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Unformatted text preview: CHAPTER 14: ACCOUNTING FOR NOT-FOR-PROFIT ORGANIZATIONS OUTLINE Number Type/Task Status (re: 13/e) Questions: 14-1 Characteristics of the nonprofit sector Identify 14-1 revised 14-2 Public support and revenue Distinguish 14-2 14-3 Volunteers Explain 14-3 revised 14-4 Board designated and temporarily restricted net assets Distinguish New 14-5 Program services and supporting services Distinguish 14-4 revised 14-6 Statement of functional expenses Explain 14-5 revised 14-7 Joint costs with a fund-raising appeal Identify 14-6 14-8 Fund accounting systems Explain 14-8 revised 14-9 Collections and historic treasures Describe New 14-10 Fund-raising foundations and variance power Explain New Cases: 14-1 Institutionally related foundation Evaluate 14-1 14-2 Terms of gifts restricted vs. unrestricted Recommend 14-2 14-3 Watchdog agencies and benchmarks Internet New Exercises/Problems: 14-1 Various Multiple choice New 14-2 Joint costs with a fund-raising appeal Explain 14-2 14-3 Statement of functional expenses Discuss 14-3, revised 14-4 Prepare all four financial statements Prepare statements 14-4, revised 14-5 Statement of activities Evaluate 14-5 14-6 Notes on net assets Explain 14-6 14-7 Volunteers Evaluate, compute New 14-1 CHAPTER 14: ACCOUNTING FOR NOT-FOR-PROFIT ORGANIZATIONS Answers to Questions 14-1. An entity in the not-for-profit sector is different than one in the public sector because it does not have the power to tax citizens; rather, it is dependent on contributions, dues, and charges for services as its revenue sources. A not-for-profit organization (NPO) is different than a business in the for-profit sector because it has no owners who expect a return on their investment. In addition, an NPO operates for purposes other than providing goods and services at a profit. Note that there are governmental NPOs that are not governments, although they are considered part of the public sector because they may have elected officials, the power to issue tax-exempt debt, and be a component unit of a government. Examples: Not-for-profit sector Girl Scouts of America Public sector Missoula Mining Museum (in the city of Missoula, Montana) Private, business sector Microsoft, Inc. 14-2. Public support consists of resources received, either directly from contributors or donors or indirectly from other not-for-profit organizations, in nonreciprocal or nonexchange transactions in which the donor does not receive direct tangible benefit commensurate with resources contributed. Revenues are recognized when resources are received in reciprocal or exchange transactions. In these cases, the party who provides resources receives benefits in exchange for the resources he or she provides. Typical revenue sources are membership dues, program service fees, sales of supplies and services, investment income, and realized gains on investment transactions. Grants from governmental agencies may have aspects of both indirect public support and revenues, and thus, are reported as separate items in the operating statement.and thus, are reported as separate items in the operating statement....
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