Transcript
LJ
Nonprofit Accounting
Nonprofit Accounting
￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣
NONPROFIT ORGANIZATIONS
A.
B.
Nonprofit Organizations: 1.
Priv Privat ate e NotNot-fo forr-Pr Prof ofit it Coll Colleg eges es/U /Uni nive vers rsit itie ies s
2.
Priv Privat ate e NotNot-fo forr-Pr Prof ofit it Hos Hospi pita tals ls/H /Hea ealt lthc hcar are e Enti Entiti ties es
3.
Volunt luntar ary y Hea Healt lth h & Welfa elfare re Orga Organi niz zatio ation ns
4.
Any Other Other Nonpro Nonprofit fit Organi Organizat zation ion (labor (labor union, union, resear research ch founda foundatio tion, n, church church,, etc.) etc.)
Instead of GASB standards, all these nonprofits: 1.
Follow FASB nonprofit model.
2.
Carry and depreciate their own
3.
Carry and service their own
4.
Use Use “no “norm rmal al”” accr accrua uall acc accou ount ntin ing g (not (not mod modif ify y acc accru rual al). ).
5.
Meas Measur urem emen entt foc focus us:: pro provi vide de infor informa matio tion n for for the the ent entit ity y as as a whol whole. e.
6.
cted Deal Deal with with (mu (must be rest restri ric ted by an
7.
Deal Deal with with gift gifts, s, bequ beques ests ts,, don donat atio ions ns,, gra grant nts, s, etc. etc.
.
Notes:
1
party rty).
Nonprofit Accounting
￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣
DONATED MONEY Nonprofits use normal accrual accounting, so restricted money is recorded as revenue immediately when either: A.
Collected or
B.
Pledged (promised)
Example: $100,000 Gift restricted to purchase equipment Cash
100,000 100,000
To record receipt of donation restricted to purchase equipment.
Year-end: Equipment still not purchased
100,000
100,000
To set up Net Asset account on B/S
Next Year: Funds spent; equipment purchased Equipment Cash
100,000 100,000
To record purchase of equipment
100,000
100,000
To record donation used for intended purpose
Net Assets Temporarily Restricted is a(n) Net Assets Released from Restriction is a(n)
2
account. account.
Nonprofit Accounting
￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣
PLEDGES & DONATED SERVICES
A.
Pledges --- Record as revenue at fair market value, net of uncollectibility, in the year the pledge is made.
Example: Nonprofit Hospital has a pledge drive. $200,000 in pledges have some kind of restriction. Based on past experience, they expect to collect 100% of the restricted pledges but $50,000 on the unrestricted pledges will not be collected.
650,000
50,000
400,000
200,000
To record pledges at FV in the year the pledges are made.
B.
Donated Services --are met:
Record as both an expense and a revenue if the following criteria
1.
Fair value of the service is determinable, and either
2.
Services donated would have been paid for otherwise by the nonprofit, or
3.
Nonfinancial assets are created or enhanced.
Example: Nuts donate nursing services to a private, not-for-profit hospital
50,000
(Notice: both a
so it washes out. It’s all about
and an
3
50,000 are recorded, ).
Nonprofit Accounting
￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣
STATEMENTS OF FINANCIAL POSITION & A CTIVITIES
A.
Statement of Financial Position (i.e., a balance sheet) Assets
XXXX
Liabilities
XXX
Net Assets: Unrestricted Temporarily Restricted Permanently Restricted
XXX XXX XXX
Total Liabilities and Net Assets
B.
XXXX
Statement of Activities Revenues (restricted and unrestricted) Plus Net Assets Released From Restrictions
XXXX XX XXXX
Less Expenses
(XXX)
Net Change: Net Assets: Unrestricted Net Assets: Temporarily Restricted Net Assets: Permanently Restricted
Notes:
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XXX XXX XXX
Nonprofit Accounting
￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣
STATEMENT OF CASH FLOWS
Statement of Cash Flows --- FASB Format (must be the Direct Method) 1.
