Accounting for Not-for-Profit Organizations For Non Profit OG.pdf · Not-For-Profit Accounting...

Accounting for

Not-for-Profit Organizations

Learning Objective 1

Learn about the four main

categories of not-for-profit

organizations.

Categories of Not-For-Profit

Organizations

Voluntary health and welfare organizations

Other not-for-profit entities

Health care entities

Colleges and universities

The Nature of Not-For-Profit

Organizations

A not-for-profit entity…

(1) receives contributions of resources from

providers who do not expect pecuniary returns,

(2) operates for purposes other than profits,

and (3) does not possess ownership interests

like those of business enterprises.

Differentiate between governmental

and nongovernmental

not-for-profit organizations.

Classification of Organizations

Governmental not-for-profit organizations

Nongovernmental not-for-profit

organizations

Governmental Not-For-Profit

Organizations

Officers are elected by popular vote or

appointment by a state or local government.

Governments can unilaterally dissolve the entity.

The entity has the power to enact

and enforce a tax levy.

They are special-purpose governments.

Governmental Not-For-Profit

Organizations

GASB Statements No. 34 and No. 35

require special purpose governments

with more than one governmental

program or both governmental

and business-type activities to

present both government-wide

and fund financial statements.

Nongovernmental Not-For-Profit

Organizations

These are NFP organizations that

lack the governmental element:

Colleges and universities

Health care organizations

Identify the accounting principles

applicable to governmental and

nongovernmental not-for-profit

organizations.

Not-For-Profit Accounting Principles

FASB Statements No. 116 and 117

are applicable to all nongovernmental

not-for-profit entities.

FASB Statements No. 124 and 135

are specifically related to

not-for-profit organizations.

Financial Statements

FASB Statement No. 117 requires

that all NFP entities provide:

Statement of Financial Position

Statement of Activities

Statement of Cash Flows

Classification of Net Assets

Three Classes of Net Assets

Unrestricted Temporarily Restricted

Permanently Restricted

The statement reports assets,

liabilities, and net assets.

Comparative statements from

the prior period are not required.

This provides information

about the change in amount

and nature of net assets.

The focus of accounting is

the organization as a whole.

It reports increases in unrestricted

net assets as revenues and...

reports decreases in unrestricted

net assets as expenses.

Temporarily restricted or permanently

restricted net assets consist of

donor- restricted contributions.

Generally, an organization reports

revenues and expenses at gross amounts.

Peripheral gains and losses

are reported at net amounts.

Optional classifications

Operating or nonoperating

Recurring or nonrecurring

Statement of Functional Expenses

must report expenses classified by

function and by natural classification.

This statement is not required for ONPOs.

Statement No. 117 extends the

provisions of FASB Statement No. 95

to not-for-profit organizations.

Statement No. 117 encourages

NFP organizations to use

the direct method.

Contributions

Statement No. 116 defines a contribution

as “an unconditional transfer of cash

or other assets...in a voluntary,

nonreciprocal transfer...”

A promise to give is a written or oral

agreement to contribute cash or

other assets to another entity.

Donor-Imposed Restrictions

It provides that the donor’s money be

returned or the donor is released from

the promise to give if the condition is not met.

Gifts of Long-Lived Assets

Unrestricted

Restricted

Investments and Investment Income

Investments are initially recorded at cost.

Contributed securities are

recorded at their fair market value.

Investment income is recognized as earned.

Transactions

Exchange Transactions

Agency Transactions

Gifts in Kind

Introduce FASB not-for-profit

accounting principles.

Measurement Principles

NFP organizations measure

contributions at fair value.

If the fair value of the contributed asset decreases

significantly between the pledge date and the

date the asset is received, the difference is

recognized in the period the decrease occurred.

Collections

Statement No. 116 encourages retroactive

capitalization of collections of works of art.

If collections are capitalized, they are

recognized as revenues or gains.

Fund Accounting

Many not-for-profit organizations continue to

use fund accounting for internal accounting.

Apply not-for-profit accounting

principles to voluntary health

and welfare organizations.

Voluntary Health and Welfare

Organizations

VHWOs are supported by and provide

voluntary services to the public.

March of Dimes

Girl Scouts

American Cancer Society

Meals on Wheels Boy Scouts

Accounting for Voluntary Health

and Welfare Organizations

In 2005, Neighbors Helping Neighbors (NHN)

distributed decals to all residents in the community.

The decals cost NHN $145.

The organization received unrestricted cash

contributions of $4,000 and unconditional

pledges of $6,000 ($2,000 collectible in 2006).

Cash 4,000

Unrestricted Support –

Contributions 4,000

To record cash contributions

Expenses – Supporting Services 145

Cash 145

To record payment of decals

Contributions Receivable 6,000

Allowance for

Uncollectible Contributions 600

Unrestricted Support –

Contributions 3,600

Temporarily Restricted

Support – Contributions 1,800

To record unrestricted promises to give, promises restricted

for use in 2006, and estimated uncollectibles

On January 1, 2005, Martin Construction

donated a used van to the organization.

