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Unformatted text preview: CHAPTER 14: ACCOUNTING FOR NOT-FOR-PROFIT ORGANIZATIONS OUTLINE Number Type/Task Status (re: 12/e) Questions: 14-1 Characteristics of the nonprofit sector Identify 14-1 revised 14-2 Public support and revenue Distinguish 14-3 revised 14-3 Volunteers Explain 14-4 14-4 Program services and supporting services Distinguish 14-5 revised 14-5 Statement of functional expenses Explain 14-6 14-6 Joint costs with a fund-raising appeal Identify New 14-7 Standards-setting responsibility Explain 14-8 revised 14-8 Fund accounting Explain 14-9 revised 14-9 Investments at market value Explain 14-10 14-10 Control over other organizations Explain 14-11 Cases: 14-1 Institutionally related foundation Evaluate 14-1 revised 14-2 Terms of gifts restricted vs. unrestricted Recommend 14-2 14-3 Watchdog agencies and benchmarks Internet 14-3 revised Exercises/Problems: 14-1 Various Multiple Choice New 14-2 Joint costs with a fund-raising appeal Explain 14-3 14-3 Statement of functional expenses Discuss 14-4 revised 14-4 Prepare all four financial statements Prepare statements New 14-5 Statement of activities Evaluate New 14-6 Notes on net assets Explain New 14-7 Volunteers Evaluate, compute New 3 CHAPTER 14: ACCOUNTING FOR NOT-FOR-PROFIT ORGANIZATIONS Answers to Questions 14-1. An entity in the not-for-profit sector differs from one in the for-profit sector in part because it has no owners expecting a return on their investment, and it operates for purposes other than providing goods and services at a profit. A key distinction between a nongovernmental NPO and an NPO in the public sector is that the first is dependent on contributions, dues, and charges for services for revenue; while a governmental NPO may have the power to tax. Governmental NPOs also may have elected officials, the power to issue tax-exempt debt, and be a component unit of a government. Examples: Nonprofit sector American Red Cross, Inc. Public sector City of Dallas, Texas Private, business sector General Motors, 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 for resources received in reciprocal or exchange transactions; i.e., those in which the other party receives benefits in exchange for the resources provided. 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....
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