Chp 14 Homework

Chp 14 Homework - CHAPTER 14 Answers to Questions...

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CHAPTER 14: ACCOUNTING FOR NOT-FOR-PROFIT ORGANIZATIONS Answers to Questions 14-1 As discussed in the opening pages of Chapter 1, nongovernmental not-for-profit organizations differ from those in the public (governmental) sector because they do not have the power to tax citizens or issue tax-exempt debt, are not controlled by or financially accountable to a government, and do not have popular election of members of their governing board or appointment of board members by a government. Both types of organizations may depend on contributions and charges for services for financing their operations. This is particularly true for nongovernmental not-for-profit organizations. 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. 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 The authority to issue accounting and financial reporting standards for nongovernmental not-for-profit organizations is assigned to the Financial Accounting Standards Board (FASB). Issues will vary depending on when the FASB technical agenda is viewed. Currently, the FASB has had two exposure drafts outstanding that deal with combinations of not-for-profit organizations (i.e., mergers and acquisitions) and goodwill and other intangible assets acquired in a merger or acquisition. 14-3 FASB Statement No. 117 requires all nongovernmental not-for-profit organizations to present a statement of financial position (or balance sheet), a statement of activities, and a statement of cash flows for the entity as a whole. In addition to these three statements, voluntary health and welfare organizations must also present a statement of
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Chp 14 Homework - CHAPTER 14 Answers to Questions...

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