Cash Flow From Operating Activities (includes unrestricted items)
2.
Cash Flow From Investing Activities (including works of art)
3.
Cash Flow From Financing Activities (includes interest or dividend income restricted for long-term purposes and contributions restricted for long-term purposes)
Cash Flows From Operating Activities Cash received from customers Cash paid to suppliers, employees, taxes Cash paid for interest Cash received for interest and dividends
XXXX (XXX) (XXX) XX
Net cash provided (used) by Operating Activity Cash Flow From Investing Activities Buy or Sell Property, Plant or Equipment Buy or Sell Investments
XXXX
XXXX XX
Net cash provided (used) by Investing Activity Cash Flow From Financing Activities Borrow or repay debt principal Dividend paid Issue stock Buy or sell Treasury Stock
XXXX
XXXX (XXX) XXX XX
Net cash provided (used) by Financing Activity
XXXX
Net increase/decrease in cash and cash equivalents
XXXX
Cash and cash equivalents at the beginning of period
XXXX
Cash and cash equivalents at the end of the period
XXXX
Independently answer mul tip le-choice questio ns 1 – 15.
5
Nonprofit Accounting
￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣
MULTIPLE-CHOICE QUESTIONS 1 - 15
1. In the preparation of the statement of activities for a nongovernmental not-for-profit organization, all expenses are reported as decreases in which of the following net assets classes? a. b. c. d.
Total net assets Unrestricted net assets Temporarily restricted net assets Permanently restricted net assets (8327)
2. How should a nongovernmental not-for-profit organization report depreciation expense in its statement of activities? a. b. c. d.
It should not be included. It should be included as a decrease in unrestricted net assets. It should be included as an increase in temporarily restricted net assets. It should be reclassified from unrestricted net assets to temporarily restricted net assets, depending on donor-imposed restrictions on the assets. (8773)
3. Famous, a nongovernmental not-for-profit art museum, has elected not to capitalize its permanent collections. In the previous year, a bronze statue was stolen. The statue was not recovered and insurance proceeds of $35,000 ware paid to Famous in the current year. This transaction would be reported in I. II. a. b. c. d.
The statement of activities as permanently restricted revenues. The statement of cash flows as cash flows from investing activities.
I only II only Both I and II Neither I nor II (6812)
4. How should a nongovernmental, not-for-profit organization report donor-restricted cash contributions for long-term purposes in its statement of cash flows? a. b. c. d.
Operating activity inflow Investing activity inflow Financing activity inflow As a noncash transaction (8605)
6
Nonprofit Accounting
￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣
5. A nongovernmental not-for-profit organization borrowed $5,000, which it used to purchase a truck. In which section of the organization’s statement of cash flows should the transaction be reported? a. b. c. d.
In In In In
cash inflow and cash outflow from investing activities cash inflow and cash outflow from financing activities cash inflow from financing activities and cash outflow from investing activities cash inflow from operating activities and cash outflow from investing activities (8112)
6. An unrestricted cash contribution should be reported in a nongovernmental not-for-profit organization’s statement of cash flows as an inflow from a. b.
Operating activities Investing activities c. Financial activities d. Capital and related financing activities (7746)
7. On December 30, Leigh Museum, a not-for-profit organization, received a $7,000,000 donation of Day Co., shares with donor stipulated requirements as follows: Shares valued at $5,000,000 are to be sold with the proceeds used to erect a public viewing building. Shares valued at $2,000,000 are to be retained with the dividends used to support current operations. As a consequence of the receipt of the Day shares, how much should Leigh report as temporarily restricted net assets on its statement of financial position? a. b. c. d.
$0 $2,000,000 $5,000,000 $7,000,000 (5475)
8. On January 2, the Baker Fund, a nongovernmental not-for-profit corporation, received a $125,000 contribution restricted to youth activity programs. During the year, youth activities generated revenues of $89,000 and had program expenses of $95,000. What amount should Baker report as net assets released from restrictions for the year? a. b. c. d.
