Professional Documents
Culture Documents
Accounting For Non Profit Organizations
Accounting For Non Profit Organizations
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assets, such as land or works of art, donated with stipulations that they be used for a specified purpose, be
preserved and not be sold or;
assets donated with stipulations that they be invested to provide permanent source of income such as gifts
that create permanent endowment funds.
Separate line items may be reported within temporarily restricted net assets or in notes to financial statements
to distinguish between temporary restrictions for:
a.
b.
c.
d.
STATEMENTS OF ACTIVITIES
This statement shows the revenues, gains, expenses and losses. The primary purpose of this statement is to
provide relevant information about:
a.
b.
c.
the effects of transactions and other events and circumstances that change the amount and nature of net
asset,
the relationships of those transactions and other events and circumstances to each other, and
how the organizations resources are used in providing various programs or services.
The information in this statement used with related disclosures and information in other financial statements,
helps donors, creditors and others to
a.
b.
c.
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Instructional - include both resident and extension instruction, public service, organized researched and the
operation of libraries.
Administrative - auxiliary include staffing and promotion, registration and enrollment, operation of the
business office, and operation and maintenance of the educational plant
Auxiliary services include the operation of the residence halls, dining rooms, college unions and bookstores,
health centers, and athletic and cultural programs.
Revenues in support of these different activities are provided by such varied sources as contributions,
government appropriations, student fees, endowment income, and revenues from the sale of goods and
services.
There are six major fund groupings for educational institutions, namely:
1.
Current funds
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2.
3.
4.
5.
6.
Loan funds
Endowment and other nonexpendable funds
Annuity funds
Plant funds, divided into unexpended plant funds, retirement of indebtedness funds and an investment in
plant section
Agency fund
Unrestricted fund
Restricted fund
Endowment funds
Agency fund
Annuity fund and life income fund
Loan fund
Plant fund
xxx
xxx
If the donor imposes use or time restriction, the cash contribution or donation is reported as temporary restricted
revenue on the statement of activities.
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recorded at fair value i.e. if a hospital receives free drugs or a university receives free operating supplies,
the entry is
Inventory
Contributions revenue
xxx
xxx
b.
The services require specialized skills, are provided by individuals possessing those skills and would typically
need to be purchase if not provided by donations.
Contributed services rendered by skilled individuals are recognized at the going rate for comparable employees or
contractors of the entity less any meals or other living costs absorbed by the nonprofit organization.
To increase expense and increase unrestricted revenue, contributed services is recorded as follows:
Salaries expense
Contributions revenue
xxx
xxx
xxx
xxx
Another example, a building is used by a university on a rental basis. However, the owner waives rental payment.
This is recorded at the fair value of the rental as follows:
Rental expense
Contributions revenue
xxx
xxx
Program services these are the organizations activities that result in the distribution of goods and services
to beneficiaries, customers or members that fulfill the purposes or mission of the organization.
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2.
Supporting Services these are other expenses that include all activities of the organization other than
program services, i.e. management and general expenses, fund raising and membership development
activities.
All expense of a non profit organization is reported as unrestricted in the statement of activities. This means that
expenses are deducted only from unrestricted revenue.
What is a restricted fund?
This is used to account for assets available for current use but expandable only as authorized by the donor of the
assets. The donor may impose either use restriction or time restriction or both. Assets of the restricted fund are
not derived from the operations of the nonprofit organization.
Explain endowment of fund.
A permanent endowment fund is one for which the principal must be maintained indefinitely in revenue producing
investment. Only the revenue from the investments may be expended. A permanent endowment fund is also known
as regular endowment. A permanent endowment fund or permanently restricted but the revenue from the fund
is temporarily restricted.
A term endowment fund is one for which the principal may be expended after the passage of certain period or the
occurrence of an event specified by the donor. The term is temporarily restricted.
A quasi-endowment fund is a fund established by the governing board of the nonprofit organization. At the option
of the board, the principal may later be expended.
Accordingly, a quasi-endowment fund is included on unrestricted net assets because this is established using
unrestricted net assets.
Agency Fund
Example: A university may act as custodian of cash of a student organization. The university disburses cash
as directed by the officers of the student organization.
Undistributed cash of the student organizations is reported as liability of the university's agency fund
because the university has no equity in the fund.
Annuity Fund
Established when assets are contributed to the nonprofit organization with the stipulation that the
organization shall pay specified fixed amount to a designated beneficiary periodically during a specified
period of time.
