Exam 10: Accounting for Private Not-For-Profit Organizations

Below are the complete set of published financial statements taken from the annual report of the Dillard Museum. The statements do not comply with generally accepted accounting principles for private not-for-profits in a number of ways. Review these statements and describe instances in which the statements fail to comply with accepted accounting standards. You must be able to justify your assertions - for example you cannot say they failed to capitalize leases if there is no evidence they have a qualifying lease. Example: (1) The financial statements contain no footnote disclosures. Footnotes are an integral part of the financial statements and many individual disclosures are required under FASB standards.

A Statement of Functional Expenses is required for tax agencies.

A not-for-profit organization received a gift of $460,000 with purpose restrictions in 2008. In 2009 funds were expended for the purpose outlined in the gift, however, it was not possible to determine whether the restricted funds or unrestricted funds were used. The presumption should be:

While many not-for-profit organizations use funds for internal purposes, the financial statements do not report separate funds.

The FASB requires that expenses of voluntary health and welfare organizations to be reported according to function. Which of the following is one of the FASB required function categories:

Voluntary health and welfare organizations promote the general health and well-being of the public.

Performing arts organizations are an example of other not-for-profit organizations.

What are the financial statements required for all nongovernmental, not-for-profit organizations?

When expenses are recognized for a transaction and the not-for-profit possess funds restricted for transactions of that type, it is assumed that ______________.

FASB statement 116 requires contributions to be recorded as revenue when the contributed money is actually received.

Which of the following would not be an example of a voluntary health and welfare organization?

A skilled carpenter repaired the roof for a private not-for-profit free of charge. The not-for-profit would have had to pay $50 for this service if not donated. What entry should the not-for-profit make? A) Building 50 Contribution revenue 50 B) Service expense 50 Contribution revenue 50 C) Improvements 50 Contribution revenue 50 D) No entries are necessary for the transaction.

A donor gave $ 500,000 to a private not-for-profit organization to be held in endowment. In addition, the governing board permanently designated $ 1,000,000 to the endowment. In the Statement of Financial Position, how should these amounts be classified?