Saint Louis University

School of Accountancy and Business Management

Mary Height Campus, Baguio City

Accounting for
Non- Profit
Organizations
(Outline of
research with
BBCCC Financial
Statements
Attached)

Accounting 303 MWF 2:30-3:30 D801

ACCOUNTING FOR NON-PROFIT ORGANIZATION

This chapter will focus upon for four types of not-for-profit / service organizations, namely:
1. The professional organization

Accounting For Non Profit organizations – Group 10 Page 1 of 38

 2. The privately organized education institutions – school, college, university
3. The private organized hospital; and
4. The cooperative

What is a non-profit organization?

A non-profit organization is an entity that is operated for the benefit of society as a whole rather than for the benefit
of an individual proprietor or a group of partners or shareholders. A non-profit organization strives only to obtain
revenue sufficient to cover its expenses. Thus, the concept of income is not meaningful.
Non-profit organizations constitute a significant segment of our society.

Some examples are:

1. Voluntary health and welfare organizations:

2. Schools, colleges and universities
3. Hospitals
4. Cooperatives
5. Labor unions
6. Performing arts organizations
7. Foundations
8. Religious organizations
9. Country Clubs
10. Professional associations

Purpose of Financial Statements

The primary purpose of financial statements is to provide relevant information to meet the common interests of
donors, members, creditors and others who provide resources to not-for-profit organizations. Those external users of
financial statements have common interests in assessing
a. The services an organization provides and its ability to continue to provide those services and
b. How managers discharge their stewardship responsibilities and other aspects of their performance.
More specifically, the purpose of financial statements, including accompanying notes, is to provide information
about:
a. The amount and nature of an organization’s assets, liabilities and net assets
b. The effects of transactions and other events and circumstances that change the amount and nature of net
assets
c. The amount and kinds of inflows and outflows of economic resources during a period and the relation
between inflow and outflow
d. How an organization obtains and spends cash, its borrowing and repayment of borrowing and other factors
that may affects its liquidity
e. The service efforts of an organization

STATEMENT OF FINANCIAL POSITION

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 This statement provides relevant information about the liquidity, financial flexibility and interrelationship of
an organization’s asset and liabilities in order to let the external users of such be able to assess the organization’s
ability to continue providing the services, to meet obligations, and needs for external financing.

Information about the nature and amounts of different types of permanent restrictions or temporary
restrictions shall be provided either by reporting their amounts on the face of the statement or by including relevant
details in notes to financial statements. Separate line items maybe reported within permanent restrictions for
holding of :

a. assets, such as land or works of art, donated with stipulations that they be used for a specified purpose, be
preserved and not be sold or;
b. assets donated with stipulations that they be invested to provide permanent source of income such as gifts
that create permanent endowment funds.

Separate line items may be reported within temporarily restricted net assets or in notes to financial statements
to distinguish between temporary restrictions for:

a. support of particular operating activities,

b. investment for a specified terms,
c. use in specified future period, or
d. acquisition of long-lived assets. Donors’ temporary restrictions may require that resources be used for
specified purpose as purpose restrictions or both. Gifts called term endowments such as gifts of cash or
other assets with stipulation that they be invested to provide source of income for a specified term and that
the income be used for a specified purpose are both time and purpose restricted.

STATEMENTS OF ACTIVITIES

This statement shows the revenues, gains, expenses and losses. The primary purpose of this statement is to
provide relevant information about:

a. the effects of transactions and other events and circumstances that change the amount and nature of net
asset,
b. the relationships of those transactions and other events and circumstances to each other, and
c. how the organization’s resources are used in providing various programs or services.

The information in this statement used with related disclosures and information in other financial statements,
helps donors, creditors and others to

a. evaluate the organizations performance during a period,

b. assess an organization’s service efforts and its ability to continue provide services, and
c. assess how an organization’s managers have discharged their stewardship responsibilities and other aspects
of their performance. This statement use the descriptive term - change in net assets or change in equity of
the entity as a whole.

STATEMENT OF CASH FLOW

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 This statement provides relevant information about the cash receipts and cash payments of an organization
during a period. Although this statement may be using either of the two methods, direct and indirect, only the direct
method is illustrated below.

