (FASB) discourages its use because it can be misinterpreted as a mere intention to give. The FASB’s preferred terminology is “promise to give.”

Question 3

In NFP what are Promises to Give?

Answer 3

A promise to give represents an unconditional agreement by a donor to transfer assets to the not-for-profit entity. The promise represents a social, moral, and often legal obligation. Use of this term, rather than the colloquial term “pledge,” is encouraged by the FASB. Promises are accounted for in the Contributions Receivable account. Formerly, an account called Pledges Receivable was used.

Question 4

What is Deferred Revenue?

Answer 4

Deferred (or unearned or unrealized) revenue is revenue received currently that is not yet earned and will be recognized in a future period when it is earned. The

Question 5

What can a weighted-average exchange rate be used?

Answer 5

Translation at the exchange rates at the dates the numerous revenues, expenses, gains, and losses are recognized is generally impractical, an appropriately weighted-average exchange rate for the period may be used to translate those elements.

Question 6

What are the 10-K Filing Deadlines & Requirements?

Answer 6

Annual 10-K reports are due:
60 Days - Large Accelerated (700M)
75 Days - Accelerated (75M - 700M)
90 Days - All Others (<75M)

Question 7

What are the 10-Q Filing Deadlines & Requirements?

Answer 7

Quarterly 10-Q reports are due:
40 Days - Large Accelerated (700M)
40 Days - Accelerated (75M - 700M)
45 Days - All Others (<75M)

Question 8

What are Business Type Activities (Governmental)

Answer 8

Business-type activities are services provided by a governmental unit that are fee-supported and provided in ways similar to business enterprises. (Examples are public utilities (water, sewer, gas, electric), parking garages, and golf courses.)

Question 9

Define Enterprise Funds

Answer 9

Enterprise funds are funds that may be used to account for any activity of a governmental unit for which a fee is charged to external users for goods or services.

Question 10

Define Internal Service Funds

Answer 10

Internal service funds are proprietary funds used to account for any activity that provides goods or services to another fund, department, or agency of the primary government and its component units or to another government on a cost-reimbursement basis (i.e., an in-house enterprise, such as motor pool, garage, print shop, or data processing center)

Question 11

What is a bond?

Answer 11

A bond is a type of debt instrument or debt security in the name of the issuing party (a government or corporation) usually issued in denominations of $1,000.

Question 12

What is a bond to an issuer?

Answer 12

bond represents a liability or debt to the issuer and is senior to (paid before) capital stock

Question 13

Who is a bond holder?

Answer 13

The holder is the creditor

Question 14

What is an operating segment?

Answer 14

An operating segment is a component of an enterprise:

• Engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same enterprise),
• Whose operating results are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and
• For which discrete financial information is available.

Question 15

Reportable Segments Tests are?

Answer 15

• Segment revenue (both to external customers and intersegmental) is at least 10% of total revenue of all operating segments.
• The absolute amount of segment profit (or loss) is at least 10% of all operating segments with a profit (or loss).
• Operating segment assets are at least 10% of total assets.

Question 16

In a NFP can a board impose restrictions?

Answer 16

When resources are under control of the governing board and not specifically restricted by an outside donor, the resources are considered unrestricted and the resulting income is unrestricted revenue.

Question 17

How are unrestricted contributions accounted for?

Answer 17

Unrestricted contributions are reported as operating activities

Question 18

Contributions restricted for long-term purposes are reported as?

Answer 18

reported as financing activities.

Question 19

What are the three components of non-compliance with donor imposed restrictions?

Answer 19

• Reasonable possibility that a material contingent liability has been incurred at the date of the financial statements
• Reasonable possibility that the noncompliance could lead to a material loss of revenue or
• Could cause an entity to be unable to continue as a going concern

Question 20

What is the Statement of Activities?

Answer 20

The statement of activities is one of the main financial statements of a nonprofit or not-for-profit organization. A nonprofit’s statement of activities is issued instead of the income statement which is issued by a for-profit business.