Far - Part 3 - Not-For-Profit Accounting

Front 1

All NFP orgs must prepare at least 3 FS

Back 1

Statement of Financial Position
Statement of Activities
Statement of Cash Flows

Front 2

NFP Orgs include:

Back 2

Hospitals
Colleges/Universities
Voluntary health & welfare organizations

Front 3

VHW's must also prepare a ____ in addition to 3 required FS

Back 3

Statement of Functional Expenses

Front 4

Statement of Financial Position includes ___

Back 4

Assets
Liabilities
Net Assets

---Unrestricted net assets
---Temporarily restricted net assets
---Permanently restricted net assets

Front 5

Unrestricted net assets

Back 5

available for general use, including those set aside by board of trustees

Front 6

Temporarily restricted net assets

Back 6

donated by outside party & restricted to specific purpose

Front 7

Permanently restricted net assets

Back 7

donated by outside party & required to be invested with earnings restricted or unrestricted

Front 8

Format of Statement of Financial Position

Back 8

Front 9

Statement of Activities

Back 9

Reports revenues, gains, expenses, and losses, &
Temporarily restricted assets released from restriction

Categorized activities among unrestricted, temporarily restricted, & permanently restricted to provide change in net assets for each.

Change added to beg bal to provide ending NA for each category

Front 10

Statement of Activities - expenses classified by

Back 10

Object (nature of item/service obtained)
Function (program or activity to which attributed)
Character (periods benefited from pmts)

Front 11

Format of Statement of Activities

Back 11

Front 12

Statement of Cash Flows

Back 12

Special treatment for donated assets restricted for LT purposes
Clasified as CF from financing activities

Front 13

Statement of Functional Expenses

Back 13

Classified expenses into program services & support services

Front 14

Program Services

Back 14

expenses directly related to org's purpose

Front 15

Support services

Back 15

expenses necessary but not directly related to org's purpose (fundraising, admin)

Front 16

Statement of Functional Expenses - Expenses classified by

Back 16

Object
Nature
Character

Front 17

Contributions that are part of the major, ongoing, & central operations are considered ___. Those that are not are considered ___.

Back 17

Revenues; gains

Front 18

J/E: Unrestricted cash donations

Back 18

Dr. Cash
---Cr. Donations (unrestricted funds)

Front 19

J/E: Permanently restricted donations

Back 19

Dr. Cash
---Cr. Donations (permanently restricted funds)

Front 20

J/E: Donated Services

Back 20

Dr. Program Expense
---Cr. Donations (unrestricted funds)

Front 21

J/E: Cash donations restricted for a specific purpose

Back 21

When made:
Dr. Cash
---Cr. Donations (temporarily restricted funds)

When used:
Dr. Temporarily restricted net assets
---Cr. unrestricted net assets
Dr. Expense
---Cr. Cash

Front 22

J/E Cash donated for purchase of property

Back 22

When made:
Dr. Cash
---Cr. Donations (temporarily restricted funds)

When used:
Dr. Temporarily restricted net assets
---Cr. unrestricted net assets
Dr. Property
---Cr. Cash

Front 23

Pledges

Back 23

Promise by outside parties to donate assets
Recognized in period of pledge
Allowance for uncollectible amt established
If there is a time restriction - temporarily restricted

Front 24

J/E: Pledges

Back 24

Dr. Pledges
---Cr. Allowance for uncollectible pledges
---Cr. Donations (unrestricted funds)
---Cr. Donations (restricted funds)

Front 25

Donations of art, antiques, or artifiacts are not recognized if

Back 25

Asset held for research or exhibition
Asset preserved & unaltered
Proceeds from sale of asset to be used to buy additional art, antiques, artifacts

Front 26

Donated assets to be held in trust

Back 26

Not recognized by NFP
Disclosed in footnotes

Front 27

Hospital revenues - patient service revenue is recorded at

Back 27

gross value of services

billing may be less due to Medicare allowance or employee discount

difference recorded in allowance acount

statement of activities will report net amount

Front 28

How are services provided for free due to charity recognized for hospitals?