$0 $6,000 $95,000 $125,000
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Nonprofit Accounting
￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣
9. The Turtle Society, a nongovernmental not-for-profit organization, receives numerous contributed hours from volunteers during its busy season. Chris, a clerk at the local tax collector’s office, volunteered ten hours per week for 24 weeks transferring turtle food from the port to the turtle shelter. His rate of pay at the tax office is $10 per hour, and the prevailing wage rate for laborers is $6.50 per hour. What amount of contribution revenue should Turtle Society record for this service? a.
$0 b. $840 c. $1,560 d. $2,400 (8352)
10. Oz, a nongovernmental not-for-profit organization, received $50,000 from Ame Company to sponsor a play given by Oz at the local theater. Oz gave Ame 25 tickets, which generally cost $100 each. Ame received no other benefits. What amount of ticket sales revenue should Oz record? a. b. c. d.
$0 $2,500 $47,500 $50,000
(7066)
11. Community Enhancers, a nongovernmental not-for-profit organization, received the following pledges: Unr estr icted Restr icted f or capital additions
$400,000 300,000
All pledges are legally enforceable. However, Community’s experience indicates that 5% of all pledges prove to be uncollectible. What amount should Community report as pledges receivable, net of any required allowance account? a. b. c. d.
$700,000 $665,000 $380,000 $285,000
ceivable
8
(7747)
Nonprofit Accounting
￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣
12. Which of the following assets of a nongovernmental not-for-profit charitable organization must be depreciated? a. b.
A freezer costing $150,000 for storing food for the soup kitchen Building costs of $500,000 for construction in progress for senior citizen housing c. Land valued at $1 million being used as the site of the new senior citizen home d. A bulk purchase of $20,000 of linens for its nursing home (8110)
13. Settam, a nongovernmental not-for-profit organization, received a donation of stock with donor-stipulated requirements as follows: Shares valued at $8,000,000 are to be sold with the proceeds used for renovation. Shares valued at $2,000,000 are to be retained with the dividends used to support current operations. What amount should Settam include as unrestricted net assets as a result of this donation? a. b.
$0 $ 2,000,000 c. $ 8,000,000 d. $10,000,000 (8580)
14. Janna Association, a nongovernmental not-for-profit organization, received a cash gift with the stipulation that the principal be held for at least 20 years. How should the cash gift be recorded? a. b.
A temporarily restricted asset A permanently restricted asset c. An unrestricted asset d. A temporary liability (8113)
15. Hann School, a nongovernmental not-for-profit organization, spent $1 million of temporarily restricted cash to acquire land and building. How should this be reported in the statement of activities? a. b.
Increase in unrestricted net assets Increase in temporarily restricted net assets c. Increase in permanently restricted net assets d. Decrease in permanently restricted net assets (8578)
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Nonprofit Accounting
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HOSPITALS A.
Required: FASB nonprofit model used for external reporting
B.
Optional: Funds used for internal reporting All these funds are organized around one principle: is the money
or is it
restriction or is it a 1.
restriction? . If it is
, is it a
Unrestricted Fund: General Fund (day-to-day operations) a. Fixed assets and accumulated depreciation b. Long-term debt c.
Board-designated assets (internally restricted money is technically unrestricted, because the board can change their mind)
d. Agency activity (hospital acts as an agent)
, ,
e. 3 Net Assets Positions: and 2.
Donor-Restricted Funds: a. Specific Purpose Fund (1)
Gifts / bequests / grants / donations temporarily restricted for operational purposes
(2)
Net Asset Position:
orary
b. Plant Replacement & Expansion Fund
c.
(1)
Gifts / bequests / grants / donations temporarily restricted for capital additions
(2)
Net Asset Position:
orary
Endowment Funds (1)
Pure or Permanent Endowment Funds
(2)
Term Endowment Funds
(3)
Net Asset Positions:
10
&
Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣
3.