PROFESSIONAL ORGANIZATION

There are more than 40 professional organizations accredited by the Professional Regulation Commission. These
associations or institutions have their head offices in Metro Manila, but their chapters are found all over the country.
Their operations are generally financed by membership dues that are paid annually. Sharing of these membership
fees among the different chapters, regional councils and head office are provided for in their by-laws. Bigger
organizations have established regional councils which oversee the chapters. Each organization has its own mission
and vision and its activities shall be towards the attainment of these goals.

Their operations are characterized by having a board of directors establishing the policies and guidelines based
in the by-laws whish are implemented by means of a set of officers elected from among the members of the board.
Every year elections are conducted nationwide. Various committees are created with a chairman and members who
give their time and effort voluntarily to achieve the objectives of the organizations. Full accrual basis is used
whenever practicable, depreciation is provided but is not considered in determining the excess of receipts over
disbursements. Two kinds of net assets are commonly accounted for, unrestricted or general and restricted or
special net assets. The spreadsheet is used to summarize daily transactions in these two types of assets. An updated
list of members is a requirement for the sure accounting of annual dues in arrears to support the receivable
accounts. Collections are normally done by the chapters and monthly reports are prepared to account for the
remittances due to the head office and the regional councils. Restricted net asset are created every time collections
would include receipts for subscription to the periodic journal or for the additions or betterment of the building.

EDUCATIONAL INSTITUTIONS

The activities of an educational institution may be classified as :

a. Instructional - include both resident and extension instruction, public service, organized researched and the
operation of libraries.
b. Administrative - auxiliary include staffing and promotion, registration and enrollment, operation of the
business office, and operation and maintenance of the educational plant
c. Auxiliary services include the operation of the residence halls, dining rooms, college unions and bookstores,
health centers, and athletic and cultural programs.

Revenues in support of these different activities are provided by such varied sources as contributions,
government appropriations, student fees, endowment income, and revenues from the sale of goods and
services.

There are six major fund groupings for educational institutions, namely:

1. Current funds
2. Loan funds
3. Endowment and other nonexpendable funds
4. Annuity funds
5. Plant funds, divided into unexpended plant funds, retirement of indebtedness funds and an investment in
plant section

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 6. Agency fund

Explain the accounting for non-profit organizations.

Accounting for non-profit organizations is essentially “fund accounting”. This means that the internal accounting for
many non-profit organizations is the fund which is an accounting entity with a self-balancing set of accounts
recording cash and other financial resources together with related liabilities and changes therein. Accounting is
based on FASB SFAS 116, SFAS 117, SFAS 124 and AICPA Audit and Accounting Guide for health care organizations.

Funds commonly used by non-profit organizations include the following:

1. Unrestricted fund
2. Restricted fund
3. Endowment funds
4. Agency fund
5. Annuity fund and life income fund
6. Loan fund
7. Plant fund

Unrestricted Fund/ General Fund/ Current Fund

This is also known as the general fun which includes all the assets of a non-profit organization that are available for
use as authorized by the governing board and are not restricted for specific purposes. The revenue and gains of
unrestricted funds are derived from a number of sources. It is used in fund accounting.

Restricted Fund/ Restricted Current Fund/ General Fund

These are the receipts of resources that are to be used in special activities such as publication of a periodic journal or
construction of a building for the unit.

Accounting for cash contributions or donations

Cash contributions or donations are reported as revenue in the year received even though there are donor-imposed
uses or time restrictions on the donation. The entry for the cash contribution or donation is:

Cash xxx
Contributions revenue xxx

If the donor imposes use or time restriction, the cash contribution or donation is reported as “temporary restricted
revenue” on the statement of activities.

Accounting for “contributed materials”

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  recorded at fair value i.e. if a hospital receives free drugs or a university receives free operating supplies,
the entry is

Inventory xxx
Contributions revenue xxx

Accounting for “contributed services”

Contributed services are recognized in the statement of activities if either of the following conditions is met:

a. The services create or enhance a non financial asset.

b. The services require specialized skills, are provided by individuals possessing those skills and would typically
need to be purchase if not provided by donations.

