Flashcards in Section 30 - NFP Accounting Deck (30):
What 4 groups do not-for-profit accounting cover?
1) Health care
2) Colleges and universities (non-governmental)
3) Voluntary health and welfare (United Way, Red Cross, Salvation Army)
4) All other not above (fraternities, labor unions, museums, libraries, non profit orgs)
What are the 3 basic financial statements required for not-for-profit accounting?
1) Statement of Financial Position (B/S)
2) Statement of Activities (I/S + RE)
3) Statement of Cash Flows
What method of accounting is used for not-for-profit accounting?
What is reported on the Statement of Financial Position (B/S)?
Assets = liabilities + net assets
What are the three accounts reported in the Net Assets section of the Statement of Financial Position (B/S)?
1) Unrestricted net assets - Resources available for general use. May include asset set aside by the Board of Trustee, however, this is not a true restriction since it may be reversed.
2) Temporarily restricted net assets - Use is restricted to a future time, which could then convert to Unrestricted
3) Permanently restricted net assets - Use is restricted
What is reported on the Statement of Activities (I/S)?
-Contributions from donors and investment income
-Property - included FMV at date of gift
-Services - only include if professional and NPO would otherwise paid for them
2) Net assets released from restriction - temporarily restricted net assets that became unrestricted during the year
3) Expenses - only unrestricted net assets
4) Changes in all three Net Assets classes
What is the JE to record a unrestricted cash contribution received by a NPO (revenue)?
Cash (operating activity)
Revenues (UNA - unrestricted net assets)
What are the JE to record a temporarily restricted cash contribution received by a NPO (revenue)?
TESTED A LOT
Cash (operating activity)
Money is spent
Net assets released (TRNA)
Net assets released (UNA)
Report actual cost
Does the net increase in UNA and the increase in expenses (decrease UNA) has any net effect on unrestricted Net Assets?
What are the 3 activities in the Statement of Cash Flows?
1) Operating activities
2) Investing activities
3) Financing activities
What is included in the Operating activities for the Statement of Cash Flows?
-Temporarily restricted revenue
-Revenue and expense
***may use direct or indirect method
What is included in the Investing activities for the Statement of Cash Flows?
Flow from buying and selling assets
What is included in the Financing activities for the Statement of Cash Flows?
Flow from borrowings and repayments
-$$ restricted for LT purposes
-Pmt on bonds, N/P, $$ restricted for acq of PPE
What is the additional F/S Volunteer Health and Welfare Organizations must provide?
Statement of Functional Expense
Public support (donations)
-Program expenses (further mission of org)
-Support services (secondary to mission)
=Excess of revenue over expenses
What are the specific activities in the line items for the Statement of Functional Expense?
Public support - contributions, grants, bequests, pledges, special events revenues
Revenues (earned) - membership dues, investment income, client service revenue, fees
Program expenses - further mission of org - research, community services, public health and education
Support services - secondary to mission - G. A. M (marketing, tax prep, print annual report), fundraising
When is donations of services recorded?
-when it's a professional services
-when org would have paid for the services (essential services)
Contribution revenues (UNA)
How are the donations of art, artifacts, or antiques recorded?
Not recognized as assets or contribution revenue if they are held for display or education OR their sale results in the purchase of similar items
When both Temporarily Restricted Assets and Unrestricted Assets are available for use, TRA are used first.
How are investments (marketable securities) recorded?
Trading - FMV, unrealized gains/losses on Statement of Act.
AVS - FMV, unrealized gains/losses on Statement of Act.
HTM - Bonds
Doesn't cover Equity securities
How are pledges recorded?
Pledges receivable (at P.V.)
Allowance for uncollectible pledges
If NPO collect money for others such as a foundation (agent or trustee), how are contribution classified?
Revenue - have power to redirect money OR beneficiary of donation is financially related
Liability - if don't meet either of the two above
How are scholarships, tuition remissions and refunds treated for Colleges and Universities?
Tuition remissions and scholarships are revenue (if go to school)
Refunds - not revenues
Scholarships - reduction of revenue and netted against college's tuition
What are the 4 F/S required for hospitals?
1) Balance Sheet (Statement of Financial Position)
2) Statement of Changes in Net Assets
3) Statement of Cash Flows
4) Statement of Operations (activities) ****MOST TESTED***
What is reported in the Statement of Operations (UNA) (Activities) for hospitals?
Patient service revenue
-Provision for contractual adjustments
=NET PATIENT SERVICE REVENUES
+Other operating revenues, gains and losses (earned)
+Non-operating revenues (Other income) (unearned)
=EXCESS OF REV/GAINS over EXP/LOSSES (PERFORMANCE INDICATOR)
What is included in Patient Service Revenue on the Statement of Operations?
What is included in "Provision for contractual adjustments" on the Statement of Operations?
What is included in "Other operating revenues, gains and losses (earned)" on the Statement of Operations?
-Non-medical - parking, gift shop, cafeteria, tuition
-Donated medicines and blankets (supplies and equipment)
-Net assets released from restriction used for operations
What is included in "Operating expenses" on the Statement of Operations?
-Gen and Admin
-Int results from operations
What is included in "Non-operating revenues (Other income) (unearned)" on the Statement of Operations?
Other income - unearned
-unrestricted donations, gifts, bequests
-unrestricted interest and dividend income
What are the items that are reported separately from performance indicator?
Excluded from performance indicator
-Assets released from donor restrictions for long-lived assets (PPE)
-Restricted investment income
-Change in net unrealized gains and losses (other than trading) on unrestricted investments
-Transfers to parents
-Discontinued operations and Extraordinary items