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FAR 2014 > NFP Accounting > Flashcards

Flashcards in NFP Accounting Deck (67):
1

Which financial statements are required for not - for - profit organizations?

Statement of Financial Position

Statement of Activities

Statement of Cash Flows

Statement of Functional Expense (Volunteer Health Organizations Only)

2

What are the major classifications found on a Statement of Financial Position?

Similar to Balance Sheet:

Assets
Liabilities
Net Assets
Unrestricted Assets
Permanently Restricted Assets
Temporarily Restricted Assets

3

What are the major classifications in a Statement of Activities?

Similar to an Income Statement - organization - wide:

Revenues
Expenses - ONLY deducted from Unrestricted Revenues
Gains and Losses
Changes in Net Asset classes
Unrestricted
Permanently Restricted
Temporarily Restricted

4

What are the characteristics of a Statement of Cash Flows for not - for - profits? What are the major classifications?

Both direct and indirect methods are OK

Operating Activities - Unrestricted Revenues and Unrestricted Expenses

Investing Activities

Financing Activities - Endowments and restricted contributions


5

Which organizations are required to present a Statement of Functional Expenses?

Volunteer Health Organizations

6

Which statements are required for non - governmental hospitals?

Balance Sheet
Statement of Operations
Statement of Changes in Net Assets
Statement of Cash Flows
Financial Statement Notes

7

Which basis of accounting is used for revenues and net assets?

Accrual basis of accounting is used

Only external parties can restrict the use of assets (permanent or temporary)

Assets earmarked internally by management are still classified as unrestricted

8

What are the characteristics of unrestricted assets or revenue?

No restrictions or conditions placed on entity in order to use the resources

Note: assets earmarked internally by management are still unrestricted

9

When are revenues on contributions recognized?

Revenues on contributions are recognized in the year received - not the year the contribution is spent and are recorded at Fair Value on the date received

10

When are services rendered considered contributions?

If the organization would have otherwise paid for them

or

They increase the value of a non - monetary asset

11

Is hospital charity care revenue?

NO.

It is disclosed in the notes to the financial statements only.

12

How are unconditional pledges to contribute recorded?

Classified as revenue in the current year only - multi - year future contributions fall under Temporarily Restricted.

13

Which revenues are expenses deducted from?

Expenses ONLY deducted from Unrestricted Revenues - not Temporary or Permanently Restricted Revenues/Assets

14

What are the characteristics of temporarily restricted assets/revenue?

Use is restricted to a future time - which could then convert to unrestricted - Class: Temp. Restricted Revenue

Unrestricted contributions promised (including multi - year contributions) - but not yet received are actually restricted by time and are therefore classified as Temporarily Restricted Assets - Multi - year contributions are recorded at the present value of the future contributions

15

What are the characteristics of an endowment?

Use of investment is restricted - but income from investment could be either restricted or unrestricted

Must be under control of receiving entity (Quasi Endowment) in order to be recorded in unrestricted net assets

Otherwise - a memo entry is recorded

16

When is the donation of an art collection recognized as a contribution or asset?

Not recognized as assets or contribution revenue if they are held of display or education' or their sale results in the purchase of similar items

17

When both Temporarily Restricted Assets and Unrestricted Assets are available for use - which assets are used first?

Temporarily restricted assets are used before Unrestricted assets.

18

How is a refundable advance recorded by a not for profit?

Classified as a Liability

Promise to contribute assets pending on certain conditions being met

Becomes unconditional once the possibility that it won't happen is remote

19

How are investments recorded and valued in not - for - profit accounting?

Fair Value is mostly used

Exception - Equity method used when significant influence exists

20

How are scholarships recorded?

As a reduction of revenue - netted against college's tuition

21

How is depreciation expense recorded by a not - for - profit?