Contributed services rendered by skilled individuals are recognized at the going rate for comparable employees or
contractors of the entity less any meals or other living costs absorbed by the nonprofit organization.

To increase expense and increase unrestricted revenue, contributed services is recorded as follows:

Salaries expense xxx

Contributions revenue xxx

Accounting for Contributed facilities

Contributed facilities are recognized at fair value either to an asset or expense account. For example, if a university
receives a new building from a generous benefactor to be used as one of its colleges, the entry is:

Building xxx
Contributions revenue xxx

Another example, a building is used by a university on a rental basis. However, the owner waives rental payment.
This is recorded at the fair value of the rental as follows:

Rental expense xxx

Contributions revenue xxx

Classifications of Expense of a nonprofit Organization

1. Program services – these are the organizations activities that result in the distribution of goods and services
to beneficiaries, customers or members that fulfill the purposes or mission of the organization.

2. Supporting Services – these are other expenses that include all activities of the organization other than
program services, i.e. management and general expenses, fund raising and membership development
activities.

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All expense of a non profit organization is reported as unrestricted in the statement of activities. This means that
expenses are deducted only from unrestricted revenue.

What is a restricted fund?

This is used to account for assets available for current use but expandable only as authorized by the donor of the
assets. The donor may impose either “use” restriction or “time restriction” or both. Assets of the restricted fund are
not derived from the operations of the nonprofit organization.

Explain endowment of fund.

A “permanent endowment fund” is one for which the principal must be maintained indefinitely in revenue producing
investment. Only the revenue from the investments may be expended. A permanent endowment fund is also known
as “regular endowment”. A permanent endowment fund or “permanently restricted” but the revenue from the fund
is “temporarily restricted”.

A term “endowment fund” is one for which the principal may be expended after the passage of certain period or the
occurrence of an event specified by the donor. The term is “temporarily restricted”.

A “quasi-endowment fund” is a fund established by the governing board of the nonprofit organization. At the option
of the board, the principal may later be expended.

Accordingly, a quasi-endowment fund is included on “unrestricted net assets” because this is established using
unrestricted net assets.

Agency Fund

 Used to account for assets held by the nonprofit organization as custodian.

 Example: A university may act as custodian of cash of a student organization. The university disburses cash
as directed by the officers of the student organization.

 Undistributed cash of the student organizations is reported as liability of the university's agency fund
because the university has no equity in the fund.

Annuity Fund

 Established when assets are contributed to the nonprofit organization with the stipulation that the
organization shall pay specified fixed amount to a designated beneficiary periodically during a specified
period of time.

 At the end of the specified period for the specified payments, the unexpended assets of the annuity fund
are transferred to the unrestricted fund, restricted fund or endowment fund as instructed by the donor.

Life income Fund

 Used to account for stipulated payments to a named beneficiary during the beneficiary’s lifetime.

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  Only the income on the fund is paid to the beneficiary’s payment from a life income fund varies form period
to period comparing to annuity fund that is fixed.

Loan Fund

 Established by colleges and university for the purpose of granting loans to students to satisfy their school
needs.

 Students loans funds are generally revolving – as old loans are repaid, new loans are made for the receipts.

Plant Fund

 established for land, building, and equipment

 It may also include cash and investments earmarked for additions to plant or payments of liabilities
collateralized by the plant assets.

 Sinking fund assets set aside for retirement of debt incurred to acquire plant assets is also included.

Components of Financial Statements of Non-Profit Organizations

1. Statement of Financial Position – reports that “ assets should equal liabilities and net assets”

2. Statement of Activities – reports the “changes in net assets” and their revenue, gains, expenses and losses.
This is equivalent to income statement in commercial accounting.

- It reports gross amount of revenue and expenses, except that investment revenue may be reported net of
expenses, and gains and losses on disposals of plant assets may be reported net.

- It reports expenses by functional classification such as program services and supporting services.

3. Statement of Cash Flows

4. Notes to Financial Statements

5. Statement of Functional Expenses – required only to voluntary health and welfare organizations – this
reports expenses both by function (program and supporting ) and natural classification (salaries,
depreciation etc. )

Classifications of Net Assets

 reported in the statement of Financial Position

1. Unrestricted net assets – assets in the “unrestricted fund”.

2. Temporarily restricted net asset – assets in the restricted fund, loan fund, term endowment fund,
annuity fund, life income fund and plant fund.

