Question

Please no hand-writing and photo

a-What is a Not-For-Profit Organization (NFPO)? Explain in detail the categories of NFPO.

b- (Preparation of government-wide financial statements - capital asset elements)

The following information is extracted from the City of Jeddah’ government-wide statement of net position at December 31, 2018: Capital assets 3,000,000 Accumulated depreciation, capital assets 1,600,000 Annual depreciation rate on capital assets 10 % Bonds payable -0- The following information is extracted from the city's governmental funds statement of revenues, expenditures, and changes in fund balances for the year ended December 31, 2018. Expenditures - bond principal (Debt Service Fund) 60,000 Proceeds of debt (Capital Projects Fund) 600,000 Required: a. Prepare journal entries so the foregoing information can be used in a work sheet to prepare government-wide financial statements for the year ended December 31, 2018.

Answer 1

a)

A nonprofit organization, also known as a non-business entity, not-for-profit organization, nonprofit institution, is dedicated to furthering a particular social cause or advocating for a shared point of view. In economic terms, it is an organization that uses its surplus of the revenues to further achieve its ultimate objective, rather than distributing its income to the organization's shareholders, leaders, or members. Nonprofits are tax exempt or charitable, meaning they do not pay income tax on the money that they receive for their organization. They can operate in religious, scientific, research, or educational settings.

We will first discuss charitable organizations that fall into the category of Section 501 (c)(3) of the IRS rules, as they are the most common kind of nonprofit organizations in the country.

A new start up nonprofit organization falls under the jurisdiction of section 501 (c)(3) if it is:

a) Charitable,
b) Educational,
c) Literary,
d) Religious,
e) Scientific,
f) Concerned with public safety ,
g) Promotes amateur sporting activities OR
h) Works for the prevention of cruelty towards children or animals.

b) Depreciation a/c Dr 300000

To accumulated depreciation a/c    300000

(accumulated depreciation @10%)

Bank/Cash    a/c Dr    1440000

depreciation    a/c Dr    160000

   To capital asset a/c 1600000

(being depreciation claimed)

Income statement a/c    Dr    160000

   To Depreciation a/c 160000

(being depreciation transferred to income statement)

Bank a/c    Dr    600000

To capital project fund a/c    600000

(Being proceeds from capital fund)