Fund Accounting & GAAP for NPOs Flashcards
7 cards from real CNC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Fund Accounting & GAAP for NPOs flashcards as text
A Single Audit is required for a nonprofit that expends federal awards exceeding what annual threshold?
Answer: $750,000
Under 2 CFR Part 200, nonprofits that expend $750,000 or more in federal awards during a fiscal year must undergo a Single Audit.
How should a nonprofit report depreciation on a donated building used for program services?
Answer: Record depreciation expense using the asset's fair value at the date of donation as the depreciable base
Donated fixed assets are capitalized at fair value on the donation date, and that fair value becomes the depreciable base for recording depreciation expense.
Under GAAP, which approach should a nonprofit use to allocate salaries of employees who work across both program and management/general functions?
Answer: Allocate salary based on time and effort studies or time sheets documenting actual function percentages
GAAP requires functional expense allocation to reflect actual resource consumption, typically supported by time studies, time sheets, or other reasonable allocation bases.
What is the significance of the 'liquidity and availability' disclosure added by ASU 2016-14?
Answer: It requires nonprofits to disclose how they manage liquidity risk and quantify financial assets available within one year to meet general expenditures
ASU 2016-14 requires a qualitative description of how a nonprofit manages liquidity and a quantitative disclosure of financial assets available within one year for general use.
A nonprofit holds an underwater endowment (fair value below the original gift amount). Under UPMIFA, how should this be classified?
Answer: Report the fund's entire balance within net assets with donor restrictions
Under UPMIFA guidance (ASC 958-205), underwater endowment funds are reported in their entirety within net assets with donor restrictions, with required disclosures about the deficiency.
Which cost behavior distinction is most critical when preparing a nonprofit's budget and fund accounting reports?
Answer: Distinguishing between direct program costs and indirect (overhead) costs for grant reporting and internal management
Separating direct program costs from indirect/overhead costs is essential for accurate grant reporting, functional expense allocation, and demonstrating efficient use of restricted funds.
A nonprofit incorrectly records a donor-restricted grant as unrestricted revenue. What is the likely audit finding and required correction?
Answer: Restate net assets by reclassifying the grant from net assets without donor restrictions to net assets with donor restrictions
Misclassifying restricted contributions as unrestricted requires restating the financial statements to move the amount into net assets with donor restrictions, ensuring proper stewardship disclosure.