3. Permanently restricted net assets – “permanently endowment fund”

Unconditional Promises Treatment

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  Reported in the period pledges are made not in the period of cash collection.

 Contribution will not be received until next year, the contribution will be reported as increase in temporarily
restricted net assets for the current year because of time restriction.

 Conditional promise to give is considered unconditional if the possibility that the condition will not be met is
remote.

Treatment of Re classifications of Net assets

Example: In prior year, a benefactor made a contribution to a private nonprofit university with the stipulation that
the donation be used for faculty travel during the current year.

 This contribution is reported under temporarily restricted net assets in the prior year.

 When the contribution is used for faculty travel in the current year, it is reported as “reclassification” in the
current year's statement of activities. Re-classifications are reported in the statement of activities as “net
assets released from restrictions”.

 This reclassification is reported in the current year as negative amount for temporarily restricted net assets
and positive amount for restricted net assets.

 The travel expense is reported in the current year's statement of activities as deduction from unrestricted
net assets. All expenses are decrease in unrestricted net assets.

 The use of the contribution for faculty travel has no effect on unrestricted net assets at the current year end
because the effect is offsetting, meaning, increase in unrestricted net assets upon reclassification from
“temporarily restricted to unrestricted” and decrease in unrestricted net assets when the contribution is
used or expended.

Classifications of Cash flow or Non Profit Organizations in the Cash Flow Statements

1. Operating Activities – includes “unrestricted” cash contributions, unrestricted revenues and expenses.

2. Investing activities – includes cash flows from acquisition and disposal of property, plant and equipment,
investments, and other long-term assets.

3. Financing activities – includes temporarily or permanently “restricted” cash contributions and cash flows
from borrowings and repayment of borrowings.

Financial Statements Pro- Forma Forms

STATEMENT OF FINANCIAL POSITION

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 XXX Organization
Statement of Financial Position
December 31, 20x1 and 20x2
(In thousands)
ASSETS 20X1 20X2
Cash and cash equivalent P xxx P xxx
Receivables xxx xxx
Inventories and prepaid expenses xxx xxx
Assets restricted to investment in building and equipment xxx xxx
Land, building and equipment xxx xxx
TOTAL ASSETS P XXX P XXX

LIABILITIES AND NET ASSETS

Vouchers payable P xxx P xxx
Refundable advances xxx xxx
Long-term debt xxx xxx
TOTAL LIABILITIES P XXX P XXX
Net assets:
Unrestricted P xxx P xxx
Temporarily restricted xxx xxx
Permanent restarted xxx xxx
TOTAL NET ASSETS P XXX P XXX
TOTAL LIABILITIES AND NET ASSETS P XXX PXXX

Accounting For Non Profit organizations – Group 10 Page 10 of 38

STATEMENT OF ACTIVITIES

XXX Organization
Statement of Activities
For the year ended December 31, 2ox1
Temporarily Permanently
Unrestricted Restricted Restricted Total
Revenues, gains and other support:
Contributions P xxx P xxx P xxx P xxx
Fees xxx xxx
Total P xxx P xxx
Expenses and losses
Program A P xxx P xxx
Program B xxx xxx
Management and General xxx xxx
Fund Raising xxx xxx
Total P xxx P xxx
Change in net assets P xxx P xxx P xxx P xxx
Net assets at beginning of year xxx xxx xxx xxx
Net assets at end of year P xxx P xxx P xxx P xxx

Statement of Cash Flows

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 XXX Organization
Statement of Cash Flow
For the year ended December 31, 20X1

Cash flows from operating activities:

Cash received from members and contributors P xxx
Cash received from service recipients xxx
Cash paid for:
Program A xxx
Program B xxx
Fund raising xxx (xxx)
Cash paid to employees and suppliers (xxx)
Net cash from operating activities P xxx
Cash and cash equivalents at beginning of year xxx
Cash and cash equivalents at end of year P xxx

Reconciliation of change in net assets to net received from operating activities:

Change in net assets P xxx
Adjustments to reconcile change in net asset to
net cash from Operating activities:
Depreciation xxx
Decrease in refundable advance (xxx)
Increase in vouchers payable xxx
Increase in receivable xxx
Increase in inventories and prepaid expenses xxx
Net cash flow from operating activities P xxx

LOAN FUNDS

 Consist of resources that are available for loans to students.