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Required Statements for External Reporting
a. Statement of Financial CancelPosition Download And Print b. Statement of Cash Flows (FASB format --- see page 5. A city hospital would follow the GASB format.) C.
Statement of Activities --- three revenue categories: 1.
Patient service revenue (Gross Patient Service Revenue less Charity Care equals Patient Service Revenue less 3rd Party Contractual Adjustments equals Net Patient Service Revenue)
2.
Other operating revenue
Educational programs Cafeteria Vending machines Pay parking lot Gift shop Specific purpose grants FMV of donated services FMV of donated supplies (medicine, linens) Gifts for charity care 3.
Nonoperating gains/losses
Unrestricted gifts, bequests Gains/losses on sales of assets Unrestricted endowment income Unrestricted interest/dividend income
Independently answer multiple-choice questions 16 – 18.
11
Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣ In order to print this document from Scribd, you'll MULTIPLE-CHOICE QUESTIONS 16 - 18 first need to download it. Cancel
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16. Under Abbey Hospital’s established rate structure, the hospital would have earned patient service revenue of $6,000,000 for the year. However, Abbey did not expect to collect this amount because of charity care of $1,000,000 and discounts of $500,000 to third-party payors. How much should Abbey record as patient service revenue for the year? a. b. c. d.
$6,000,000 $5,500,000 $5,000,000 $4,500,000
(1422)
17. Hospital, Inc., a not-for-profit organization with no governmental affiliation, reported the following in its accounts for the current year ended December 31: Gross patient services revenue from all services provided at the established billing rates of the hospital (note that this figure includes charity car e of $25,000)
$775,000
Pr ovisions f or bad debts
15,000
Difference between established billing rates and fees negotiated with third-party payors (contractual adjustments)
70,000
What amount would the hospital report as net patient service revenue in its statement of operations for the current year ended December 31? a.
$680,000 b. $690,000 c. $705,000 d. $735,000 (7790)
18. A not-for-profit hospital issued long-term tax exempt bonds for the hospital’s benefit. The hospital is responsible for the liability. Which fund may the hospital use to account for this liability? a. b. c. d.
Enterprise Specific purpose General General long-term debt account group (4663)
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Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣
COLLEGES
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A.
Required: FASB model used for external reporting
B.
Optional: Funds used for internal reporting 1.
Unrestricted Current Fund (current operations)
2.
Restricted Current Fund
3.
Agency Fund
4.
Loan Fund
5.
Annuity Income and/or Life Income Funds
6.
Endowment Funds a. Pure (net assets permanently restricted) b. Term (net assets temporarily restricted) c.
7.
Quasi (board-designated assets; net assets unrestricted)
Plant Funds: a. Unexpended Plant (net assets temporarily restricted to capital additions) b. Investment in Plant (net assets unrestricted) c.
Retirement of Indebtedness (net assets temporarily restricted to service debt)
d. Renewal & Replacement (net assets temporarily restricted for major repairs)
C.
Required Statements for External Reporting 1.
Statement of Financial Position
2.
Statement of Cash Flows (FASB format --- see page 5. State or city college would follow GASB format.)
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Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣ In order to print this document from Scribd, you'll first need to download it.
3.
Statement of Activities Cancel
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a. Tuition Waivers --- Expenditures, not revenue reductions: (1)
Scholarships
(2)
Fellowships
(3)
Tuition Remissions (faculty’s children attend free)
b. Refunds --- Revenue reduction c.
Types of Expenses: 3 categories (1)
Education & General (Faculty salaries, Research, Student Services, Financial Aid)
(2)
Auxiliary Enterprise (Cafeteria, Bookstores, Athletic Programs)
(3)
Support: Management, General & Administrative, Fund Raising)
Independently answer multiple-choice questions 19 – 23.
