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Flashcards in Non profit accounting Deck (56)
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1

Conditional promise to give

If condition becomes probable -

report revenue as TRA

2

Financial statements required for NPO

Statement of Financial Position
Statement of Activities
Statement of Cash Flows

Statement of Functional expenses - for voluntary health and welfare organizations
- shows expenses by function and natural
classification

3

Supporting activities

management and general expenses
fund raising
membership development

4

Contributions by NPO's to other NPO's are reported as

EXPENSES by the donating NPO

5

Tuition remission for faculty/employee's dependents - how to account?

Tuition costs are included in the tuition revenues and reported as expenses.

-compensation expenses - benefits to faculty

6

Scholarship tuition costs for students not required to perform services

Deducted from tuition revenues

7

Donations with donor imposed conditions

NO ENTRY WHEN DONATION IS MADE if no asset is received

are not recognized until the condition becomes probable.

The condition has to be fulfilled or very probable to be fulfilled before revenue is recognized

8

Computation of net patient revenue

Gross patient revenue
less: charity care
contractual adjustments
allow. for discounts to employees
= Net patient revenue

9

A promise to contribute this year- where donor contributed in the previous year

is a time restricted donation -
recognize as TR revenues

10

Investments in stocks by non profit organizations are reported at year end

at FMV

11

For hospitals, the Statement of changes in net assets reports

the CHANGES in the hospital’s unrestricted, temporarily restricted, and permanently restricted net assets FOR A TIME PERIOD

12

For hospitals, the Statement of Operations discloses

ONLY the CHANGES in UNRESTRICTED net assets FOR A TIME PERIOD,

13

For hospitals the Balance Sheet discloses

discloses the AMOUNTS of unrestricted, temporarily restricted, and permanently restricted net assets as of a SPECIFIC DATE.

14

For hospitals, charity care are reported

ONLY IN THE NOTES TO FS

15

Statement of Financial Position format

Assets
Liabilities
Net assets
Unrestricted
Temporarily restricted
Permanently restricted


16

NPO Statement of Activities format

Column headings:

UNA TRNA PRNA Total

Revenues, gains and other support
Net assets released from restrictions
= Total revenues, gains and other support

Expenses and losses
= Total expenses and losses

Changes in net assets - TOTAL CASH FLOW
net assets at beginning of the year
= Net assets at the end of the year

17

Components of revenues, gains and other support

Contributions
Fees
Income on long term investments
Other investment income
Net unrealized and realized gains on LT
investments

18

Components of net assets released from restrictions

Satisfaction of program restrictions
Satisfaction of equipment acquisition restrictions
Expiration of time restrictions

19

Components of expenses and losses

Program A
Program B
Program C
Management and general expenses - includes
depreciation
Fund raising
Total expenses
Fire loss
Actuarial loss on annuity obligations

=Total expenses and losses

20

Statement of Functional Expenses

Public support
+ Revenues
- Program expenses
- Support services
=Excess of revenue over expenses

21

Statement of Functional Expenses
Public support components

donations from the public
contributions
grants
bequests
pledges
special event revenues

22

Statement of Functional expenses
Revenues - components

membership dues
investment income
client service revenue
fees

23

Statement of Functional Expenses
Program expenses

expenses to further the mission of the organization
directly related to the program
ex:
research
community services
public health
education

24

Statement of Functional expenses
Support services

secondary to the mission

General, administrative and management expenses

marketing
tax preparation
printing of annual report
business management
budgeting


Fund raising

print and mail pledge cards
donor list
merchandise sent toi potential contributors

25

SUPPORT SERVICES
General, administrative and management

marketing
tax preparation
printing of annual report
business management
budgeting
expenses related to soliciting funds other than
contributions and membership dues
promoting sales of goods or services to customers
responding to government or foundation prosposals for customer sponsored contracts for goods and services

26

SUPPORT SERVICES
Fund raising expenses

print and mail pledge cards
donor list
merchandise sent toi potential contributors

27

Expenses related to soliciting funds other than contributions and membership dues

ARE NOT FUND RAISING EXPENSES

- General, A & M expenses

promoting sales of goods or services to customers

responding to government or foundation proposals for customer sponsored contracts for goods and services

28

For other NPO's not VHWO, where should the functional expenses be reported?

in the form of a financial statement

OR

in the Notes to FS

29

CONTRIBUTIONS
Journal Entries

UNRESTRICTED DONATIONS:

Cash
Revenues - UNA

TEMPORARILY RESTRICTED DONATIONS:

Cash
Revenue - TRNA

Net assets released from restrictions
Net assets released - UNA

Expenses - UNA
Cash

PERMANENTLY RESTRICTED DONATIONS;

Cash
Revenues - PRNA

Cash
Revenues - TRNA
# interest income

30

DONATED SERVICES
What are the 2 requisites to be recognized as contributions revenue?

Recognized if:

services create or enhance a NON-FINANCIAL asset

the services require specialized skills


If recognized, JE:

Expenses - UNA
Contributions Revenue - UNA

DO NOT RECOGNIZE SERVICES OF UNSKILLED VOLUNTEERS