At the end of the specified period for the specified payments, the unexpended assets of the annuity fund
are transferred to the unrestricted fund, restricted fund or endowment fund as instructed by the donor.
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Used to account for stipulated payments to a named beneficiary during the beneficiarys lifetime.
Only the income on the fund is paid to the beneficiarys payment from a life income fund varies form period
to period comparing to annuity fund that is fixed.
Loan Fund
Established by colleges and university for the purpose of granting loans to students to satisfy their school
needs.
Students loans funds are generally revolving as old loans are repaid, new loans are made for the receipts.
Plant Fund
It may also include cash and investments earmarked for additions to plant or payments of liabilities
collateralized by the plant assets.
Sinking fund assets set aside for retirement of debt incurred to acquire plant assets is also included.
Statement of Financial Position reports that assets should equal liabilities and net assets
2.
Statement of Activities reports the changes in net assets and their revenue, gains, expenses and losses.
This is equivalent to income statement in commercial accounting.
- It reports gross amount of revenue and expenses, except that investment revenue may be reported net of
expenses, and gains and losses on disposals of plant assets may be reported net.
- It reports expenses by functional classification such as program services and supporting services.
3.
4.
5.
Statement of Functional Expenses required only to voluntary health and welfare organizations this
reports expenses both by function (program and supporting ) and natural classification (salaries,
depreciation etc. )
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Reported in the period pledges are made not in the period of cash collection.
Contribution will not be received until next year, the contribution will be reported as increase in
temporarily restricted net assets for the current year because of time restriction.
Conditional promise to give is considered unconditional if the possibility that the condition will not be met
is remote.
This contribution is reported under temporarily restricted net assets in the prior year.
When the contribution is used for faculty travel in the current year, it is reported as reclassification in the
current year's statement of activities. Re-classifications are reported in the statement of activities as net
assets released from restrictions.
This reclassification is reported in the current year as negative amount for temporarily restricted net assets
and positive amount for restricted net assets.
The travel expense is reported in the current year's statement of activities as deduction from unrestricted
net assets. All expenses are decrease in unrestricted net assets.
The use of the contribution for faculty travel has no effect on unrestricted net assets at the current year end
because the effect is offsetting, meaning, increase in unrestricted net assets upon reclassification from
temporarily restricted to unrestricted and decrease in unrestricted net assets when the contribution is
used or expended.
Classifications of Cash flow or Non Profit Organizations in the Cash Flow Statements
1.
Operating Activities includes unrestricted cash contributions, unrestricted revenues and expenses.
2.
Investing activities includes cash flows from acquisition and disposal of property, plant and equipment,
investments, and other long-term assets.
3.
Financing activities includes temporarily or permanently restricted cash contributions and cash flows
from borrowings and repayment of borrowings.
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XXX Organization
Statement of Financial Position
December 31, 20x1 and 20x2
(In thousands)
ASSETS
Cash and cash equivalent
Receivables
Inventories and prepaid expenses
Assets restricted to investment in building and equipment
Land, building and equipment
TOTAL ASSETS
LIABILITIES AND NET ASSETS
Vouchers payable
Refundable advances
Long-term debt
TOTAL LIABILITIES
Net assets:
Unrestricted
Temporarily restricted
Permanent restarted
TOTAL NET ASSETS
TOTAL LIABILITIES AND NET ASSETS
20X1
P xxx
xxx
xxx
xxx
xxx
P XXX
20X2
P xxx
xxx
xxx
xxx
xxx
P XXX
P xxx
xxx
xxx
P XXX
P xxx
xxx
xxx
P XXX
P xxx
xxx
xxx
P XXX
P XXX
P xxx
xxx
xxx
P XXX
PXXX
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STATEMENT OF ACTIVITIES
XXX Organization
Statement of Activities
For the year ended December 31, 2ox1
Temporarily
Unrestricted
Restricted
Revenues, gains and other support:
Contributions
Fees
Total
Expenses and losses
Program A
Program B
Management and General
Fund Raising
Total
Change in net assets
Net assets at beginning of year
Net assets at end of year
P xxx
xxx
P xxx
P xxx
xxx
xxx
xxx
P xxx
P xxx
xxx
P xxx
P xxx
P xxx
xxx
P xxx
Permanently
Restricted
P xxx
P xxx
xxx
P xxx
Total
P xxx
xxx
P xxx
P xxx
xxx
xxx
xxx
P xxx
P xxx
xxx
P xxx
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XXX Organization
Statement of Cash Flow
For the year ended December 31, 20X1
Cash flows from operating activities:
Cash received from members and contributors
Cash received from service recipients
Cash paid for:
Program A
Program B
Fund raising
Cash paid to employees and suppliers
Net cash from operating activities
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
P xxx
xxx
xxx
xxx
xxx
(xxx)
(xxx)
P xxx
xxx
P xxx
LOAN FUNDS
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3.
