Accounting for Not-for-Profit: College and Universities

Functions of College and Universities:

1.
2.
3.
4.

Academic-para magturo
Financial-management of businesses inside the campus
Student Service-not academic like health, counselling, and publications
Public Relation-good relations among community-faculty,alumni etc.

Accounting Principles Used:

-Follow the GASB- public institution engaged in business-type activities only, thus accounting for NPO
-shift from fund focused accounting to organization focused accounting

Accounting for Funds (parang equity if sa Profit company)

1. Current Funds
a. Unrestricted current fund
-current assets na laging available para sa objective ng university
-to cover the operational costs and resulting expenses of the university
Pointers/Other journal Entries:
1) Contributed Services should qualify the 3 criteria mentioned earlier to be recorded
2) Close the entries for unrestricted net assets
b. Restricted Fund-limitations are received from externally entity/ for external specified
purpose only
-not to be considered as revenue until ma-expend (Expenditure govern revenue
recognition) meaning these resources are expenditure driven
*OTHER FUND ACCOUNTS USED BY UNIVERSITIES

i. Endowment and Similar Funds

3 Categories
1. Regular or pure endowments-principal nonexpendable but earnings of endowment
are not
*note: earnings of endowment can be unrestricted/ restricted depede sa donors
restrictions
2. Term endowment-principal is expendable na after a period of time
3. Quasi-endowment-BOD designated to be restricted na iseset-aside (so technically di
talaga endowment)
ii. Loan funds
-loans for students and faculty
-comes from:
1) Contribution restricted for loan purposes
2) Unrestricted pero BOD designated it to be for loans
3) Government Grant restricted for loan fund
-is separated because of it being a large amount when it comes to universities
-Has the property of SELF-PERPETUATINGmeaning yung repayment of principal and
excess of interest becomes the base for additional loans. Ang nagpapaikot sa loan fund ay
yung loan fund mismo
NOTE:
1) to qualify as a loan fund dapat lagging available for loan ang INTEREST & PRINCIPAL. If
INTEREST lang ang available then ENDOWMEN FUND yun
2) Di necessarily LOAN FUND yung account name.
iii. Annuity funds (Split Interest Trust)
-periodic payments to continue as an annuity sa donor or sa designated beneficiary
-accounted for @FV sa date of receipt
iv. Life Income funds
-lahat ng income na na-generate ng dinonate na asset ay mapupunta lang sa isang person
or sa donor mismo
-when initially recorded, credit LIFE INCOME REVENUE @FV
*NOTE ON ANNUITY and LIFE INCOME FUND
1) if the Annuity fund ceases-mapupunta yung principal ng donation sa donor-specified
fund/unrestricted fund
2) If there are Gains or Losses-record sa appropriate net asset account

2. Plant funds-anything related to capital assets( funds to acquire them, retirement of liabilities tied
to capital assets)
a. Unexpended Plant Fund-resources used to acquire properties
b. Plant fund for renewals and replacements-to keep plant in physical plant in operating
condition
c. Plant funds for retirement of indebtedness-to pay interest of plant fund indebtedness
d. Investment in Plant-related to long-term debt
NOTE: Always include PROVISION FOR DEPRECIATION for all plant asset except for works of
art
3. Agency Funds-accounts for things na di property ng university, parang agent/vessel lang siya
thus LIABILITY siya and so NO NET ASSETS
example: Holding assets for a student organization

Accounting for Revenue-accrual basis

3 major groups of revenues
1. Educational and general revenue
group
a. Student tuition fees*
b. Governmental appropriations
c. Governmental grants* and
contracts
d. Gifts and private grants
e. Endowment Income
f. Other sources
2. Auxiliary Enterprise Revenues-ex.
Dorm fees
3. Expired term endowments
-endowments with lapse restriction

*Operating Income
Accounting for Expenses
-recognized on accrual basis
-classified on a natural basis
2 major groups of revenues
1. Educational and General Expense
Classification: Instruction, Research,
Operation and Maintenance of Plant,
Public Support, Academic Support,
Intuitional Support, Student services,
Student Aid
2. Auxiliary Enterprise Revenues

Accounting for Contributions- similar with principles in NPO

Donor-Imposed Restriction and Reclassification-refer to the NPO notes