ADescribe the Basic Accounting for Private Not-For-Profit Groups Promoted by the FASB

question 39

Essay

a.Describe the basic accounting for private not-for-profit groups promoted by the FASB including a brief description of the three net asset classes.
b.Indicate in which of the net asset classes the following transactions belong:
1.Donor makes a cash gift to not-for profit which must be invested and maintained in perpetuity
2.Income Earned on donation noted in item #1 is restricted to certain program expenditures
3.Gains/Losses, both realized and unrealized, on donation noted in item #1.Not stipulated in donor agreement or by the law
4.Expenses paid out for programs stipulated in donor agreement relating to donation made in item #1.

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Definitions:

Liability Account

An account noted on the balance sheet that represents debts or obligations that a company owes to others and must settle over time.

Posting Reference Column

A ledger column used to indicate the account number or code that corresponds to each entry, facilitating cross-referencing between ledgers.

Journal

A book or digital record where transactions are initially recorded before they are posted to ledgers.

Liability Account

An accounting record that captures obligations or debts a company owes to others, which are expected to be paid in the future.