The FMV of the van is $1,500.

The van has a three-year remaining useful life.

Equipment 1,500

Support – Contributions 1,500

To record receipt of donated van

Depreciation Expense – Program

Services – Community Service 500

Accumulated Depreciation 500

To record depreciation

Net Assets – Reclassification Out 500

Unrestricted Net Assets –

Reclassification In 500

To record reclassification of net assets for which

the temporary restriction is satisfied

A fund-raising banquet was held.

Sales were $950 and related

expenses amounted to $650.

What are the journal entries?

Cash 950

Unrestricted Gains – Special Event 950

To record proceeds from a fund-raising event

Unrestricted Gains – Special Event 650

Cash 650

To charge costs of fund-raising event against

support from the event

Other Issues

Gifts in kind

Membership fees

Donated securities and investment income

Other Issues

Donated services and payment of salaries

Depreciation

Fixed assets purchased with restricted resources

Other Not-For-Profit Organizations

Cemetery associations Social organizations

Civic organizations

Libraries

Museums

Political organizations

Religious organizations

principles to hospitals and other

health care organizations.

Accounting for a Nongovernmental

Not-For-Profit Hospital

Patient service revenue

Premium fees

Other operating revenues

Patient Service Revenues

Daily patient service

(room, board, general nursing)

Nursing services

(O/R, recovery room)

Other professional services

Patient Service Revenues

Courtesy allowances

Contractual adjustments

Statement of Operations and Other

Hospital Financial Statements

Balance Sheet

Statement of Operations

Statement of Changes in Net Assets

principles to private not-for-profit

colleges and universities.

Private Not-for-Profit Colleges

and Universities

Nongovernment not-for-profit

colleges and universities

apply the requirements of

SFASs 116 and 117.

Accounting for a Private

Not-For-Profit College or University

Tuition and fees

Appropriations from federal,

state, and local governments

Contributions

Student financial aid

Endowments

Sales and services

Expenses

Instruction

Research

Academic support

Public service

Expenses

Student services

Institutional support

Operation and maintenance of plant

Student aid

Financial Statements

Accounting for Not-for-Profit Organizations For Non Profit OG.pdf · Not-For-Profit Accounting...

Documents

Transcript of Accounting for Not-for-Profit Organizations For Non Profit OG.pdf · Not-For-Profit Accounting...

NFP Acctg. Concepts - 1 NOT-for-PROFIT ACCOUNTING Basic Concepts.

Accounting for Not-for-Profit Organizationstaffnew.uny.ac.id/upload/197706192014042001/pendidikan/akl2 ACCOUNTIN… · Many not-for-profit organizations choose to use fund accounting

Essentials of Accounting for Governmental and Not-for-Profit Organizations

Accounting for Not-for-Profit Organisation

ACCT 4391-01 Government & Not-for-Profit Accounting … · Text: Government and Not-for-Profit Accounting: Concepts and Practices, 7th edition, Granof, Khumawala, Calabrese, and Smith

Accounting for Not-for-Profit Organisation - Prashanth …ncertbooks.prashanthellina.com/class_12.Accountancy.AccountancyI/1... · Accounting for Not-for-Profit Organisation 3 institutions

Government and Not-for-Profit Accounting: Concepts and ...c.ymcdn.com/sites/ · PDF fileGovernment and Not-for-Profit Accounting: Concepts and Practices, 7e ... •Government •Nonprofit

Non profit Accounting and Financial Reporting Update...Non profit Accounting and Financial Reporting Update Financial Statements of Not-for-Profit Entities Disclosure Framework Simplification

Technical Guide on Accounting for Not-for-Profit Organisations

Introduction to Governmental and Not-for-Profit Accounting…€¦ · Not-for-Profit Accounting, 7e Chapter 4: The Governmental Fund Accounting Cycle, An Introduction to General and

Accounting for Not-for-Profit Organisationncertbooks.solutions/wp-content/uploads/2020/01/leac101.pdf · 2020. 1. 15. · Accounting for Not-for-Profit Organisation 3 institutions

Government and Not for Profit Accounting 5th Edition ...

Guide to Accounting Standards for Not-for-Profit … accounting framework for not-for-profit organizations (NFPOs) in Canada is changing. The Public ... organization controlled by

Accounting Guide for Not for Profit Organizations

NOT-FOR-PROFIT AUDITING AND ACCOUNTING UPDATE

Chapter 12A Accounting for Not-for-Profit Organizations.

Government and Not-for- Profit Accounting Ibrahim Sammour.

Accounting & Tax Update for Not-for-Profit …clarknuber.com/wp-content/uploads/2016/05/CN-Accounting...Accounting & Tax Update for Not-for-Profit Organizations April 21, 2016 2 Agenda

ACCOUNTING FOR NOT FOR PROFIT … FOR NOT FOR PROFIT...ACCOUNTING FOR NOT FOR PROFIT ORGANISATION Q.1 Give to main sources of income of a ‘Not for profit organisation’. Q.2 State

Not for Profit Accounting Made Easy