Fund Accounting & GAAP for NPOs Flashcards
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Read the first 7 Fund Accounting & GAAP for NPOs flashcards as text
A nonprofit receives a federal grant with a 'cost-sharing' requirement. How should the matched costs be recorded under GAAP and OMB Uniform Guidance?
Answer: Record cost-sharing expenditures as expenses and track them separately to meet matching requirements
Cost-sharing expenditures are recorded as expenses in the normal course and tracked separately to demonstrate compliance with the matching requirement imposed by the federal award.
Which of the following best describes 'program service revenue' in nonprofit accounting?
Answer: Fees charged in exchange for providing the nonprofit's mission-related services
Program service revenue is earned from exchange transactions directly related to the nonprofit's exempt purpose, such as tuition, membership fees, or patient service revenue.
Under ASC 842, how must a nonprofit with a significant operating lease (e.g., office space) report the lease on its statement of financial position?
Answer: Recognize a right-of-use asset and a corresponding lease liability
ASC 842 requires lessees (including nonprofits) to recognize a right-of-use asset and lease liability for virtually all leases with terms greater than 12 months.
A nonprofit's investment pool earns $30,000 in interest and dividends during the year. The endowment agreement says income is unrestricted. How is this recorded?
Answer: Investment income within net assets without donor restrictions
When the endowment agreement specifies that income is unrestricted, all interest and dividends are credited to net assets without donor restrictions.
What distinguishes a 'capital campaign fund' from an 'operating fund' in nonprofit fund accounting?
Answer: Capital campaign funds account for resources raised and spent specifically for major capital assets, separate from day-to-day operations
A capital campaign fund isolates contributions and expenditures related to major asset acquisitions or construction projects, keeping them separate from routine operating revenues and expenses.
Under GAAP, how should a nonprofit recognize a multi-year pledge of $100,000 ($20,000/year for 5 years) received today?
Answer: Recognize the present value of all future payments as contribution revenue in the year the pledge is made
Unconditional multi-year pledges are recognized at their present value in the year received, with the discount unwound to contribution revenue (or interest income) in subsequent years.
Which document replaced OMB Circulars A-110, A-122, and A-133 to create a single unified framework for federal award management?
Answer: OMB Uniform Guidance (2 CFR Part 200)
The OMB Uniform Guidance (2 CFR Part 200), effective December 2014, consolidated A-110, A-122, A-133 and others into one comprehensive framework for managing federal awards.