CH 14 Sol Partial - see pdf

CH 14 Sol Partial - see pdf - CHAPTER 14: ACCOUNTING FOR...

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Unformatted text preview: CHAPTER 14: ACCOUNTING FOR NOT-FOR-PROFIT ORGANIZATIONS Solutions to Exercises and Problems 14-1. 1. b. 6. b . 2 . d . 7. d . 3. c . 8 . c . 4. a. 9. a . 5. a . 10. c. 14-2. 1. Based on the information provided, it appears that the purpose, audience, and content criteria are met for this activity to be considered a bona fide activity. The joint costs should be allocated between the functional program expenses and support expenses, including fund-raising. The purpose of the door-to-door campaign is to help accomplish the entitys missionto increase recycling. The audience is targeted because they are not recycling much, rather than because they have a high likelihood of contributing to the organization. The content of the campaign is to motivate these people to action, specifically to get them to recycle more. 2. The purpose and content criteria appear to be met; however, the audience criteria are not met. The audience is targeted based on Ch. 14, Solutions, 14-2 (Contd) their likelihood of paying the high price of admission and consequently making a charitable contribution. In this case, all the costs of the activity should be reported as fund-raising costs. 3. This activity fails all three criteria to be considered a bona fide activity under AICPA SOP 98-2 . The purpose of the solicitation 14- 1 campaign is primarily to raise contributions (there is no call to action), not to promote the mission of the organization. The targeted audience is one that is middle-class and likely to contribute; in fact, their children would most likely not qualify to attend the camp. The content of the campaign does not motivate people to action. Simply asking people to read an informational pamphlet is not calling them to act in a way that advances the mission of the organization. 2 Ch. 14, Solutions (Contd) 14-3. a . DATE: xx TO: NPO Support Organization Board FROM: Accountant RE: Statement of Functional Expenses This statement reports only on expenses, and classifies those expenses in two ways: (1) by functional category as columns, that is, either associated with a program or with supporting the program, and (2) by line-item or object-of-expense, such as salaries and fringes or travel and meetings. Expenses are measured using the accrual basis of accounting which means that expenses are recorded as they are incurred and in the same reporting period as the revenue to which they relate. The cost of using up capital assets is reported as depreciation expense for the reporting period, and any interest expense on long-term debt would be reported in this statement as well. This statement provides more detail for expenses than is seen in the statement of activities, although the total expenses for program functions and supporting the programs functions will be shown on both statements. The statement of cash flows essentially shows the expenses that have been paid in cash, as well as payments for expenses from prior years categorized by whether they related to operating, investing, or financing activities of the...
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This note was uploaded on 04/12/2011 for the course ACCT 2500 taught by Professor Johnmalone during the Fall '08 term at Cuyahoga CC.

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CH 14 Sol Partial - see pdf - CHAPTER 14: ACCOUNTING FOR...

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