 Originate from gifts, they may be built up over a period of years from student fees for such purpose or for
transfers from endowment fund whose income is available for such purpose.
 Can be made with or without interest depending upon the conditions established by those providing loan
the loan fund.
 Nonexpendable uncollectible loans, fund administrative expenses, and losses on the sale of fund
investments, and as a result of credits arising from interest on loans, income from fund investments , and
gains on sale of fun investment.

Transactions related to loan of NPO universities:

1. Receipt of cash gift to be used for loans to students, P50,000.
Cash 50,000

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 Loan Fund net assets 50,000
2. Purchase of securities for P25,000 which includes accrued interest of P600.
Investment 25,000
Accrued Interest 600
Cash 25,600
3. Loans to students, P20,000.
Notes Receivables 20,000
Cash 20,00
4. Collections of interest on investments, P1,500.
Cash 1,500
Accrued Interest 600
Loan Fund net assets 900
5. Collection of loans with interest of P150, P7,650.
Cash 7,650
Notes Receivable 7,500
Loan Fund net assets 150
6. Uncollectible loans written off, P300.
Loan Fund net assets 300
Notes Receivable 300

Resources are balanced by the account Loan Fund Balance/ Loan Fund Net Assets.
Note: The Accounts are hypothetical In nature to illustrate the entries.

NPO University
Loan Fund
Statement of Financial Position
June 30, 20B

ASSETS

Cash P13,550
Investments 25,000
Notes Receivable 12,200
TOTAL ASSETS P 50,750

LIABILITIES AND NET ASSETS

TOTAL NET ASSETS P 50,750

NPO University
Loan Fund
Statement of Activities
For the year ended June 30, 20B

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Revenues:
Interest on investments P900
Interest on loans 150 1,050
Less: Expenses/ losses:
Uncollectible loans written off 300
Excess of revenue over expenses P 750

NPO University
Loan Fund
Statement of Cash Flows
For the year ended June 30, 20B

Cash from operating activities:

Receipts of gifts P 50,000
Excess of receipts over expenses 750
Net cash from operating activities or net assets P50,750

ENDOWMENT AND OTHER NONEXPENDABLE FUNDS

 Formed when cash or other properties are transferred to the institution provided that only income
produced by such resources can be used for the benefit of the institution.
 Unrestricted endowment is undependable; although it may change as a result of the sale of restrictions are
placed on the use of fund income by the institution. Income becomes available to the unrestricted current
fund.
 Restricted endowment is when the use of the fund income is limited to certain objectives. Income is
transferred to the appropriate restricted current fund or to the plant fund.
 Endowments are created by transfer of assets directly to the institution.
 Funds temporarily functioning as an endowment are resources not currently required by unrestricted
current fund may be transferred out of this fund to be administered as an endowment until the resources
are required for alternative use.
 In maintaining a single set of books for the endowment fund group, investments and other property items
should be identified with specific endowments, and separate endowment fund balances should be reported
for each endowment.
 Earnings don’t need to be reflected on the books for the endowment funds that may be entered directly on
the books of the funds receiving the earnings.

Transactions related to endowment fund:

1. Receipt of cash from donor in establishment of Endowment Fund A, P1,000,000. No restrictions are made as
to use of endowment income.
Cash 1,000,000
Endowment Fund A balance 1,000,000

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2. Receipt of securities from 2 donors in establishment of Endowment Funds B and C. Endowment Fund B-
10,000 shares of X Co. ordinary shares, value on date of transfer is P715,000. Endowment Fund C-2,500
shares of Y Co. preference shares, value on date of transfer P245,000. No restrictions are made as to use of
endowment income.
Investments-ordinary shares 715,000
Investments-preference shares 245,000
Endowment Fund B balance 715,000
Endowment Fund C balance 245,000
3. Pooling of Endowment Funds A, B, C. Endowment fund balances were restated in terms of market values of
securities as date of pooling as follows: Ordinary shares market value, P750,000 and Preference shares
market value-P250,000.