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Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣ In order to print this document from Scribd, you'll MULTIPLE-CHOICE QUESTIONS 19 - 23 first need to download it. Cancel
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19. During the year, Public College received the following: An unrestricted $50,000 pledge to be paid the following year A $25,000 cash gift restricted for scholarships A notice that the college is named as a beneficiary of $10,000 in a recent graduate’s will What amount of contribution revenue should Public College report in its statement of activities? a. b. c. d.
$25,000 $35,000 $75,000 $85,000 (8077)
20. For the summer session, Unity University assessed its students $3,000,000 for tuition and fees. However, the net amount realized was only $2,900,000 because of the following reductions: Tuition remissions granted to faculty member’s families Class cancellation r ef unds
$30,000 70,000
How much unrestricted current funds revenues from tuition and fees should Unity report for the period? a. b. c. d.
$2,900,000 $2,930,000 $2,970,000 $3,000,000
(1406)
21. For the fall semester, Ames University assessed its students $3,000,000 for tuition and fees. The net amount realized was only $2,500,000 because scholar-ships of $400,000 were granted to students, and tuition remissions of $100,000 were allowed to faculty member’s children attending Ames. What amount should Ames report for the period as unrestricted current fund gross revenues from tuition and fees? a. b. c. d.
$2,500,000 $2,600,000 $2,900,000 $3,000,000 (4140)
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Nonprofit Accounting
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22. What describes a private nonprofit university’s internally designated asset , the income from which will be used for a specified purpose? Cancel Download And Print a. b. c. d.
Endowment Term endowment Quasi-endowment Restricted (9096)
23. A college’s plant funds group includes which of the following subgroups? I. II. III.
Renewals and replacement funds Retirement of indebtedness funds Restricted current funds
a.
I and II b. I and III c. II and III d. I only (2102)
Notes:
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Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣ In order to print this & document from Scribd, you'll VOLUNTARY HEALTH WELFARE first need to download it.
ORGANIZATIONS
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A.
Required FASB model used for external reporting
B.
Optional: Funds used for internal reporting 1.
Unrestricted Current Fund
2.
Restricted Current Fund
3.
Plant or Land, Building & Fixed Asset Fund
4.
Custodian Fund (identical to an Agency Fund)
5.
Loan Fund
6.
Annuity Income and/or Life Income Funds
7.
Endowment Funds: a. Pure (net assets permanently restricted) b. Term (net assets temporarily restricted) c. Quasi (board-designated assets; net assets unrestricted)
C.
Required Statement for External Reporting 1.
Statement of Financial Position
2.
Statement of Cash Flows (FASB format --- see page 5)
3.
Statement of Activities a. Revenue (1)
Program Revenue
(2)
Membership Dues
(3)
Fees for Services
(4)
Interest and Dividend Income
b. Support (Public): contributions, gifts, pledges, bequests, and special events
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Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣ In order to print this document from Scribd, you'll first need to download it.
4.
Statement of FunctionalCancel ExpensesDownload And Print a. Program Expenses (to meet your mission) (1)
Research
(2)
Education
(3)
Health
b. Support Expenses (1)
Fund Raising
(2)
Management
(3)
General & Administrative
Notes:
Independently answer multiple-choice questions 24 – 27.
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Nonprofit Accounting
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24. A non-for-profit voluntary health and welfare organization should report a contribution for the construction of a new building as cash flows from which of the following in the statement of cash flows? a. b. c. d.
Operating activities Financing activities Capital financing activities Investing activities (7767)
25. A voluntary health and welfare organization received a cash donation in 2001 from a donor specifying that the amount donated be used in 2003. The cash donation should be accounted for as a.
Revenue in 2001 b. Revenue in 2001, and 2002,and 2003, and as a deferred credit in the balance sheet at the end of 2001 and 2002 c. Revenue in 2003, and no deferred credit in the balance sheet at the end of 2001 and 2002 d. Revenue in 2003, and as a deferred credit in the balance sheet at the end of 2001 and 2002 (4602)
26. A labor union had the following expenses: Labor negotiations Fund-r aising Membership development Administrative and general
$500,000 100,000 50,000 200,000
In the statement of activity, what amount should be reported under the classification of program services? a. b. c. d.
