Non-Profit Exam Study Guide
Non-Profit Exam Study Guide V246
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This 6 page Study Guide was uploaded by David Schell on Sunday March 6, 2016. The Study Guide belongs to V246 at Indiana University taught by Antonette McCaster in Spring 2016. Since its upload, it has received 239 views. For similar materials see Elementary Government and Non-Profit Financial Accounting in Linguistics and Speech Pathology at Indiana University.
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Date Created: 03/06/16
Non-Profit Exam Study Guide Three things will be on the test: Statement of Activities, Debit/Credit Journal Entries, Multiple Choice Questions For the statement of activities you will be given a trial balance that looks similar to this: Trial Balance for David’s Non-Profit For Year ended December 31, 2015 (Unrestricted Net Assets) Cash 480,000 Pledges Receivable 25,000 Allowance for uncollectible pledges 50,000 Equipment 10,000 Land 60,000 Services Payable 500 Net Assets Begin (Jan 1, 2015) 50,000 Contributions 380,000 Membership dues 80,000 Investment Income 5,000 Gain on land sale 2,000 Grant from state 10,000 Program Expenses 1,500 Research expenses 1,500 Education expenses 500 Net Assets released from temporary restrictions 1,000 Total 578,500 578,500 *Note: 1. All expenses are debits and will be placed in the expense column of SOA. 2. All types of “income” (Contributions, membership dues etc.) are credits and will be placed in the Revenues, Gains, and Other Support of SOA. 3. All assets (Cash, Equipment etc.) are debits and all contra-assets are credits. Assets are NOT shown on SOA. 4. All liabilities (payables etc.) are credits and are also NOT shown on the SOA. David’s Non-Profit Statement of Activities For Year ended December 31, 2015 (Unrestricted Net Assets) Revenues, Gains and Other Support (Refer to note 2): Contributions 380,000 Membership dues 80,000 Investment Income 5,000 Gain on Land sale 2,000 Grant from state 10,000 Net Assets Released from Restrictions 1,000 Total 478,000 Expenses (refer to note 1): Program Expenses 1,500 Research Expenses 1,500 Education Expenses 500 Total Expenses 3,500 Changes in Unrestricted Net Assets: *Hint Revenues, Gains and Other Support – Expenses= 474,500 Begin Unrestricted Net Assets 50,000 Changes in Unrestricted Net Assets 474,500 End Unrestricted Net Assets 524,500 Trial Balance for David’s Non-Profit For Year ended December 31, 2015 (Temporary Restricted Net Assets) Cash 13,000 Contributions 14,000 Temporary Net Assets released from restrictions 1,000 Total 14,000 14,000 David’s Non-Profit Statement of Activities For Year ended December 31, 2015 (Temporary Restricted Net Assets) Revenues, Gains and Other Support (Refer to note 2): Contributions 14,000 Temp Net Assets released from restrictions 1,000 Total 13,000 Expenses: None Change in Temporary Net Assets 13,000 Begin Temporary Net Assets 0 Change in Temporary Net Assets 13,000 End Temporary Net Assets 13,000 Trial Balance for David’s Non-Profit For Year ended December 31, 2015 (Permanently Restricted Net Assets) Cash restricted for endowment 500,000 Contributions 500,000 Total 500,000 500,000 David’s Non-Profit Statement of Activities For Year ended December 31, 2015 (Permanently Restricted Net Assets) Revenues, Gains and Other Support (Refer to note 2): Contributions 500,000 Total 500,000 Expenses 0 Changes in Permanently Restricted Net Assets 500,000 Begin Temporary Net Assets 0 Change in Temporary Net Assets 500,000 End Temporary Net Assets 500,000 Debit/Credit Journal Entries *Tricks: 1. Any question referring to pledges or contributions will have a debit for cash or pledges receivable. The balanced out credit will be either unrestricted, temporary, or permanently restricted net assets depending on the wording of the problem. 2. If assets increase, it is a debit but if assets decrease, the entry will be a credit. 3. If liabilities or Net Assets increase, it is a credit but if liabilities or Net Assets decrease, the entry will be a debit. 4. Expenses will ALWAYS be debits. 5. If an asset is sold, debit cash and credit asset AND gain on land sale. 6. Allowance for Uncollectible pledges will always be a credit. SAMPLE Debit/Credit Problems 1. TheMiddlewayhousereceivedpledgesfromdonorsfor$20,000andthedonorsspecified that this money is to be used only for after school programs. Cash 20,000 Temporary Net Assets 20,000 Reasoning: Cash was received which would increase it by $20,000 and Temporary Net assets would also increase by $20,000. (Refer to Trick #1) 2. The Middleway House spent $15,000 for its after school programs and used the temporary net asset funds designated specifically for this purpose. Temporary Net Assets 15,000 Cash restricted for after school programs 15,000 Reasoning: TemporaryNetassetsweredecreased by$15,000andCashwasdecreasedby $15,000. (Refer to Trick #1) 3. Bob’s Senior Center, a VHWO, purchased senior living equipment for $20,000 with cash from the unrestricted fund. Equipment 20,000 Cash 20,000 Reasoning: Equipment is an asset that increase by $20,000 and paid for by another asset (cash). (Refer to Trick #2) 4. Bob’s Senior Center was low on cash and sold $5,000 of its equipment for $6,000. Cash 6,000 Equipment 5,000 Gain on Equip Sale 1,000 Reasoning: Cashwasincreasedbecauseofthesale an equipmentwasdecreased because they no longer have it. The gain on equipment sale is reported as a credit. (Refer to Trick #5) 5. Expenses were incurred for a summer program at the Middleway House- $500 in rental equipment, $200 in marketing, and these were paid for in cash. Rental equipment expense 500 Marketing expense 200 Cash 700 Reasoning: Refer to Trick #4 6. AdonorimposedarestrictionontheMiddlewayHousefor$5000tobeusedafter5years. Record the entry after 5 years. Reclassifications Out 5000 Reclassifications In 5000 Reasoning: Donor imposed restrictions but after 5 years we reclassify 5000 to unrestricited Net Assets. 7. A non-profit had a telethon were donors pledged $500,000 that will be paid in a short term (1 year). The Non-profit is declaring that 15% of these pledges are uncollectible. Pledges Receivable 500,000 Allowance for uncollectible pledges 75,000 Unrestricted Net Assets 425,000 Reasoning: Refer to Trick #6
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