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- Which of the following characteristics identify a nonprofit as it relates to tax-status? (Choose all that apply.) Select one or more: a. They don't generate profit that gets reinvested into their mission. b. They are governed by a compensated board of directors c. They are primarily funded by membership fees d. They have a mission that is based around serving the public needA charitable organization relies for its funding on donations from the general public, which is mainly in the form of cash collected in the streets by volunteers and cheques sent by post to the charity's head office. Wealthy individuals occasionally provide large donations, sometimes on condition that the money is used for specific purpose. The constitution of the charity specifies the purpose of the charity, and also states that no more than 15% of the charity's income each year may be spent on administration costs. Required Identify the inherent risks for this charitable organization that an auditor of its financial statements would need to consider.A charitable organization relies for its funding on donations from the general public, which is mainly in the form of cash collected in the streets by volunteers and cheques sent by post to the charity’s head office. Wealthy individuals occasionally provide large donations, sometimes on condition that the money is used for specific purpose. The constitution of the charity specifies the purpose of the charity, and also states that no more than 15% of the charity’s income each year may be spent on administration costs.Identify the inherent risks for this charitable organization that an auditor of its financial statements would need to consider.
- The following questions concern the accounting principles and procedures applicable to a private not-for-profit entity. Write answers to each question. What is the difference between revenue and public support? What is the significance of the statement of functional expenses? What accounting process does a private charity use in connection with donated materials? What is the difference in the two types of restricted net assets found in the financial records of a private not-for-profit organization? Under what conditions should the entity record donated services? What is the proper handling of costs associated with direct mail and other solicitations for money that also contain educational materials? A not-for-profit receives a painting. Under what conditions can this painting be judged as a work of art? If it meets the criteria for a work of art, how is the financial reporting of the entity affected?The following questions concern the accounting principles and procedures applicable to a private not-for-profit entity. Write answers to each question.a. What is the difference between revenue and public support?b. What is the significance of the statement of functional expenses?c. What accounting process does a private charity use in connection with donated materials? d. What is the difference in the two types of restricted net assets found in the financial records of a private not-for-profit organization?e. Under what conditions should the entity record donated services?f. What is the proper handling of costs associated with direct mail and other solicitations for money that also contain educational materials?g. A not-for-profit receives a painting. Under what conditions can this painting be judged as a work of art? If it meets the criteria for a work of art, how is the financial reporting of the entity affected?The board of directors of Earth Rock's!, a nonprofit organization focused on environmental protection, hypothesizes that individuals are more likely to donate if they see evidence that their donations are used primarily for program activities rather than administrative and fund-raising costs. To get a sense of how its own cost structure compares to other groups, the board decides to benchmark the financial performance of Earth Rocks! against several other environmental organizations. The data for Earth Rocks! and the other environmental organizations appear below Program Expenditures Fund-raising Costs Administrative Costs Total Costs Earth Rocks 374,900 98,000 121,400 594,300 Weed Lovers 421,000 104,300 98,350 623,650 Flora and Fauna 353,000 97,600 71,840 522,840 Leaf It Be 501,900 89,000 109,750 700,650 Nature's Gift 455,470 71,000 82,450 608,920 Use these data to benchmark Earth Rocks! against the other environmental organizations. How does Earth Rocks! compare to…
- All of the listed features or obligations differentiate a registered charity from a private corporation except one. Which one? Ability to issue donors official tax receipts Required to file Form T3010 Charity can incorporate like a private company Requirement to meet annual spending quotaWhich of the following accounting rules apply to all not-for-profit organizations? (Select all that apply.) The financial statements must include a statement of functional expenses The balance sheet must segregate assets according to restrictions on their use. The balance sheet must segregate current assets from long-term assets. The balance sheet must show reserves for likely amount of bad debts. Equipment must be reported net of accumulated depreciation. The activity statement must report expenses as decreases in net assets with donor restrictions. The activity statement must segregate revenues according to restrictions on their use.Which statement below best describes the entities that can accept donations from the public and provide donors with documentation to allow them to claim a tax deduction in respect of their donation? a. A local state school. b. A private hospital. c. Only entities classified as a deductible gift recipient (DGR) as they meet the necessary requirements to be registered by the ATO. d. Any not for profit organisation.
- Which of the following statements is true?a. All not-for-profit organizations must include a statement of functional expenses.b. Donor-restricted contributions whose restrictions have been met in the reporting period may be reported as unrestricted support.c. Statements should focus on the individual unrestricted and restricted funds of the organization.d. FASB ASC 958-605 contains requirements that are generally more stringent than those relating to for-profit organizations.Differentiate between public support and revenues as sources of assets for private not-for-profit organizations. Whatbenefit is there in accounting for these differently?Which of the following best describes a non-profit organization? One in which the leadership is governed by a board of directors O One in which the workforce is made up of volunteers O One that reinvests profit into the organization instead of distributing it to owners One that relies solely on private donations for the organization's financial needs