Professional Documents
Culture Documents
Accounting For NPOs Philippines
Accounting For NPOs Philippines
Not-for-Profit Organizations
Chapter 21
21 - 1
Learning Objective 1
Learn about the four main
categories of not-for-profit
organizations.
21 - 2
Categories of Not-For-Profit
Organizations
Voluntary health and welfare organizations
Other not-for-profit entities
Health care entities
Colleges and universities
2003 Prentice Hall Business Publishing, Advanced Accounting 8/e, Beams/Anthony/Clement/Lowensohn
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Learning Objective 2
Differentiate between governmental
and nongovernmental
not-for-profit organizations.
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Classification of Organizations
Nongovernmental not-for-profit
organizations
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Governmental Not-For-Profit
Organizations
Officers are elected by popular vote or
appointment by a state or local government.
Governments can unilaterally dissolve the entity.
The entity has the power to enact
and enforce a tax levy.
They are special-purpose governments.
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Governmental Not-For-Profit
Organizations
GASB Statements No. 34 and No. 35
require special purpose governments
with more than one governmental
program or both governmental
and business-type activities to
present both government-wide
and fund financial statements.
2003 Prentice Hall Business Publishing, Advanced Accounting 8/e, Beams/Anthony/Clement/Lowensohn
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Nongovernmental Not-For-Profit
Organizations
These are NFP organizations that
lack the governmental element:
Voluntary health and welfare organizations
Health care organizations
Colleges and universities
Other
2003 Prentice Hall Business Publishing, Advanced Accounting 8/e, Beams/Anthony/Clement/Lowensohn
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Learning Objective 3
Identify the accounting principles
applicable to governmental and
nongovernmental not-for-profit
organizations.
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Not-For-Profit Accounting
Principles
FASB Statements No. 116 and 117
are applicable to all nongovernmental
not-for-profit entities.
FASB Statements No. 124 and 135
are specifically related to
not-for-profit organizations.
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Financial Statements
FASB Statement No. 117 requires
that all NFP entities provide:
Statement of Financial Position
Statement of Activities
Statement of Cash Flows
Unrestricted
Temporarily
Restricted
Permanently
Restricted
Statement of Activities
This provides information
about the change in amount
and nature of net assets.
The focus of accounting is
the organization as a whole.
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Statement of Activities
It reports increases in unrestricted
net assets as revenues and...
reports decreases in unrestricted
net assets as expenses.
Temporarily restricted or permanently
restricted net assets consist of
donor- restricted contributions.
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Statement of Activities
Generally, an organization reports
revenues and expenses at gross amounts.
Peripheral gains and losses
are reported at net amounts.
Optional classifications
Operating or
nonoperating
Recurring or
nonrecurring
Contributions
Statement No. 116 defines a contribution
as an unconditional transfer of cash
or other assets...in a voluntary,
nonreciprocal transfer...
A promise to give is a written or oral
agreement to contribute cash or
other assets to another entity.
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Donor-Imposed Restrictions
It provides that the donors money be
returned or the donor is released from
the promise to give if the condition is not met.
Restricted
Unrestricted
Unrestricted
Transactions
Exchange Transactions
Agency Transactions
Gifts in Kind
Learning Objective 4
Introduce FASB not-for-profit
accounting principles.
Measurement Principles
NFP organizations measure
contributions at fair value.
If the fair value of the contributed asset decreases
significantly between the pledge date and the
date the asset is received, the difference is
recognized in the period the decrease occurred.
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Collections
Statement No. 116 encourages retroactive
capitalization of collections of works of art.
If collections are capitalized, they are
recognized as revenues or gains.
Fund Accounting
Learning Objective 5
Apply not-for-profit accounting
principles to voluntary health
and welfare organizations.
145
4,000
1,500
1,500
500
500
950
650
Other Issues
Gifts in kind
Membership fees
Donated securities and investment income
Other Issues
Donated services and payment of salaries
Depreciation
Fixed assets purchased with restricted resources
Social organizations
Civic organizations
Political organizations
Libraries
Museums
Religious organizations
Learning Objective 6
Courtesy
allowances
Contractual
adjustments
Learning Objective 7
Apply not-for-profit accounting
principles to private not-for-profit
colleges and universities.
Nongovernment not-for-profit
colleges and universities
apply the requirements of
SFASs 116 and 117.
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Expenses
Instruction
Research
Public service
Academic support
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Expenses
Student services
Institutional support
Student aid
Operation and maintenance of plant
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Financial Statements
Statement of
Financial Position
Statement of
Activities
Statement of
Cash Flows
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End of Chapter 21