4.
5.
6.
50,000
50,000
25,000
600
25,600
20,000
20,00
1,500
600
900
7,650
7,500
150
300
300
Resources are balanced by the account Loan Fund Balance/ Loan Fund Net Assets.
Note: The Accounts are hypothetical In nature to illustrate the entries.
NPO University
Loan Fund
Statement of Financial Position
June 30, 20B
ASSETS
Cash
Investments
Notes Receivable
TOTAL ASSETS
P13,550
25,000
12,200
P 50,750
LIABILITIES AND NET ASSETS
P 50,750
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NPO University
Loan Fund
Statement of Activities
For the year ended June 30, 20B
Revenues:
Interest on investments
Interest on loans
Less: Expenses/ losses:
Uncollectible loans written off
Excess of revenue over expenses
P900
150
1,050
300
P 750
NPO University
Loan Fund
Statement of Cash Flows
For the year ended June 30, 20B
Cash from operating activities:
Receipts of gifts
Excess of receipts over expenses
Net cash from operating activities or net assets
P 50,000
750
P50,750
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4.
5.
6.
7.
8.
Pooled Cash
1,000,000
Pooled investments- ordinary shares
750,000
Pooled investments- preference shares
250,000
Cash
1,000,000
Investments-ordinary shares
715,000
Investments-preference shares
245,000
Endowment Fund B balance
35,000
Endowment Fund C balance
5,000
Purchases of P900,000 of Z Co. bonds at a price of 105.
Pooled investments- bonds
900,000
Pooled investments- unamortized bond premium
45,000
Pooled Cash
945,000
Collection of interest and dividends on pooled investments, P107,500.
Pooled Cash
107,500
Undistributed pooled income
107,500
Premium amortization on pooled investments, P2,250.
Undistributed pooled income
2,500
Pooled investments- unamortized bond premium
2,500
Distribution of income on pooled endowments to unrestricted and restricted current funds: Endowment
Fund A: 1,000,000/2,000,000 x 105,000 or P52,500. Endowment Fund B: 750,000/2,000,000 x 105,000 or
P30,375. Endowment Fund C: 250,000/2,000,000 x 105,000 or P13,125.
Undistributed pooled income
105,000
Pooled Cash
105,000
Sale of Y Co. preference shares for P260,000.
Pooled Cash
260,000
Pooled investments- preference shares
250,000
Gains and losses on pooled investments
10,000
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9.
Receipt of gift of properties to be used as a dormitory. Net income after recognizing an annual charge for
depreciation of P10,000 is to be used for certain restricted purposes. Appraised values of properties on the
date of gift: Land- P125,000, Buildings- P175,000.
Land
125,000
Buildings
175,000
Endowment Fund D balance
300,000
10. Receipt of cash from unrestricted current fund to be used as an endowment fund until alternative use is
authorized, P50,000.
Cash
50,000
Principal temporarily functioning as Endowment Fund E
balance
50,000
11. To recognize resources of P400,000 held by trustee as an endowment. No restrictions are made as to use of
endowment income.
Fund held by trustee
400,000
Endowment Fund F balance
400,000
12. Amount receivable from restricted current fund representing recovery of depreciation on endowment
properties (dormitory), P10,000.
Due from restricted current fund
10,000
Accumulated depreciation- buildings
10,000
Revenues and expenses relating to operations of the properties are reported in the restricted current funds.
PLANT FUNDS
Formed when cash or other properties are transferred to the institution subject to the requirement that
specified payments be made to a designated beneficiary during his lifetime. sometimes included with
endowment funds for accounting and reporting purposes.
Balances are increased by gifts subject to annuity agreements, gains on the sale of annuity fund assets,
payments to annuitants, and asset transfers.