Pooled Cash 1,000,000

Pooled investments- ordinary shares 750,000
Pooled investments- preference shares 250,000
Cash 1,000,000
Investments-ordinary shares 715,000
Investments-preference shares 245,000
Endowment Fund B balance 35,000
Endowment Fund C balance 5,000
4. Purchases of P900,000 of Z Co. bonds at a price of 105.
Pooled investments- bonds 900,000
Pooled investments- unamortized bond premium 45,000
Pooled Cash 945,000
5. Collection of interest and dividends on pooled investments, P107,500.
Pooled Cash 107,500
Undistributed pooled income 107,500
6. Premium amortization on pooled investments, P2,250.
Undistributed pooled income 2,500
Pooled investments- unamortized bond premium 2,500
7. Distribution of income on pooled endowments to unrestricted and restricted current funds: Endowment
Fund A: 1,000,000/2,000,000 x 105,000 or P52,500. Endowment Fund B: 750,000/2,000,000 x 105,000 or
P30,375. Endowment Fund C: 250,000/2,000,000 x 105,000 or P13,125.
Undistributed pooled income 105,000
Pooled Cash 105,000
8. Sale of Y Co. preference shares for P260,000.
Pooled Cash 260,000
Pooled investments- preference shares 250,000
Gains and losses on pooled investments 10,000
9. Receipt of gift of properties to be used as a dormitory. Net income after recognizing an annual charge for
depreciation of P10,000 is to be used for certain restricted purposes. Appraised values of properties on the
date of gift: Land- P125,000, Buildings- P175,000.
Land 125,000
Buildings 175,000
Endowment Fund D balance 300,000

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 10. Receipt of cash from unrestricted current fund to be used as an endowment fund until alternative use is
authorized, P50,000.
Cash 50,000
Principal temporarily functioning as Endowment Fund E
balance 50,000
11. To recognize resources of P400,000 held by trustee as an endowment. No restrictions are made as to use of
endowment income.
Fund held by trustee 400,000
Endowment Fund F balance 400,000
12. Amount receivable from restricted current fund representing recovery of depreciation on endowment
properties (dormitory), P10,000.
Due from restricted current fund 10,000
Accumulated depreciation- buildings 10,000
Revenues and expenses relating to operations of the properties are reported in the restricted current funds.
PLANT FUNDS
 Formed when cash or other properties are transferred to the institution subject to the requirement that
specified payments be made to a designated beneficiary during his lifetime. sometimes included with
endowment funds for accounting and reporting purposes.
 Balances are increased by gifts subject to annuity agreements, gains on the sale of annuity fund assets,
payments to annuitants, and asset transfers.

NPO University
Endowment and Other Nonexpendable Funds
Statement of Financial Position
June 30, 20B
ASSETS

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 Cash P 50,000
Due from restricted current funds 10,000
Pooled cash 317,500
Pooled investments:
Ordinary shares P 750,000
Bonds 900,000
Unamortized bond premium 2,500 1,692,500
Land 125,000
Buildings P 175,000
Less: Accumulated depreciation 10,000 165,000
Fund held by trustee 400,000
TOTAL ASSETS P 2,760,000

LIABILITIES AND NET ASSETS

Gains and losses on pooled investments P 10,000

Net Assets:
Unrestricted
Endowment Fund A P 1,000,000
Endowment Fund B 750,000
Endowment Fund C 250,000
Endowment Fund F 400,000
Total P2,400,000
Restricted:
Endowment Fund D 300,000
Principal temporarily functioning as Endowment Fund E 50,000
Total 2,750,000
TOTAL LIABILITIES AND NET ASSETS P2,760,000

Transactions related to annuity fund of NPO University:

1. Receipt of cash of P125,000 subject to condition that P5,000 per year be paid to the donor during his lifetime, any
balance available for educational and general purposes.
Account Titles Debit Credit
Cash 125,000
Annuity net assets 125,000