$850,000 $600,000 $550,000 $500,000 (1362)
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Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣ In order to print this document from Scribd, you'll first need to download it.
27. During the current year, a voluntary health and welfare organization receives $300,000 in unrestricted pledges. Of this amount, hasAnd been designated by donors for use next Cancel $100,000 Download Print year to support operations. If 15% of the unrestricted pledges are expected to be uncollectible, what amount of unrestricted support should the organization recognize in its current-year financial statement? a. b. c. d.
$300,000 $270,000 $200,000 $170,000
Notes:
20
Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣ In order to print this document from Scribd, you'll NONPROFIT AS TRUSTEE first need to download it.
A.
Application
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Donor transfers assets to nonprofit organization as trustee for beneficiary; nonprofit is middleman holding the money temporarily until it goes to the beneficiary. B.
Treatment Nonprofit organization treats such assets as: 1.
Refundable advance --- if ANY of the four following conditions are met: a. Donor retains right to direct the assets b. Donor controls the nonprofit / recipient c. Donor may revoke donation / gift d. Donor specifies itself or affiliate as beneficiary, and it is not an equity transaction
Cash
3,000
3,000
To record donated assets and related liability.
2.
Contribution / Support / Revenue --- it is NOT refundable, and EITHER: a. Nonprofit has variance power (right to redirect assets to another beneficiary) OR b. Nonprofit & beneficiary are financially interrelated
Cash
3,000
3,000
To record assets donated as contributions / support.
21
Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣ In order to print this document from Scribd, you'll first need to download it.
3.
Equity transaction --- ALL of the following three conditions are met: Cancel
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a. Donor specifies itself or affiliate as beneficiary; AND b. Donor & nonprofit are financially interrelated; AND c. It’s not refundable.
Cash
3,000
3,000
Notes:
Independently answer multiple-choice questions 28 – 30.
22
Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣ In order to print this document from Scribd, you'll MULTIPLE-CHOICE QUESTIONS 28 - 30 first need to download it. Cancel
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28. Arkin Corp. is a nongovernmental non-for-profit organization involved in research. Arkin’s statement of functional expenses should classify which of the following as support services? a. b. c. d.
Salaries of staff researchers involved in research Salaries of fundraisers for funds used in research Costs of equipment involved in research Costs of laboratory supplies used in research (8775)
29. During the current year, Mill Foundation, a nongovernment non-for profit organization, received $100,000 in unrestricted contributions from the general public. Mill’s board of directors stipulated that $75,000 of these contributions would be used to create an endowment. At the end of the current year, how should Mill report the $75,000 in the net assets section of the statement of financial position? a. b. c. d.
Permanently restricted Unrestricted Temporarily restricted Donor restricted (7762)
30. Gridiron University is a private university. A successful alumnus has recently donated $1,000,000 to Gridiron for the purpose of funding a “center for the study of sports ethics.” This donation is conditional upon the university raising matching funds within the next 12 months. The university administrators estimate that they have a 50% chance of raising the additional money. How should this donation be accounted for? a. b. c. d.
As a temporarily restricted support As unrestricted support As a refundable advance As a memorandum entry reported in the footnotes (8787)
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Nonprofi t Accountin g
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣ In order to print this document from Scribd, you'll SIMULATION QUESTIONS first need to download it.
