[Anonymous]

Becker Question –

Could somebody explain me why do they have to make so many entries?

Why not do this?

DR: Cash

CR: Pledge A/R

DR: Contribution Rev – Temporarily restricted

CR: Contribution Rev – Unrestricted

And what kind of account is “Satisfaction of time restriction – Temporarily restricted” ?

Please help me with this.

Thanks

[Yvonne570]

It's for control and disclosure purposes. They identify revenues as restricted (permanently or temp) to keep other's hands off – not available. The additional controls are in place to ensure regulatory compliance with spending of tax payer funds or donations made from contributors. If everything was handled like GAAP accounting for not for profits and government, it would be a mess – as they do not segregate what's hands off or whats available to spend.

AUD - Passed:)
FAR - Passed:)
REG - Retake TBD
BEC - Missed by 3 points Retake TBD

[Anonymous]

so essentially they have 3 of every account?

Cash – Unrestricted

Cash – Temp Restricted

Cash – permanently restricted etc

Am i correct?

[Yvonne570]

They have 1 cash account – but the funding received is offset by the net assets (indirectly) – moved over as unrestricted/temp restricted/permanently restricted.

So knowing that whenever there's a debit (cash received donations), there's a credit, contribution rev – temp restricted if there was a restriction of time or purpose, etc.

Then when the expenditure is made, you have to release the restriction

DR: net assets released from restrictions – temp restricted

CR: net assets released from restrictions – unrestricted

DR: expenditure

CR: cash

The added entries seem like a pain but would be a disaster if they did not have these entries.

AUD - Passed:)
FAR - Passed:)
REG - Retake TBD
BEC - Missed by 3 points Retake TBD

[Anonymous]

thank you!!! You are my new hero. When you study for FAR 9 and you have never (10 yrs ago in college) done NFP its difficult.

thanks again

[Yvonne570]

Any time:)

AUD - Passed:)
FAR - Passed:)
REG - Retake TBD
BEC - Missed by 3 points Retake TBD

[Author]

Replies