2. Purchase of securities for P120,000 that includes accrued interest of P2,000.

Account Titles Debit Credit
Investments 118,000
Accrued interest 2,000
Cash 120,000

3. Collections of income for the year ended June 30, 20B, P9,500.
Account Titles Debit Credit
Cash 9,500

Accounting For Non Profit organizations – Group 10 Page 17 of 38

 Accrued interest 2,000
Annuity net assets 7,500

4. Recognition of amount payable to annuitant, P5,000.

Account Titles Debit Credit
Annuity net assets 5,000
Due to annuitant 5,000

5. Amount becoming available for educational and general purposes according to annuity agreement, P2,500.
Account Titles Debit Credit
Annuity net assets 2,500
Due to Unrestricted Current Fund 2,500

NPO University
Annuity Fund
Statement of Financial Position
June 30, 20B

ASSETS

Cash P 14,500
Investments 118,000
TOTAL ASSETS P132,500
LIABILITIES AND NET ASSETS
Due to annuitant P5,000
Due to unrestricted current fund 2,500
Annuity net assets 125,000
TOTAL LIABILITIES AND NET ASSETS P 50,750

NPO University
Annuity Fund
Statement of Charges in Equity
For the year ended June 30, 20B

Net assets, beg. P-0-

Add: Increase from gift subject to annuity P125,000
Increase from income for year 7,050 132,500
Total P132,500
Less: Amount payable to annuitant for year P 5,000

Accounting For Non Profit organizations – Group 10 Page 18 of 38

Amount payable to unrestricted current fund 2,500 7,500
Net assets, end P 125,000

PLANT FUNDS
Three groups:
1. Resources that are held for plant expansion and replacement
2. Resources that are held for retirement of long-term debt incurred in the acquisition of the plant
3. The specific physical resources comprising the plant.
Three balancing groups of accounts for plant resources:
1. Unexpended plant funds- consist of cash, securities, receivables and other assets that are used for the
acquisition of new plant or replacement of existing plant. The difference between the assets and liabilities.
This balance is commonly divided into (1) the portion to be applied to plant additions and (2) the portion to
be applied to renewals and replacements.
2. Retirement of indebtedness funds- consist of cash, securities, and other assets that are to be used for the
retirement of plant indebtedness. Fund accounts are balanced by a single fund balance reporting total
resources available for retirement of indebtedness.
3. Invested in plant- consist of the individual property items that compose the educational plant. Carries any
long-term indebtedness relating to plant acquisitions. The difference between plant assets and related
liabilities. This balance is commonly divided to show the different sources of plant financing- gifts, current
funds, and endowment funds.

Transactions related to that Unrestricted Plant Funds of NPO University:

1. Receipt of cash gift to be used for plant acquisitions, P100,000.
Cash 100,000
Unexpended plant funds balance- plant addition 100,000
2. Payment of additions to buildings, P85,000.
Unexpended plant funds balance- plant addition 85,000
Cash 85,000
3. Issue of bonds to raise funds for construction of buildings, aP1,500,000.
Cash 1,500,000
Unexpended plant funds balance- plant additions 1,500,000
4. Completion of buildings at contract price of 1,500,000.
Unexpended plant funds balance- plant additions 1,500,000
Contracts payable 1,500,000
5. Payment of contract, 1,500,000.
Contracts payable 1,500,000
Cash 1,500,000
6. Receipt of cash from unrestricted current fund plant renewals and replacements in subsequent periods,
P30,000.
Cash 30,000
Unexpended plant funds balance- renewals and replacements 30,000
7. Purchase of securities, P30,000.
Investments 30,000
Cash 30,000
8. Collection of interest on investments, P750.

