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Flashcards in NFP Accounting Deck (21)
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1
Q
Which financial statements are required for not - for - profit organizations?
A
Statement of Financial Position

Statement of Activities

Statement of Cash Flows

Statement of Functional Expense (Volunteer Health Organizations Only)
2
Q
What are the major classifications found on a Statement of Financial Position?
A
Similar to Balance Sheet:

Assets
Liabilities
Net Assets
Unrestricted Assets
Permanently Restricted Assets
Temporarily Restricted Assets
3
Q
What are the major classifications in a Statement of Activities?
A
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
Q
What are the characteristics of a Statement of Cash Flows for not - for - profits? What are the major classifications?
A
Both direct and indirect methods are OK

Operating Activities - Unrestricted Revenues and Unrestricted Expenses

Investing Activities

Financing Activities - Endowments and restricted contributions


5
Q
Which organizations are required to present a Statement of Functional Expenses?
A
Volunteer Health Organizations
6
Q
Which statements are required for non - governmental hospitals?
A
Balance Sheet
Statement of Operations
Statement of Changes in Net Assets
Statement of Cash Flows
Financial Statement Notes
7
Q
Which basis of accounting is used for revenues and net assets?
A
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
Q
What are the characteristics of unrestricted assets or revenue?
A
No restrictions or conditions placed on entity in order to use the resources

Note: assets earmarked internally by management are still unrestricted

9
Q
When are revenues on contributions recognized?
A
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
Q
When are services rendered considered contributions?
A
If the organization would have otherwise paid for them

or

They increase the value of a non - monetary asset
11
Q
Is hospital charity care revenue?
A
NO.

It is disclosed in the notes to the financial statements only.
12
Q
How are unconditional pledges to contribute recorded?
A
Classified as revenue in the current year only - multi - year future contributions fall under Temporarily Restricted.
13
Q
Which revenues are expenses deducted from?
A
Expenses ONLY deducted from Unrestricted Revenues - not Temporary or Permanently Restricted Revenues/Assets
14
Q
What are the characteristics of temporarily restricted assets/revenue?
A
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
Q
What are the characteristics of an endowment?
A
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
Q
When is the donation of an art collection recognized as a contribution or asset?
A
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
Q
When both Temporarily Restricted Assets and Unrestricted Assets are available for use - which assets are used first?
A
Temporarily restricted assets are used before Unrestricted assets.
18
Q
How is a refundable advance recorded by a not for profit?
A
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
Q
How are investments recorded and valued in not - for - profit accounting?
A
Fair Value is mostly used

Exception - Equity method used when significant influence exists
20
Q
How are scholarships recorded?
A
As a reduction of revenue - netted against college's tuition
21
Q
How is depreciation expense recorded by a not - for - profit?
A
Depreciation expense is allocated proportionately to various functions