Financial Statements and Analysis Test - 8

The capital fund of a nonprofit organization. Money is directed into the accumulated fund when revenues are greater than expenditures; money is directed away from the accumulated fund (withdrawn) when expenditures are greater than revenues.so, the equation in NPO is :- Accumulated fund + Liabilities = Assets

It is a primary source of income of a non-profit organisation. It is usually collected every month from all the ordinary members. Subscription is the amount paid by the members to keep their mem­bership alive.But if it is received in advance it creates liability . hence, Subscription received in advance is a liability for NPO which is to be shown in balance sheet.

NPO doesnt have any owners equity , they can take debt.

income and expenditure account shows the income received and expenditure incurred during a year through which result is surplus or deficit.If there is exess of Revenue over expenditure there will be surplus and if there is excess of expenditure over revenue there will be Deficit. 

receipt and payment account is summary of cash book which records only cash recipts and cash payments hence it is based on cash basis.

It is like donation. It is the amount given to a non-trading concern as per the will of deceased person. It is taken to the Receipts and Payments Account as Capital Receipts. This will appear in Balance Sheet on liability side.

Any amount invested outside is treated as investment so sport fund if invested outside it will be investment.

By selling old newspapers, NPO will receive revenue hence it will be an income for NPO which is to shown in Income and expenditure account on income side.

Nongovernmental not-for-profit organizations are required to provide only Statement of financial position, statement of activities, and statement of cash flows as their external financial statement.

The statement of financial position is another name for the balance sheet. It is one of the main financial statements and it reports an entity's assets, liabilities, and the difference in their totals.

A nonprofit's statement of activities is issued instead of the income statement which is issued by a for-profit business.

The statement of cash flows for a nonprofit organization is similar to that of a for-profit business. It reports the organization's change in its cash and cash equivalents during the accounting period.

Temporarily restricted assets are those that are donated subject to restrictions that are limited to a specific period of time hence it is a temporarily restricted asset.