Leadstar College of Management and

Leadership
Faculty of Business and Leadership
Fund Accounting

INDIVIDUAL ASSIGNMENT (50%)

General Direction

 Page size, writing format & Style: 10-20 pages, 12 font size, font style:
Times New Roman, 1.5 spacing
 Assignment submission format: Assignment must be submitted in both
hard copy and in soft copy. The soft copy should be emailed to
universityleadstar@gmail.com.
 The assignment questions are extracted from the case indicated in the
next page. The justifications and answers for each case-question should
consist of introduction and conclusion.
 You are expected to use standard referencing styles (both in-text
citations and bibliography).
 Assignment due date: Final exam date.

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Answer the following questions showing all necessary
computations when needed.
1. Explain what distinguishes governmental not-for-profit organizations from nongovernmental,
not-for-profit organizations.

2. Identify and explain the characteristics that distinguish governmental and not-for-profit
entities from business entities.

3. GASB and FASB standards are concerned only with external financial reporting whereas
FASAB standards are concerned with both internal and external financial reporting. Do you
agree with this statement? Why or why not?

4. In March 2014, a local not-for-profit organization received a pledge from a donor for
$10,000; the donor promised to pay the money to the organization in September 2014, to be
used in providing reading programs for underprivileged children. The donor gave money to
the organization in September 2014, and it was spent for reading programs in the first half of
2015. When should the revenue associated with this contribution be recognized?

5. City XYZ received $4,000,000 from one of its most prominent citizens during the year ended
June 30, 2009. The donor stipulated that the $4,000,000 be invested permanently, and that
interest and dividends earned on the investments be used to support the homeless people of
City XYZ. During the year ended June 30, 2014, dividends received from stock investments
amounted to $20,000, while interest received from bond investments amounted to $40,000.
At June 30, 2014, $10,000 of interest was earned, but it will not be received until July of
2014. The fair value of the securities in which the $4,000,000 was invested had increased
$8,000 by June 30, 2014. For the year ended June 30, 2014, what amount should the trust
fund report as investment earnings on the statement of revenues, expenses, and changes in
fund balance?

6. During 2013, an alumnus of QPR University donated $10,000,000 to the school with the
understanding that the principal (the original $10,000,000) may never be spent. However, the
earnings from the principal may be spent at any time in any manner the school chooses.
During 2013, the donation earned $1,000,000, none of which has been spent. For reporting
purposes in 2013, how much should QPR report?

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7. In the current month, a private not-for-profit hospital performed medical services for patients
worth $660,000. The hospital expects the amount ultimately collected to be $460,000. The
$200,000 difference is comprised of: contractual adjustments with third-party payers of
$110,000; estimated uncollectible accounts of $60,000; and charity care of $30,000. How
much net patient service revenue should be reported for the month?

8. ABC city established an internal service fund for its data processing activities on July 1,
2013. During the fiscal year ended June 30, 2014, the following transactions and events
occurred:

1) On July 1, 2013, the city council authorized the general fund to contribute $1,000,000 to help
establish the internal service fund on July 20, 2013.

2) The internal service fund spent $900,000 of the contribution to acquire a mainframe
computer on July 25, 2013.

3) During the year ended June 30, 2014, the internal service billed other funds of the city
$300,000 for use of the computer. By year end, all of the billings were collected except for
$30,000.

4) The internal service fund incurred general operating expenses of $100,000, exclusive of
depreciation, during the year ended June 30, 2014. All of the expenses were paid by June 30,
2014, except for $24,000.
5) Depreciation expense related to the computer was $180,000.

Required:

A) Prepare all journal entries that would be recorded by ABC city's internal service fund for the
year ended June 30, 2014. Explanations for journal entries are not necessary.
B) Prepare a statement of revenues, expenses, and changes in fund net assets for the internal
service fund for the year ended June 30, 2014.
C) Calculate the amount of unrestricted net assets at June 30, 2014.

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