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NPO University
Endowment and Other Nonexpendable Funds
Statement of Financial Position
June 30, 20B
ASSETS
Cash
Due from restricted current funds
Pooled cash
Pooled investments:
Ordinary shares
Bonds
Unamortized bond premium
Land
Buildings
Less: Accumulated depreciation
Fund held by trustee
TOTAL ASSETS
P 50,000
10,000
317,500
P 750,000
900,000
2,500
P 175,000
10,000
1,692,500
125,000
165,000
400,000
P 2,760,000
P 10,000
P 1,000,000
750,000
250,000
400,000
P2,400,000
300,000
50,000
2,750,000
P2,760,000
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2.
3.
4.
5.
Debit
118,000
2,000
Credit
120,000
Debit
9,500
Credit
2,000
7,500
Debit
5,000
Credit
5,000
Amount becoming available for educational and general purposes according to annuity agreement, P2,500.
Account Titles
Debit
Credit
Annuity net assets
2,500
Due to Unrestricted Current Fund
2,500
NPO University
Annuity Fund
Statement of Financial Position
June 30, 20B
ASSETS
Cash
Investments
TOTAL ASSETS
LIABILITIES AND NET ASSETS
Due to annuitant
Due to unrestricted current fund
Annuity net assets
TOTAL LIABILITIES AND NET ASSETS
P 14,500
118,000
P132,500
P5,000
2,500
125,000
P 50,750
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NPO University
Annuity Fund
Statement of Charges in Equity
For the year ended June 30, 20B
Net assets, beg.
Add: Increase from gift subject to annuity
Increase from income for year
Total
Less: Amount payable to annuitant for year
Amount payable to unrestricted current fund
Net assets, end
P-0P125,000
7,050
P 5,000
2,500
132,500
P132,500
7,500
P 125,000
PLANT FUNDS
Three groups:
1. Resources that are held for plant expansion and replacement
2. Resources that are held for retirement of long-term debt incurred in the acquisition of the plant
3. The specific physical resources comprising the plant.
Three balancing groups of accounts for plant resources:
1. Unexpended plant funds- consist of cash, securities, receivables and other assets that are used for the
acquisition of new plant or replacement of existing plant. The difference between the assets and liabilities.
This balance is commonly divided into (1) the portion to be applied to plant additions and (2) the portion to
be applied to renewals and replacements.
2. Retirement of indebtedness funds- consist of cash, securities, and other assets that are to be used for the
retirement of plant indebtedness. Fund accounts are balanced by a single fund balance reporting total
resources available for retirement of indebtedness.
3. Invested in plant- consist of the individual property items that compose the educational plant. Carries any
long-term indebtedness relating to plant acquisitions. The difference between plant assets and related
liabilities. This balance is commonly divided to show the different sources of plant financing- gifts, current
funds, and endowment funds.
Transactions related to that Unrestricted Plant Funds of NPO University:
1. Receipt of cash gift to be used for plant acquisitions, P100,000.
Cash
Unexpended plant funds balance- plant addition
2. Payment of additions to buildings, P85,000.
Unexpended plant funds balance- plant addition
Cash
3. Issue of bonds to raise funds for construction of buildings, aP1,500,000.
Cash
Unexpended plant funds balance- plant additions
4. Completion of buildings at contract price of 1,500,000.
Unexpended plant funds balance- plant additions
100,000
100,000
85,000
85,000
1,500,000
1,500,000
1,500,000
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5.
6.
7.
8.
Contracts payable
1,500,000
Payment of contract, 1,500,000.
Contracts payable
1,500,000
Cash
1,500,000
Receipt of cash from unrestricted current fund plant renewals and replacements in subsequent periods,
P30,000.
Cash
30,000
Unexpended plant funds balance- renewals and replacements
30,000
Purchase of securities, P30,000.
Investments
30,000
Cash
30,000
Collection of interest on investments, P750.
Cash
750
Unexpended plant funds balance- plant additions
750
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25,000
15,000
300,000
10,000
5,000
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NPO University
Plant Funds
Statement of Financial Position
June 30, 20B
ASSETS
Unexpended Plant Funds:
Cash
Investments
Retirement of indebtedness funds:
Cash
Invested in Plant:
Land
Improvements other than Buildings
Buildings
Less: Accum. Depreciation
Equipment
Total
Less: Items carried in Endowment funds
TOTAL ASSETS
P 15,750
30,000
P 45,750
75,000
P975,000
150,000
P4,260,000
10,000
4,250,000
510,000
P5,885,000
290,000
5,595,000
P 5,715,750
7.