SIMULATION: Promise CancelNonprofit Download AndTransactions Print Community Service, Inc. is a nongovernment not-for-profit voluntary health and welfare calendar-year organization that began operations on January 1, year 1. It performs voluntary services and derives its revenue primarily from voluntary contributions from the general public. Community implies a time restriction on all promises to contribute cash in future pe riods. However, no such policy exists with respect to gifts of long-lived assets. Items 1 through 4 are based on the following selected transactions that occurred during Community s ’
year 2 calendar year: Unrestricted written promises to contribute cash --- year 1 and year 2
--- Year 1 promises (collected in year 2) --- Year 2 promises (collected in year 2) --- Year 2 promises (uncollected)
$22,000 3 95,000 28,000 1, 4
Written promises to contribute cash restricted to use for community college scholarships (year 1 and year 2)
10,000 2 20,000 2 12,000 1, 4
--- Year 1 promises (collected and expended in year 2) --- Year 2 promises (collected and expended in year 2) --- Year 2 promises (uncollected) Written promises to contribute $25,000 if matching funds are raised for the capital campaign during year 2
--- Cash received in year 2 from contributor as a good faith advance --- Matching funds received in year 2
25,000 0
関係なし
Cash amount of $37,000 received in year 1 with donor s only stipulation that a bus be purchased
’
37,000 2
--- Expenditure of full amount of donation July 1, year 2
Items 1 through 4 represent the year 2 amounts that Community reported for selected financial
statement elements in its December 31, year 2, statement of financial position and year 2 statement of activities. For each item, indicate whether the amount was Overstated, Understated, or Correctly stated. Item
Choice
1.
Community reported $28,000 as contributions receivable. 28,000+12,000
Understated
2.
Community reported $37,000 as net assets released from restrictions (satisfaction of use restrictions). 10,000+20,000+37,000
Understated
3.
Community reported $22,000 as net assets released from restrictions (due to the lapse of time restrictions).
Correct
4.
Community reported $97,000 as contributions --- temporarily restricted.
Overstated (6656)
4. 28,000+12,000=40,000
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Nonprofit Accounting
Print document ￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣￣ In order to print this document from Scribd, you'll SIMULATION: Nonprofit Statement of Activities first need to download it.
Area Help, Inc. is a nongovernmental not-for-profit voluntary health and welfare calendar-year organization that began operations on January 1, year 1. It performs voluntary services and derives its Cancel Download And Print revenue primarily from voluntary contributions from the general pub lic. Area Help implies a time restriction on all promises to contribute cash in future periods. However, no such policy exists with respect to gifts of long-lived assets. Items 1 through 7 are based on the following selected transactions that occurred during Area Help s year ’
2 calendar year: Debt security endowment received in year 2 income to be used for community service --- Face value $90,000 --- Fair value at time of receipt 88,000 1, 3 --- Fair value at December 31, year 2 87,000 3 --- Interest earned in year 2 9,000 3
10 concerned citizens volunteered to serve meals to the homeless --- 400 hrs. free; fair market value of services $5 per hr.
Short-term investment in equity securities in year 2 --- Cost --- Fair value December 31, year 2 --- Dividend income
10,000 12,000 1,000
Music festival to raise funds for a local hospital --- Admission fees --- Sales of food and drinks --- Expenses
5,000 2 14,000 4,000
Reading Material donated to Area Help and distributed to the children in year 2 --- Fair market value
2,000
8,000 4
Federal youth training fee for service grant --- Cash received during year 2 --- Instructor salaries paid
30,000 26,000 4
Other cash operating expenses --- Business manager salary --- General bookkeeper salary --- Director of community activities salary --- Space rental (75% for community activities, 25% for office activities) --- Printing and mailing costs for pledge cards
60,000 40,000 50,000 4 20,000 4 2,000 5
Short-term bank loan in year 2 --- Interest payment in year 2 --- Principal payment in year 2
1,000 20,000
For Items 1 through 7, enter the appropriate amount for each of the following financial statement
elements in the year 2 statement of activities. Round all amounts to the nearest whole dollar. Item
1. 2. 3. 4. 5. 6. 7.
Amounts
Contributions --- permanently restricted Fair value at time of receipt Revenues --- fees Admission fee Investment income --- debt securities 9,000-(88,000-87,000)=8,000 Program expenses 8,000+26,000+50,000+20,000x75%=99,000 General fundraising expenses (excludes special events) Printing & mailing Income on long-term investments --- unrestricted Contributed voluntary services
88,000 5,000 8,000 99,000 2,000 0 0 (6674)
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