16 Questions
Which of the following is a trend in the practice of non-profit organization accounting?
Implementing transparency and accountability
What are the characteristics of a non-profit organization according to the text?
Self-governing, voluntary, and beneficial to the public
What do non-profit organizations carry out, according to the text?
Socially desirable needs of the community or its members
Which of the following is a characteristic of a non-profit organization as stated in the text?
Voluntary
What type of organization is Adventist Medical Center Manila based on the text?
Private hospital
What principles are applicable to non-profit organizations based on the text?
Generally accepted accounting principles (GAAP)
What type of organization is the Angat Buhay Foundation, Inc.?
Non-profit organization
According to PFRS Principles, when is an asset (or liability) derecognized?
When it ceases to provide inflow (or require outflow) of resources embodying economic benefits
Which financial accounting standards are mentioned as the basis for discussions on the accounting for NPOs?
SFAS No. 116 and SFAS No. 117
How are subsequent measurements of assets or liabilities conducted under PFRS Principles?
At amortized cost, under cost model, or some other measurement model required by a relevant PFRS
What is the main purpose of recognizing surplus revenue in non-profit organizations?
To retain in furtherance of the organization’s mission
Which of the following is a recognition criteria for assets and liabilities according to PFRS Principles?
Probable inflow or outflow of resources
What is the initial measurement of assets under PFRS Principles?
At cost except when a relevant PFRS requires measurement at fair value or some other value
Which type of organization does not distribute surplus revenues as dividends?
Non-profit organization
Under PFRS Principles, how is subsequent measurement of assets or liabilities conducted?
At amortized cost, under cost model, or some other measurement model required by a relevant PFRS.
Which accounting standards may be used in conjunction with the PFRSs for providing more useful financial information to users of NPOs?
SFAS No. 116 and SFAS No. 117
Study Notes
Non-Profit Organization Accounting Trends
- The trend in non-profit organization accounting is towards the adoption of financial reporting standards.
Characteristics of Non-Profit Organizations
- Non-profit organizations are characterized by their non-distribution of surplus revenues as dividends.
- They have a specific mission or objective that they aim to achieve.
- Non-profit organizations are not driven by the goal of making a profit.
Activities of Non-Profit Organizations
- Non-profit organizations carry out various activities that aim to further their mission or objective.
Principles Applicable to Non-Profit Organizations
- The principles of accounting applicable to non-profit organizations are based on the Philippine Financial Reporting Standards (PFRS).
Accounting Standards for Non-Profit Organizations
- The PFRS and the International Financial Reporting Standards (IFRS) are the basis for discussions on the accounting for non-profit organizations.
- The PFRS principles can be used in conjunction with other accounting standards to provide more useful financial information to users of non-profit organizations.
Asset Recognition and Derecognition
- An asset (or liability) is derecognized when it is no longer expected to generate future economic benefits or when it is no longer controlled by the organization.
- The recognition criteria for assets and liabilities include the probability of future economic benefits and the ability to measure the asset or liability reliably.
Initial and Subsequent Measurement of Assets
- The initial measurement of assets under PFRS Principles is at cost.
- Subsequent measurements of assets or liabilities are conducted at fair value or amortized cost.
Surplus Revenue Recognition
- The main purpose of recognizing surplus revenue in non-profit organizations is to reflect the net inflow of economic benefits.
Types of Organizations
- Adventist Medical Center Manila is a non-profit organization.
- The Angat Buhay Foundation, Inc. is a non-profit organization.
Test your knowledge on government accounting for non-profit organizations with this module 1 quiz. Explore topics such as current trends in practice, accounting for NPO, and characteristics of NPO.
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