-
P 15,000
30,750
P 45,750
75,000
P 975,000
1,500,000
P2,475,000
P3,080,000
40,000
3,120,000
5,595,000
P5,715,750
Agency
Educational institution acts as an agent or trustee, holding certain assets on behalf of others.
when agency operations are:
simple and limited duration=both asset accounts and accounts expressing the institutions accountability to
others may be carried in the general or current fund.
involved and continuing=an agency fund may be recognized and special agency books established for the
properties subject to agency control
agency funds may be established for pension and retirement resources, special organization resources,
student deposits, and tax withholding amounts.
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accounting for the agency is the same as it would be for a private business.
HOSPITALS
*Functions:
-
Provide for reception, care and medical and surgical treatment of the sick or injured
rooms are provided and foods are supplied
major activities center about inpatients, but frequently render outpatient care and emergency services
carry on special activities such as research and nurses training
operate number of auxiliary enterprises such as pharmacies for outpatients and cafeterias for staff
members and visitors
its operations call for important administrative activities like:
hospital staffing
registration of patients
operation of the physical plant
food
laundry and housekeeping management and budgeting
accounting
billing and collecting
The major source of hospital support is normally charges that that are made to patients for services.
However, such charges frequently fail to cover the full cost of hospital operations, and significant sums must be
sought from contributions and grants from private, public and charitable sources.
Funds for Hospital
-
Accounting for hospitals are similar to educational institutions that acquires a revenues that must be applied
to specific objectives.
Theres also certain accounting differences that should be pointed out
Hospital generally does not require variety of funds required by the educational institution. Differences of
the two units are found to their operating summaries.
Educational Institution
Hospitals
analysis and a summary of operations that comes closer to that of private business is normally warranted
sell specific services
expectation by patients, group purchasers of insurance protection, and insurance companies selling hospital
protection that charges for services will bear a close relationship to the costs of these services.
although contributions may be available suggest that hospital revenues should be set at levels that will
provide for the ultimate replacements of properties
these factors suggest that revenues, be compared with expenses, that a full accrual basis be employed,
and that depreciation of hospital properties be recognized in arriving at total operating costs.
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P475000
Accounts Receivable
45000
40000
16500
3500
P320000
50000
210000
2. Other hospital revenues, P420000 of which P10000 is still due from temporary fund in reimbursement of research
expenses.
Cash
Due from temporary fund
General contribution, donations, legacies and bequests
Grants from community chests, foundations
Donated services and commodities
Income transfers from temporary funds
Miscellaneous revenues
P410000
10000
P180000
122000
10,000
57,500
50,000
3. Collections of interest and dividends on endowment funds securities, P85000 of which P5000 is due from
endowment fund #1 representing bond premium amortization.
Cash
Due from Endowment Fund #1
Income from investments
P85, 000
P5, 000
80,000
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4.
Expenditures for hospital supplies, P200000 of which P25 has not been paid.
Inventory supplies
Cash
P200, 000
P175, 000
Vouchers payable
25,000
P5000
10000
15000
120000
5000
15000
P85000
45000
220000
60000
30000
50000
P170000
P490000
P60000
50000
P110000
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Bad debts
Allowance for doubtful accounts
P2500
P1000
250
1250
750
250
1500
Depreciation
General or current fund balance
P85000
P2500
P5000
P85000
P320000
50000
210000
P222500
40000
16500
3500
2500
111000
35250
261250
188250
37750
76500
11. To close other revenue and expenses accounts at the end of the period.
General contribution, donations, legacies and bequests
Grants from community chests, foundations
Donated services and commodities
Income transfers from temporary funds
Income from investments
Miscellaneous revenues
Interest expense
Depreciation
General or current fund balance
P180000
122500
10000
57500
80000
50000
P60000
85000
355000
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*In considering the presentation of hospital revenues for statement purposes, the following classifications are used;
B.TEMPORARY FUNDS
Composed of current resources that, while available for current purposes, are subject to certain limitations
in their use
For example, resources from gifts on grants and income from endowment funds that can be spent only for
specified purposes, such as research, a medical library, or nurses training, would be reported as temporary
funds
Temporary funds are identical in nature and functions to the restricted current funds of the educational
institution.
