FAR 1B4 Notes

Question 1

🔄 How should an NFP record a transaction where it receives a contribution and gives an asset in return?

Answer 1

✅ Record the received contribution
✅ Record the asset given as sales revenue
✅ Deduct the sales revenue from the contribution amount

Question 2

📑 What must NFPs disclose regarding donor-restricted net assets?

Answer 2

✅ Nature, type, and amount of different restrictions
✅ How and when (if ever) the restricted net assets can be used

Question 3

🏦 What must NFPs disclose about board-designated net assets?

Answer 3

✅ Amounts and purposes of board designations
✅ Only for net assets without donor restrictions

Question 4

📜 What must NFPs disclose about self-imposed limits on resource use?

Answer 4

✅ Any governing board actions that create restrictions

Question 5

📊 What quantitative disclosures must NFPs make regarding financial assets?

Answer 5

✅ Availability of financial assets to meet cash needs for general expenditures within one year

Question 6

💧 How must NFPs disclose financial asset liquidity?

Answer 6

✅ Quantitative disclosure of the availability of financial assets due to their nature

Question 7

🚫 What external limits on financial assets must NFPs disclose?

Answer 7

✅ Restrictions imposed by donors

Question 8

🔒 What internal limitations on financial assets must NFPs disclose?

Answer 8

✅ Any self-imposed restrictions by the organization

Question 9

🔍 When is it unnecessary to disclose something in the notes?

Answer 9

✅ If the same information is disclosed on the face of the financial statements

Question 10

🤝 What disclosures are required for joint costs in an NFP?

Answer 10

✅ Types of activities for which joint costs were incurred
✅ A statement that such costs have been allocated
✅ Total amount allocated and the portion allocated to each functional expense category

Question 11

📌 What joint cost disclosures are optional but allowed?

Answer 11

✅ The amount of joint costs for each kind of joint activity

Question 12

🎯 What donor restrictions must be disclosed in an NFP?

Answer 12

✅ Acquisition of long-lived assets
✅ Investment for a specified term
✅ Support for a particular operating activity

Question 13

📊 Where must NFPs disclose an analysis of expenses?

Answer 13

✅ In the notes or the financial statements (FS)
✅ Must include both functional and natural classifications

Question 14

📑 What is reported as supplemental information (not audited) in an NFP?

Answer 14

✅ Investing and financing activities that affect assets or liabilities but do not result in cash receipts or cash payments
✅ Examples: Acquisition of assets for stock, cash paid for interest and taxes

Question 15

📉 What must be disclosed about underwater endowment funds?

Answer 15

✅ Aggregate fair value of underwater endowment funds
✅ Total original endowment gifts or levels required to be maintained by donor stipulation or law
✅ The NFP’s policy and actions taken regarding appropriation of underwater endowment funds