De Ocampo, Alessandra Nicole R. Mr. Ms. Rona Loreta Andrea E.

Gayeta

MGA203 BADVAC3X Accounting for Government and Non-Profit Organization

NPO DISCUSSION

1. What are the characteristics of NPOs?

 Mission-driven: Nonprofit organizations (NPOs) are founded with a clear

mission or goal intended to advance society or address a specific social,

educational, cultural, or environmental issue.

 Non-profit distribution: NPOs are prohibited from sharing any earned

revenues or surpluses with shareholders or any third parties. Instead,

these monies are used to support the organization's goal through new

investments.

 Public or community-oriented: NPOs often serve the needs of a particular

community or a larger portion of society and work in the public interest. To

keep their operations going, they frequently rely on grants, contributions,

and public support.

 NPOs frequently rely on volunteers who give of their time, talents, and

expertise to assist the operations of the group and forward its goals.

 NPOs often have a board of trustees or directors who are in charge of

managing the business operations, ensuring legal compliance, and making

strategic choices.

 Sources of funding: NPOs may rely on a range of financial resources,

including contributions, grants, sponsorships, dues from members,

fundraising activities, and government assistance.

  Accountability and transparency: NPOs are required to uphold high

standards of honesty and openness in their financial and administrative

operations. They frequently release annual reports or financial statements

to explain their impact and present evidence of resource management.

2. What is the accounting standard used by the NPOs?

The Financial Accounting Standards Board (FASB) Accounting Standards

Codification (ASC) 958, generally referred to as the "Not-for-Profit Entities" standard,

is the accounting standard that nonprofit organizations (NPOs) most frequently

utilize. This standard offers thorough guidance on financial reporting for non-profit

organizations, including important topics such revenue recognition, expense

categorization, net asset classification, and financial statement presentation. NPOs

can guarantee standardized and open financial reporting procedures that are catered

to their particular traits and operations by adhering to ASC 958. To maintain accurate

and trustworthy financial records, NPOs must abide by the pertinent accounting

standards that apply in their jurisdiction.

3. What are the different types of NPOs?

Nonprofit organizations (NPOs) are a broad category of organizations that

function in a variety of industries and serve a variety of goals. Here are a few typical

categories of NPOs:

 Charitable Organizations: These NPOs are committed to helping those in

need individually or as a part of a community. They frequently discuss issues

pertaining to social welfare, healthcare, education, and disaster assistance.

 Foundations: Foundations are non-profit organizations that generally offer

funds, grants, and scholarships to assist charity causes and endeavors. They

may be founded by people, families, or businesses.

 Organizations that provide direct services to people or groups are known as

social service organizations (NPOs). They concentrate on tackling social

issues. Programs for housing aid, job training, counseling, substance

addiction rehabilitation, or family support may be available through them.

 Schools, colleges, universities, and educational foundations are examples of

NPOs in the education sector. The provision of education, research

opportunities, scholarships, and other educational services is their main goal.

 Hospitals, clinics, medical research facilities, and healthcare foundations are

examples of non-profit organizations in the healthcare sector. They seek to

offer medical care, advance public health, support research, and spread

knowledge of problems relating to one's health.

 Organizations that promote art and culture include museums, theaters, art

galleries, orchestras, dance groups, and organizations that work to preserve

cultural traditions.

 Environmental & Conservation Organizations: NPOs in this category advocate

for conservation initiatives, address climate change, and fight to conserve and

preserve the environment.

 Professional associations and trade unions are NPOs that advocate for

certain trades, industries, or professions. They put a lot of effort into

advancing the rights, interests, and professional advancement of their

members.
  Human rights organizations and advocacy groups: These NPOs work to

advance social justice, human rights, civil liberties, and policy reform. They

might concentrate on topics like racial justice, LGBTQ+ rights, gender

equality, or refugee rights.

4. What are the unique accounts used by Hospitals and Universities?

Hospitals:

 Patient Revenue: The money made from patient services such hospital stays,

operations, diagnostic procedures, and outpatient visits is recorded in this

account.

 Bad Debt Expense: Hospitals are responsible for collecting uncollectible

patient debts from people who cannot afford their medical expenses. The

expected amount of uncollectible patient accounts is included in the bad debt

charge.

 Supplies and medicines: This account keeps track of the price of the drugs,

medicines, and medical equipment used in the treatment and care of patients.

 Medical Staff Salaries: This account keeps track of the costs associated with

paying medical staff salaries, such as those for doctors, nurses, and other

healthcare providers.

 Hospitals frequently have specialized medical technology and equipment,

including MRI machines, X-ray machines, and surgical instruments. This

account displays the price paid and the depreciation of such equipment.

Universities:

 Tuition & Fees: The income from student tuition, fees, and other educational

costs is recorded in this account.

  Scholarships & Financial help: Students are given financial help, grants, and

scholarships by universities. The costs associated with paying for these

programs are kept in this account.

 Universities frequently receive donations and keep endowment funds on

hand. This account keeps track of the endowment management costs and

investment revenue.

 Costs associated with academic departments at universities include those

associated with engineering, the humanities, and the sciences. This account

keeps track of expenditures for departmental operations, faculty pay, and

research and instructional supplies.

 On-campus housing and dining: Universities that offer these services to

students keep accounts to track the income and costs related to these

facilities.

5. How do we record conditional pledge?

To enter a conditional promise into a nonprofit organization's (NPO) books of

accounts:

 Establish the terms and evaluate collectability.

 Initialize the conditional pledge as a disclosure note or memorandum item.

 If the conditions are followed, the commitment should be reclassified as an

asset or revenue.

 The financial records should be adjusted in accordance with accounting

principles and standards.

Please be aware that depending on the jurisdiction and the relevant laws, certain

accounting treatments may differ. For proper compliance, it is advised to consult with

an accountant.

6. How do we record unconditional pledge?

To include an unconditional donation in a nonprofit organization's (NPO)

books:

 Obtain the conditions and amount of the pledge.

 Create a journal entry to reflect the commitment as revenue in the financial

statements.

 Keep an eye out for the pledge's fulfillment or collection.

 Update the records if anything changes.

Note: Depending on the jurisdiction and relevant laws, certain accounting procedures

may change. To ensure proper compliance, consult an accountant.