Depreciation expense is allocated proportionately to various functions

22

What additional statement is required for voluntary health and welfare organizations

Statement of functional expenses

23

How are assets reported on statement of financial position

Balance sheet
Unrestricted, temp restricted, permanently restricted

24

How are term and regular endowments recorded

Term - temporary restricted
Regular - permanently restricted

25

When are contributions reported

When revenue received regardless of donor imposed restrictions

26

Where are expenses deducted from

Only unrestricted revenues

27

What is included in cash flow operating activities

Revenue and expenses that are unrestricted

28

What financial statements are required for NFP

Statement of financial position
Statement of activities
Statement of cash flows

29

What's included in NFP statement of cash flows

Operating
Investing
Financing

30

How are gifts of long lived assets with no restriction recorded

Class as unrestricted if accounting policy allows

31

How are contributions received from outside donors for use in research

Report and temp restricted assets

32

How is a multitrack pledge recorded

Report at PV in temporary restricted revenue

33

How is restricted cash inflow for acquisition of property treated on statement of cash flows

Include in financing activities

34

What is the general purpose of NFP FS

Focus on basic info of the organization to enhance relevance, understandability, and comparability

35

When is a liability recorded by an entity

When entity acts as an agent or trustee

36

How should entity record works of art

Don't recognize contributions if art held for public exhibition and if sold proceeds used to acquire other art

37

Where are change in assets required to be reported

Statement of activities

38

Where are expenses according to function presented

On FS or in notes to FS

39

How is a quasi endorsement recorded

As unrestricted asset

40

How is conditional promise to contribute recorded

Refundable advance - liability

41

How is a permanent endowment and investment interest recorded on statement of cash flows

Both as financing activity if investment interest used to purchase PPE

42

What are functional and natural expenses and when are they required for health and welfare organizations

Functional - program and supporting
Natural - salary expense , depreciation expense

Both required

43

When are donations of services recognized

When services create or enhance no financial asset

When services require special skill set that would have to be paid for

44

When is a conditional promise considered unconditional

When possibility that condition will not be met is remote

45

How is contribution revenue calculated

Amount given above market revenue

46

What triggers a reclassification of assets

Expiration of donor imposed restrictions ( time or purpose )

47

How does the expiration of imposed conditions affect asset

Only increases asset no reclassification

48

How are investments recognized on NFP books

FV is no significant influence

Equity method if significant influence

49

When to record contribution as a liability

Donor doesn't grant recipient variance power

Recipient org and beneficiary are not financially interrelated

50

How is a contribution treated when recipient and beneficiary interrelated and resources must be used to benefit beneficiary

Record asset and liability

51

What is variance power

Ability to redirect resources transfer to it

52

What is a split interest agreement

Donor makes initial gift to trust or directly to NFP and NFP is not sole beneficiary

53

When are joint costs of informational materials recorded

As fundraising expense unless an appeal is designed to motivate audience to action other than providing financial support

54

What are considered capital additions

Nonexpendable gifts restricted to endowment, plant, loan funds and legally restricted investment income
On investments such as funds

55

How are gifts in kind treated

Agency transactions or contributions depending on extent of discretion

56

What is an agency transaction

Asset for which organization has too little discretion

57

What FS are required for hospital

Balance sheet
Statement of operations
Statement of change in net assets
Statement if cash flows

58

Calculate net patient service revenue

Gross patient service revenue less contractual obligation with 3rd party payor less allowance for discounts to hospital employees

59

How is a voluntary health and welfare organization classified

As NFP, nonbusiness not hospital

60

What items are reported separate from performance indicator

Extraordinary items
Equity transfers
Receipt of restricted contributions
Contribution of long lived assets
Restricted investment returns
Unrealized gain or loss on investment a

61

How are expenses prepared for health care org

Using natural or functional classification

62

What is the performance indicator and give example

Report of results of operations

Excess revenue over expenses

63

How is charity care recorded

Not recorded on FS except in notes

64

How are payments of future services at retirement communities recorded

Nonrefundable advance fees as liability

65

What is recorded in other revenue gain and loss for health care org

Income from services other than providing health care service or coverage to patients

66

In a health care org at what value are donated noncash assets recorded

Fair value

67

On hospital FS how are change in assets displayed

Statement of change in net assets - reports change in hospitals unrestricted, temp, perm restricted assets

Statement of operations - discloses only change in unrestricted net assets

Balance sheet - discloses amount of unrestricted , temp restricted, perm restricted assets at certain date