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52 Cards in this Set

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  • Back
Report the fair value of donated services (doctors, nurses) as both an expense and revenue if:
1. The services would be otherwise purchased
2. The value of the the services is measurable
3. The entity controls the employment and duties of the service donors
Contributions of services are recognized as revenues only if:
1. Nonfinancial assets are created or enhanced
2. Special skills are required that would be otherwise purchased
Five types of hospital funds
Unrestricted general
Plant replacement
Specific purpose
Term Endowment
7 types of university funds
Current funds
Plant funds
Agency funds
Loan funds
Annuity Fund
Life income fund
Endowment fund
2 categories of NPO expenses
1. Program services - related directly to the primary missions of the nonprofit organization
2. Support services - include such costs as management and general administration, membership development, and fund-raising.
What 3 statements do nonprofit hospitals prepare?
Statement of Activities, Statement of Financial Position and Statement of Cash Flows
What basis of accounting do nonprofits use?
full accrual accounting
According to FASB 117, what are the the three required statements for a nonprofit?
1. Statement of financial position
2. Statement of activities
3. Statement of cash flows
What is the main thrust of the Statement of Financial position for a nonprofit?
- to show net assets in three positions:
1. unrestricted net assets
2. temporarily restricted net assets
3. permanently restricted net assets
What is the focus of the Statement of Activities for a NPO?
-show all revenues plus any net assets released from restriction
-focus is to show the changes in net asset positions (all 3)
When are contributions recognized as revenue?
When the contribution is collected, or even pledged, at fair market falue at date of gift
What is the result of a gift that has a restriction?
Recognized as temporarily restricted revenue
What is the JE if the restricted money hasnt been spent by the end of the year?
dr Temp Restricted Revenue
cr Net Assets - Temp Restricted
What are the 2 JEs for when you purchase equipment with temporarily restricted money?
dr PPE
cr Cash
dr Net Assets: Temp Restr.
cr Net Assets released from restriction
How are pledges accounted for?
Revenue at fair market value in the period the pledge is made
What 3 criterias do you use to determine when to recognize donated service?
1. FMV determinable
2. Would otherwise buy
3. Employer-employee equivalent relationship, or non-fiancial assets created or enhanced
All the funds that a heathcare entity may use for internal reporting are organized around what one topic?
Whether the funds are restricted or unrestricted.
What is the only unrestricted fund in healthcare funds?
general fund - accounts for money that is not restricted in any way?
How does a general fund of a hospital differ from that of a gov't general fund?
-hospital carries fixed assets w/ accum dep in the general fund
-hospital carries LT debt, bonds payable
-hospital carries board designated assets
Is board-designated money restricted?
no - restricted money has to be by an external party - donor restricted
- this is internally restricted money, and therefore it is technically unrestricted
What is a specific purpose fund?
Accounts for money that is restricted (grants, donations) for operational purposes
- temporarily restricted net assets
- money can only be used for that specific purpose
- no fund balance -> net assets temp restricted
What is a plant replacement fund?
Accounts for money that is restricted for capital additions
- temporarily restricted net assets
What are the 2 types of endowment funds?
1. Permanent (pure) endowment
2. Term endowment
What is a permanent endowment?
Accounts for donations when the principal may not be spent
- only income may be spent for specified purpose
What is a term endowment?
After a period of time (term), principal may be spent
- temporarily restricted net assets
What are the 3 categories of revenue for private, nonprofit hospitals?
1. Patient service revenues - private rooms, xray fees, surgery fees
2. Other operating revenues - cafeteria, gift shop, paid parking lot, educational programs, specific purpose grants, donated services
3. Nonoperating gains and losses - unrestricted gifts and pledges, g/l on sale of assets, unrestricted endowment income, expired term endowment
What do colleges use unrestricted current funds for?
Accounts for unrestricted money and current operations
- tuition, etc
- net assets - unrestricted
What two funds make up the current funds group in a college?
1. Unrestricted current fund
2. Restricted current fund
What are the 4 types of plant funds in a college or university?
1. Investment in plant
2. Unexpended plant
3. Retirement of indebtedness
3. Renewal and replacements
What is in the investment in plant fund?
-carries the fixed assets
-carries LT debt associated with fixed assets

- net assets: unrestricted
What is the the Unexpended Plant Fund in a c/u?
- accounts for money restricted for capital additions

- Net Assets: Temporarily restricted
What is the Retirement of Indebtedness Fund?
- Services debt
- Net assets: Temporarily restricted
What is the Renewal & Replacements Fund?
- accounts for money that is restricted for major repairs, mtce, and refurbishing
- Net assets: Temporarily restricted
What is a loan fund?
- accounts for temporary loan to students, faculty and staff

- Net assets: temporarily restricted
What are endowment funds, and what are the 3 types?
Accounts for money donated to university
1. Regular (pure) endowment
2. Temporary (term) endowment
3. Quasi endowment
What is a regular (pure) endowment in a c/u?
- principal may not be spent, only earnings
- Net Assets: Permanently restricted
What is a quasi-endowment?
-board designated assets
-Net Assets: Unrestricted
What are three types of tuition waivers?
Tuition waivers
How are tuition waivers accounted for?
- they are NOT revenue reductions
- dr scholarship expense
cr tuition revenue
- full disclosure!!
How do refunds affect revenue?
Refunds are a direct reduction of revenue
In the Statement of Activities, a distincition is drawn between expenses into what two categories?
Program vs. Support
What 2 categories of program expenses are there?
1. Education and general - instruction, research, student services, financial aid
2. Auxiliary enterprises - cafeteria, dorms, bookstores, athletic programs
What types of Supprt Expenses are there?
-fundraising, management, administration
What is a VHWO?
A Voluntary Health and Welfare Organization
- Red Cross, United Way
What are the 6 funds VHWOs use?
Custodian (agency)
Restricted current
Unrestricted current
Life & Annuity
What are the four statements that are required for VHWO by FASB 117?
1. Statement of financial position
2. Statement of cash flowes
3. Statement of activities
4. Statement of functional expenses
What situation does FASB 136 cover?
Donor transfers money to a non profit, but the NPO is not the intented beneficiary - they are the agent before the money goes to the actual beneficiary
How do NPOs treat money as per FASB 136?
-refundable advance, contribution or support, or as an equity transaction
When can a NPO treat money as a refundable advance?
If any ONE of these criteria are met:
1. Donor still has right to direct assets
2. Donor may revoke gift
3. Donor controls the NPO
4. Donor specifies itself of affiliate as beneficiary
When would NPO treat money as a contribution/support?
1. Not any of four refundable advance criteria are met
1. NPO has variance power
2. NPO & beneficiary are financially interrelated
IF NPO has no variance profit, no financial interrelationship and not a refundable advance, who ultimately records revenue?
What are the criteria for an equity transaction?1
1. Donor specifieds self or affiliate as beneficiary
2. Donor & NPO are financially interrelated
3. Return payment not expected