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53 Cards in this Set

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All NFP orgs must prepare at least 3 FS
Statement of Financial Position
Statement of Activities
Statement of Cash Flows
NFP Orgs include:
Hospitals
Colleges/Universities
Voluntary health & welfare organizations
VHW's must also prepare a ____ in addition to 3 required FS
Statement of Functional Expenses
Statement of Financial Position includes ___
Assets
Liabilities
Net Assets

---Unrestricted net assets
---Temporarily restricted net assets
---Permanently restricted net assets
Unrestricted net assets
available for general use, including those set aside by board of trustees
Temporarily restricted net assets
donated by outside party & restricted to specific purpose
Permanently restricted net assets
donated by outside party & required to be invested with earnings restricted or unrestricted
Format of Statement of Financial Position
Statement of Activities
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
Statement of Activities - expenses classified by
Object (nature of item/service obtained)
Function (program or activity to which attributed)
Character (periods benefited from pmts)
Format of Statement of Activities
Statement of Cash Flows
Special treatment for donated assets restricted for LT purposes
Clasified as CF from financing activities
Statement of Functional Expenses
Classified expenses into program services & support services
Program Services
expenses directly related to org's purpose
Support services
expenses necessary but not directly related to org's purpose (fundraising, admin)
Statement of Functional Expenses - Expenses classified by
Object
Nature
Character
Contributions that are part of the major, ongoing, & central operations are considered ___. Those that are not are considered ___.
Revenues; gains
J/E: Unrestricted cash donations
Dr. Cash
---Cr. Donations (unrestricted funds)
J/E: Permanently restricted donations
Dr. Cash
---Cr. Donations (permanently restricted funds)
J/E: Donated Services
Dr. Program Expense
---Cr. Donations (unrestricted funds)
J/E: Cash donations restricted for a specific purpose
When made:
Dr. Cash
---Cr. Donations (temporarily restricted funds)

When used:
Dr. Temporarily restricted net assets
---Cr. unrestricted net assets
Dr. Expense
---Cr. Cash
J/E Cash donated for purchase of property
When made:
Dr. Cash
---Cr. Donations (temporarily restricted funds)

When used:
Dr. Temporarily restricted net assets
---Cr. unrestricted net assets
Dr. Property
---Cr. Cash
Pledges
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
J/E: Pledges
Dr. Pledges
---Cr. Allowance for uncollectible pledges
---Cr. Donations (unrestricted funds)
---Cr. Donations (restricted funds)
Donations of art, antiques, or artifiacts are not recognized if
Asset held for research or exhibition
Asset preserved & unaltered
Proceeds from sale of asset to be used to buy additional art, antiques, artifacts
Donated assets to be held in trust
Not recognized by NFP
Disclosed in footnotes
Hospital revenues - patient service revenue is recorded at
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
How are services provided for free due to charity recognized for hospitals?
Not recognized as revenues
Hospital Revenues: Bad debts
recognized as expense on statement of activities
not reduction of revenue
Hospital Revenues: Misc. revenues from cafeteria, gift shop, parking lot fees, and education programs
classified as other revenue
Hospital Revenues: donated supplied
reported as operating revenue and expensed when used
Hospital Revenues: donations of essential services and unrestricted donations
nonoperating revenues
College tuition revenues: refunds to students
reduce tuition revenues
College tuition revenues: price breaks to students (scholarships/reduction due to family staff member)
Tuition recognized at gross amt
Price break recognized as expense
Contributed services, when recognized, are recognized as both ____ and ____.

However, contributed services should be recognized only when the services ___.
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.
Endowments (permanently restricted) are restricted in both the ___ and the ____ from the fund. Therefore ___.
Endowment and income

Therefore no amount of unrestricted contribution revenue should be recognized in the year donated.
Charity care represents
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.
Bad debts expense is
an operating expense, not deducted from patient service revenue.
Items deducted in determining net receivables
 Allowance for uncollectible accounts
 Allowance for contractual adjustments
 Allowance for employee discounts
Does designation of assets by trustees does change classification?
No.
A donor’s conditional promise to give is considered unconditional when
the possibility that the condition will not be met is remote.
A quasi endowment is
an unrestricted net asset.
Interest earned on board-designated investments is reported as unrestricted revenue.
unrestricted revenue.
Unconditional promises to give are reported in what period?
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.
Performance indicator
revenue and gains over expenses and losses

Can include net assets released from restrictions if used for operating expenses.
Unrealized gains and losses from other than trading securities which are not restricted by donors are reported
after the performance indicator on the statement of operations.
A transfer of assets with a conditional promise are accounted for as
a refundable advance (liability) until the conditions have been substantially met.
Restricted contributions for LT purposes (endowments, plant, future programs) are ____ activities.
financing
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
the amount reported in the financing section.
For both private sector and governmental health care organizations, financial statements include
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.
Does an expiration of donor imposed conditions cause a reporting classification?
No. However, expiration of donor imposed restrictions does.
All expenses are reported as _____. Thus, expenses are deducted only from _____.
decreases in unrestricted net assets on the statement of activities

unrestricted revenues and other additions.
Operating expenses are presented as
decreases in unrestricted net assets