Temporary fund transactions of NPO Hospital and the entries to summarize these are listed below:
1. Receipt of cash gift to be used for medical research, P10000
Cash
Temporary fund A balance
2. Purchase of securities, P85000
P100000
P100000
P85000
Cash
Temporary fund balance
4. Sale of securities, book value, P25000, for P23500
P10000
P10000
Cash
Temporary fund A balance
Temporary investment -fund A
5. Collections of interest and dividends
P23500
1500
P25000
Cash
P5000
Temporary fund A balance
P5000
6. Expenditures during year by general fund for research chargeable to temporary fund A, P50000; cash transferred
to general fund, P40000.
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P7500
P250
P250
In the example, the temporary fund books summarize two temporary fund, and a separate fund balances are
maintained to report the respective fund equities. It should be observed that changes in temporary fund balances
arising from revenues, expenses and distributions are recorded directly in the fund balances; when there are many
changes and these are to be reported in special operating statements, nominal accounts would be established to
accumulate profit and loss derail.
C.ENDOWMENT FUNDS
represent resources that have been transferred under conditions that limit expenditures to the income that
is produced by such resources.
Assets may be transferred directly to the hospital, or they may be transferred to a trustee who administers
them for the benefit of the institution
May also be created by the action of the governing board of the hospital.
Terms of it may place no restrictions on the use of the endowment income, or they may specify a particular
purpose for which the income is to be used.
In the absence of restrictions, its income becomes available to the general fund; when there are restrictions;
income is in a temporary fund.
Endowment fund transactions of NPO Hospital and the entries to summarize these are listed below.
1. Receipt of bonds in establishment of Endowment fund #1 as follows: Co.S bonds Face value, P500000, market
value on date of transfer, P470000.
Investments in bonds at fair value(Endowment fund #1)
Investments-unamortized bond premium(Endowment fund #1)
Investments-unamortized bond discount (Endowment fund #1)
Endowment fund #1 balance
P1000000
50000
P30000
1020000
2. Receipt of cash in establishment of Endowment fund # 2, P250000.Endowment income is to be used for specified
research projects.
Cash
Endowment fund #1 balance
3. Purchase of 1000 shares of Co.T preference shares, P240000.
P250000
P240000
P250000
P240000
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4. Collection of interest by general or current fund that includes P5000 reimbursable to Endowment fund #1 for bond
premium amortization.
Due from general or current fund
Investments-unamortized bond premium(Endowment fund #1)
5. Sale of Co.S bonds at fair value, P250000
Cash
Investments-unamortized bond discount (Endowment fund #1)
Investments-at bonds at fair value(Endowment fund #1)
Endowment fund #1 balance
P5000
P5000
P250000
15000
P250000
15000
In the example, Endowment fund books summarize to endowment and separate endowment fund balances
summarize their respective fund equities. It should be observed in the example that endowment fund income is
reported directly in the fund that in entitled to such income. When revenue and expense are involved in a
determination of net income, revenue and expense can be summarized in the Endowment funds books; the fund net
income, when determined is then transferred to the appropriate fund.
D.PLANT FUNDS
Two Groups of Plant Resources
1.
2.
Although the two asset of groups are recognized, hospitals would nevertheless combined these within a single plant
funds category
When there are claims against plant fund resources in connection with original financing of properties, construction
in progress, or current property acquisitions, such obligations would be recognized in the plant funds.
Funds are balanced by two plant fund balances:
1. Investment in plant
2. Reserve for plant improvement and expansion
Transactions affecting the plant funds of NPO Hospital and the entries to record these transactions are shown below:
1. Acquisition of land construction of hospital financed by gifts of cash, P1500000 and cash raised through a
mortgage, P1000000.
Land
Building
Equipment
Mortgage Payable
Investment in Plant
P250000
1750000
500000
1000000
1500000
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2. Receipt of gifts of cash of P50000 and securities valued at P100000 for plant improvement and replacements
Cash
Investments
Reserve for plant improvement and replacements
3. Acquisition of equipment, P30000 mortgage, P1000000.
P50000
100000
P30000
Equipment
Investment in Plant
4. Payment by general fund of mortgage installment, P50000.
P30000
P150000
P30000
P30000
Mortgage Payable
P50000
Investment in Plant
5. Adjustments required on December 31,20B:
a) accrued investments on investment,P1500;
b) depreciation for plant assets for year,P85000;
c) amount recoverable from general fund equal to depreciation on plant assets.