Back 28

Not recognized as revenues

Front 29

Hospital Revenues: Bad debts

Back 29

recognized as expense on statement of activities
not reduction of revenue

Front 30

Hospital Revenues: Misc. revenues from cafeteria, gift shop, parking lot fees, and education programs

Back 30

classified as other revenue

Front 31

Hospital Revenues: donated supplied

Back 31

reported as operating revenue and expensed when used

Front 32

Hospital Revenues: donations of essential services and unrestricted donations

Back 32

nonoperating revenues

Front 33

College tuition revenues: refunds to students

Back 33

reduce tuition revenues

Front 34

College tuition revenues: price breaks to students (scholarships/reduction due to family staff member)

Back 34

Tuition recognized at gross amt
Price break recognized as expense

Front 35

Contributed services, when recognized, are recognized as both ____ and ____.

However, contributed services should be recognized only when the services ___.

Back 35

revenue and expense

(1) create or enhance nonfinancial assets, or

(2) require specialized skills, are provided by individuals possessing those skills, and would typically be purchased if not provided by donation.

Front 36

Endowments (permanently restricted) are restricted in both the ___ and the ____ from the fund. Therefore ___.

Back 36

Endowment and income

Therefore no amount of unrestricted contribution revenue should be recognized in the year donated.

Front 37

Charity care represents

Back 37

health care services that are provided but are never expected to result in cash flows

o Not recognized as revenue.
o No need to estimate uncollectible accounts.

Bad debts expense does not include an amount related to charity care.

Front 38

Bad debts expense is

Back 38

an operating expense, not deducted from patient service revenue.

Front 39

Items deducted in determining net receivables

Back 39

 Allowance for uncollectible accounts
 Allowance for contractual adjustments
 Allowance for employee discounts

Front 40

Does designation of assets by trustees does change classification?

Back 40

No.

Front 41

A donor’s conditional promise to give is considered unconditional when

Back 41

the possibility that the condition will not be met is remote.

Front 42

A quasi endowment is

Back 42

an unrestricted net asset.

Front 43

Interest earned on board-designated investments is reported as unrestricted revenue.

Back 43

unrestricted revenue.

Front 44

Unconditional promises to give are reported in what period?

Back 44

the period the pledges are made, not in the period of cash collection.

Note that the contributions will be reported as temporarily restricted net assets on the statement of activities if they are not received until future years.

Front 45

Performance indicator

Back 45

revenue and gains over expenses and losses

Can include net assets released from restrictions if used for operating expenses.

Front 46

Unrealized gains and losses from other than trading securities which are not restricted by donors are reported

Back 46

after the performance indicator on the statement of operations.

Front 47

A transfer of assets with a conditional promise are accounted for as

Back 47

a refundable advance (liability) until the conditions have been substantially met.

Front 48

Restricted contributions for LT purposes (endowments, plant, future programs) are ____ activities.

Back 48

financing

Front 49

For the statement of cash flows to reconcile to the change in cash and cash equivalents reported in current assets, cash flows reported in the investing activities section has to equal

Back 49

the amount reported in the financing section.

Front 50

For both private sector and governmental health care organizations, financial statements include

Back 50

a balance sheet
a statement of operations
a statement of changes in net assets
a cash flow statement
notes to the financial statements


The statement of operations may be combined with the changes in net assets, or may be presented separately.

Front 51

Does an expiration of donor imposed conditions cause a reporting classification?

Back 51

No. However, expiration of donor imposed restrictions does.

Front 52

All expenses are reported as _____. Thus, expenses are deducted only from _____.

Back 52

decreases in unrestricted net assets on the statement of activities

unrestricted revenues and other additions.

Front 53

Operating expenses are presented as

Back 53

decreases in unrestricted net assets