Thanks NYCaccountant and ericnkem. That clarifies it somewhat but I keep coming across questions where I can't tell if it is governmental or not. Most of my confusion is coming from two multiple choice questions that I thought you would answer the same way for both but one deducts the bad debt expense from revenues and the other reports the bad debts as an expense. Does the religious group mean it is not governmental? And so anything that just says nonprofit is governmental? Sorry but this concept is confusing me.
Question 1:
Terry, an auditor, is performing test work for a not-for-profit hospital. Listed below are components of the Statement of Operations:
Revenue relating to charity care $100,000
Bad debt expense 70,000
Net Assets released from restrictions and used for operations 50,000
Other revenue 80,000
Net Patient Service Revenue (includes revenue related to charity care) 500,000
What amount would be reported as total revenues, gains, and other support on the Statement of Operations?
Answer: $460,000
This amount includes Net Patient Service Revenues (net of $100,000 Charity Care Revenues) of $400,000, Other Revenue (often called Other Operating Revenue) of $80,000, the portion of Temporarily Restricted Net Assets used for operations of $50,000 during the current period, and a reduction for bad debts of $70,000 for a total of $460,000.
Question 2:
Williams Hospital, a nonprofit hospital affiliated with a religious group, reported the following information for the year ended Dec 31. 2012:
Gross patient service revenue at the hospital's full established rates: $980,000
Bad debt expense: 10,000
Contractual adjustments with third-party payors: 100,000
Allowance for discounts to hospital employees: 15,000
On the hospital's statement of operations for the year ended Dec. 31, 2012, what amount should be reported as net patient service revenue?
A: $865,000 (which in the case doesn't subtract the bad debt expense and only the contractual adjustments and the allowance discounts to employees)
.