chap010 - Chapter 10 10-1. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10....

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Chapter 10 10-1. 1. C. 2. C. 3. A. 4. B. 5. A. 6. C. 7. C. 8. D. 9. B. 10. A. 10-2. 1. B. 2. D. 3. C. 4. A. 5. C. 6. D. 7. C. 8. B. 9. C. 10. B. 10-3. UNRESTRICTED NET ASSETS TEMPORARILY RESTRICTED NET ASSETS PERMANENTLY RESTRICTED NET ASSETS Increase Decrease Increase Decrease Increase Decrease 1 X 2 3 X X 4 X 5 X 6 X 7 X 8 9 X 10 X 10-1
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10-4. A. The financial reports required by the FASB for nonprofit organizations are (1) Statement Of Financial Position, (2) Statement Of Activities, and (3) Statement Of Cash Flows. In addition, voluntary health and welfare organizations are required to prepare a Statement Of Functional Expenses. B. The three classes of net assets, as required by the FASB, are (1) Unrestricted, (2) Temporarily Restricted, and (3) Permanently Restricted. C. Resources that have been restricted by the donor for expenditure in future periods would be recognized as contribution revenue, increasing temporarily restricted net assets, in the year in which the pledge or cash is received, whichever comes earlier. When the time period arrives, the resources would be reclassified to the unrestricted class of net assets. When the donor is silent regarding which time period should benefit, the presumption is to benefit the time period when the cash is received. Resources that have been restricted by the donor for a purpose other than plant would be recorded as revenue increasing temporarily restricted net assets. The assets would be released from restrictions and reclassified to the unrestricted class of net assets when expended for the purpose intended by the donor. If both unrestricted and restricted resources are available for expenditure for the purpose intended by the donor, the presumption is that the restricted resources are expended first. (See part (E) for contributions restricted for plant.) If restrictions are met in the same year as the contribution, the entity has the option of recording the contribution revenue as unrestricted. D. A Condition is a happening or event that must occur before revenue is recognized. For example, a donor may impose the condition that a nonprofit organization raise matching funds before a donation is made. A nonprofit organization will not recognize revenue from a conditional pledge until the condition is met. A Restriction is a limitation placed on a contribution by a donor. An unconditional pledge that is restricted is recognized as revenue, either in the temporarily or permanently restricted class of net assets. An example of a permanent restriction would be when a donor gives a nonprofit organization funds that must be invested permanently (an endowment) and the income be used in accord with the wishes of the donor. TEMPORARY RESTRICTIONS may be for purpose, time, or plant acquisition, or a
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This note was uploaded on 01/19/2012 for the course ACCT 2302 taught by Professor Smith,s during the Spring '09 term at HCCS.

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chap010 - Chapter 10 10-1. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10....

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