Accrued interest on investments
P1500
Reserve for plant improvements and replacements
Investment in plant
Accumulated Depreciation-building
Accumulated Depreciation-equipment
P85000
P85000
P50000
P1500
P35000
50000
P85000
Alternative approaches have been suggested for analyzing and recording plant funds transactions of the hospital.
Probably the best approach would recognize two self-balancing sets of accounts, one summarizing the existing
physical plant and the other summarizing resources that are held for plant improvement and replacement.
With such an approach, the analysis of transactions affecting hospital plant assets, liabilities, and fund balances or
net assets is the same as that employed for the educational unit. However, the entries relating to existing plant and
to improvement and replacement resources are made in self-balancing from within a single set of books instead of in
separate sets of books as in the case of the educational unit.
COOPERATIVES
A cooperative is a business organization owned and operated by a group of individuals for their mutual
benefit. Cooperatives are defined by the International Co-operative Alliance's Statement on the Co-operative Identity
as autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs
and aspirations through jointly owned and democratically controlled enterprises. A cooperative may also be defined
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as a business owned and controlled equally by the people who use its services or by the people who work there.
Cooperative enterprises are the focus of study in the field of cooperative
A credit cooperative is financial organization owned and operated by its member with the following objectives:
Current accounting policies and procedures adopted by credit cooperatives were used as basis in
development of this manual. Key officers of cooperatives were interviewed and financial statements and relevant
reference materials were gathered from organizations during capacity building for cooperatives.
As a general rule, a good accounting system includes the following:
1.
2.
3.
4.
5.
6.
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This accounting principle requires that the members of the cooperative and other users of the financial
statements should be informed of material and relevant information about economic and financial affair of the
cooperative. This can be done either in the financial statements or in the notes that company the statements of
supplementary schedules and other presentation. Full disclosure requires reporting of all facts that can make a
difference in the decision of the users and that the accounting information reported must be understandable and not
susceptible to misinterpretation. Such disclosure makes the financial statements more relevant and useful and less
subject to misinterpretation.
Adequate information to be disclosed in the financial statements may not be presented in detail provided
that important and relevant facts are revealed and made clear. The full-disclosure principle requires the financial
report to give more emphasis to substance over form. This means that the substance should not be made less clear
or hidden.
There are, however, limits to the amount of disclosure that can be made in financial statements or in
accompanying notes. As minimum information, the following should generally be disclosed.
a.
b.
c.
d.
e.
f.
g.
h.
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The accounting period shall be 12-month period starting January 1 and ending December 31, as common
practiced.
FINANCIAL STATEMENTS
Financial statements are the means by which the information accumulated and processed in financial
accounting is periodically communicated to those who use it. They are designed to serve the needs of a variety of
users, particularly owners and creditors. Trough the financial accounting process, the myriad and complex effect of
the economic activities of a cooperative are accumulated, analyzed, quantified, recorded, summarized and reported
as information of two basic types;
a. financial condition, which relates to a point in time
b. financial operations, which relates to a period of time
Notes to financial statement, which may explain headings, captions or amounts in the statements or present
information that cannot be expressed in terms of money and those descriptions of accounting policies are integral
part of the statements.
A. Statement of Financial Condition (Balance Sheet)
The statement of financial condition presents the difference between the total assets and total liabilities. The
statement at any date present s an indication in conformity with generally accepted accounting principles of the
financial status on the cooperative at a particular point of time.
B. Statement of Operation (Statement of Net Surplus)
Presents the revenues, expenses, gain, losses and net surplus (net loss) recognized during the period and thereby
presents an indication in conformity with GAAP of the result of the cooperative's service directed activities during the
period. The information presented in the statement of operation is usually considered as the most important
information provided by financial accounting because the net surplus is paramount concern to those interested in
economic activities of cooperative.
C. Statement of Cash Flow is a formal statement summarizing all operating, investing and financiang activities of a
cooperative.
D. Other Schedules such as:
a. Bank Reconciliation
b. Aging of Loans receivables
d. Property and equipment
e. Members loans receivable, saving/time deposit, subscribed and paid-up share capital.
f. Investment
g. Accounts Payable
h. Loans Payable
i. Use of:
i. Reserve refund
ii Optional refund
iii Education and training Fund
Apex
Local
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Attachments:
Comparable Financial Statements of Baguio- Benguet Community Credit Cooperative for
the year ended 2008- 2009
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Reference:
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