FAR Own Flashcards 10
What are components of Operating Activities in the statement of CFs for Proprietary funds?
- Cash inflows from sales of goods and services
- Cash outflows to suppliers and employees
- Cash inflows from interfund reimbursements and exchanges including payments in lieu of taxes
- Cash transactions not meeting the definition of the other categories
What are the differences in Governmental statement of cash flows for proprietary? (7 differences)
- The direct method is required
- a reconciliation of OPERATING INCOME (not net income) to net cash provided by operations is required
- There are four categories - now capital and related financing activities and noncapital related financing activities
- The order of financing and investing activities categories are reversed
- Interest income/cash receipts are reported as INVESTING activities (not operating)
- Interest expense/cash payments are either CAPITAL and related financing or NONCAPITAL financing (NOT operating)
- Capital Asset Purchases are reported as FINANCING ACTIVITIES (NOT INVESTING)
What are the components of investing activities for statement of CFs for proprietary funds?
Cash inflows and outflows associated with loans to others
cash inflows and outflows associated with equity transactions
What are the components of capital and related financing activities in the statement of CFs for proprietary funds?
Cash flows from issuing debt associated with capital assets
cash inflows from capital grants
cash inflows from contribution activity associated with capital assets
cash activity related to special assessments associated with capital assets
What are the components of noncapital financing activities for the statement of CFs for proprietary funds?
Cash receipts from grants or subsidies
cash received from property taxes (not restricted for capital use)
operating transfers
How do you calculate ticket revenue and contribution revenue for a contribution for not-for-profit?
Ticket revenue = fair value of the tickets purchased
contribution revenue = difference between the amount contributed and fair value of purchases given in the exchange
How do you calculate contributions revenue?
cash contributions and unconditional pledges are recognized as revenue when received (even if not spent yet)
When are NFP organizations considered financially interrelated?
One organization is able to INFLUENCE the OPERATING and FINANCIAL decisions of the other and an ongoing economic INTEREST in the NET ASSETS of the other
What is considered a contribution to a NFP?
Contributions are transactions that are unconditional (not requiring a future event to occur), non-reciprocal, voluntary, and not of an ownership investment.
What is a quasi-endowment fund?
they account for assets that have been internally designated by the institution for a specified purpose. They would be displayed as unrestricted net assets on externally published financials.
Can NPFs pool their investments?
they can pool all types of investments of various internal accounting funds but must equitably allocate realized and unrealized gains and losses to net asset classifications as appropriate
How is donor restricted cash received for long-term purposes accounted for in the statement of CFs for NFP?
As inflow from financing activities (NOT OPERATING)
When are assets classified as unrestricted net assets?
Unrestricted net assets are available to financing general operations of the particular organization and may be expended at the discretion of the governing board. Not permanently restricted or temporarily restricted by donor-imposed stipulations
INTERAL BOARD-DESIGNATED FUNDS ARE UNRESTRICTED
When are assets classified as Temporarily Restricted net assets?
Similar to permanent but the donor-imposed stipulations either expire by passage of time or can be fulfilled and removed by actions of the organization. Temporarily restricted net assets should not be displayed as a deficit: any over-expenditure of temporarily restricted net assets should be classified as a reduction of unrestricted net assets
When are assets classified as Permanently Restricted Net assets?
Contributions and other inflows of assets whose use is limited by donor-imposed stipulations that neither expire by the passage of time nor can be fulfilled or otherwise removed by actions of the organization
What are included in support services expenses for NFPs?
Fundraising, Administration, Management and General, Membership development
When do you recognize cash contributions, unconditional promises, and conditional promises, and multi-year pledges, allowance for uncollectible pledges?
Cash contributions: Received Unconditional promises: Pledged Conditional Promises: Earned Multi-Year pledges: PV of pledge - now =revenue Future = tem. restricted revenue Allowance: NRV (Full accrual)
When should donated services be recorded as contribution revenue?
Create or enhance a non financial asset or they require specialized skills that the provider possesses and would otherwise have been purchased by the organization
SOME:
Specialized skills are required and possessed by donor
Otherwise needed by the organization
Measurable
Easily at fair value
What is without variance power?
The NFP acts as an AGENT/NO benefits or power. Accepts assets from a donor and agrees to use or manage them on behalf of a specified beneficiary (Record a liability - refundable advance)
DR: Asset
CR: Refundable advance
Recipient Accounting - What happens when the NFP is granted variance power? (financially interrelated = same journal entry)
The NFP acts as AGENT/HAS power. Accepts assets from a donor and agrees to use or manage them on behalf of beneficiary (Recognize contribution revenue)
DR: Asset
CR: Contribution revenue
Beneficiary Accounting - How does the beneficiary account for the following:
Recognized interest - financially interrelated
Recognized beneficial interest - Pool of Assets
Recognized Receivable and Contribution Revenue
Recognized interest - financially interrelated = Equity
recognized beneficial interest - pool of assets = Revenue
recognized receivable and contribution revenue = Revenue
What are the types of endowment funds and their treatment?
Permanent: - the principal is not permitted to be spent PERMANENTLY RESTRICTED
Term: Must be held for a specified term: TEMPORARILY RESTRICTED
Quasi-Endowments: used with the internal governing board (NOT DONOR) has determined that funds are to be retained and invested for specified purposes. UNRESTRICTED
How do you report tuition and fees for NFPs?
Report Student tuition and fees at GROSS AMOUNT: Scholarships, tuition waivers, and similar reductions are considered either expenditures or a separately displayed allowance reducing revenue:
Assessed student tuition and fees
- cancelled classes
=GROSS revenue from tuition and fees