Accounting For Non Profit organizations – Group 10 Page 19 of 38

 Cash 750
Unexpended plant funds balance- plant additions 750

Transactions related to that Retirement on Indebtedness Plant Funds of NPO University:

1. Receipt of cash from unrestricted current for payment of mortgage installment due, P25,000.
Cash 25,000
Retirement of indebtedness funds balance 25,000
2. Payment of mortgage installment due, P25,000
Retirement of indebtedness funds balance 25,000
Cash 25,000
3. Receipt of cash gift to be used for payment of installments due on mortgage in 20C-20E, P75,000.
Cash 75,000
Retirement of indebtedness funds balance 75,000

Transactions related to that Investment In Plant Funds of NPO University:

1. Receipt of gift of land, buildings, and equipment for educational and general purposes valued at P4,000,000;
properties are subject to mortgage for P1,000,000.
Land 850,000
Improvements other than buildings 150,000
Buildings 2,500,000
Equipment 500,000
Mortgage payable 1,000,000
Investment in plant- from gifts 3,000,000
2. Addition to buildings financed by gifts reported in unexpected plant funds, P85,000.
Buildings 85,000
Investment in plant- from gifts 85,000
3. Issue of bonds to be used for construction of buildings, P1,500,000
Buildings to be acquired 1,500,000
Bonds payable 1,500,000
4. Completion of buildings financed by bond issue
Buildings 1,500,000
Buildings to be acquired 1,500,000
5. Payment by retirement of indebtedness funds of current installment due on mortgage, P25,000
Mortgage payable 25,000
Investment in plant- from current funds 25,000
6. Acquisition by general current fund of equipment, P15,000
Equipment 15,000
Investment in plant- from current funds 15,000
7. Acquisition by endowment fund of a dormitory valued at P300,000
Land 125,000
Buildings 175,000
Investment in plant- from endowments 300,000
8. To record depreciation on buildings represented by endowment, P10,000
Investment in plant- endowments 10,000
Accumulated depreciation 10,000
9. Retirement of equipment carried at P5,000

Accounting For Non Profit organizations – Group 10 Page 20 of 38

 Investment in plant- from gifts 5,000
Equipment 5,000

NPO University
Plant Funds
Statement of Financial Position
June 30, 20B

ASSETS
Unexpended Plant Funds:
Cash P 15,750
Investments 30,000 P 45,750
Retirement of indebtedness funds:
Cash 75,000
Invested in Plant:
Land P975,000
Improvements other than Buildings 150,000
Buildings P4,260,000

Accounting For Non Profit organizations – Group 10 Page 21 of 38

 Less: Accum. Depreciation 10,000 4,250,000
Equipment 510,000
Total P5,885,000
Less: Items carried in Endowment funds 290,000 5,595,000
TOTAL ASSETS P 5,715,750

LIABILITIES AND NET ASSETS

Unexpended plant funds:

Balance- plant additions P 15,000
Balance- renewals and replacements 30,750 P 45,750
Retirement of indebtedness funds:
Balance 75,000
Investment in plant:
Mortgage payable P 975,000
Bonds payable 1,500,000 P2,475,000
Investment in plant-
From gifts P3,080,000
From current funds 40,000 3,120,000 5,595,000
TOTAL LIABILITIES AND NET ASSETS P5,715,750

7. Agency
- Educational institution acts as an agent or trustee, holding certain assets on behalf of others.
- when agency operations are:
- simple and limited duration=both asset accounts and accounts expressing the institution’s accountability to
others may be carried in the general or current fund.
- involved and continuing=an agency fund may be recognized and special agency books established for the
properties subject to agency control
- agency funds may be established for pension and retirement resources, special organization resources,
student deposits, and tax withholding amounts.
- accounting for the agency is the same as it would be for a private business.

HOSPITALS
*Functions:

- Provide for reception, care and medical and surgical treatment of the sick or injured
- rooms are provided and foods are supplied
- major activities center about inpatients, but frequently render outpatient care and emergency services
- carry on special activities such as research and nurses training
- operate number of auxiliary enterprises such as pharmacies for outpatients and cafeterias for staff members
and visitors
- its operations call for important administrative activities like:
 hospital staffing
 registration of patients
 operation of the physical plant
 food

Accounting For Non Profit organizations – Group 10 Page 22 of 38

  laundry and housekeeping management and budgeting
 accounting
 billing and collecting

The major source of hospital support is normally charges that that are made to patients for services.
However, such charges frequently fail to cover the full cost of hospital operations, and significant sums must be
sought from contributions and grants from private, public and charitable sources.

Funds for Hospital

- Accounting for hospitals are similar to educational institutions that acquires a revenues that must be applied
to specific objectives.
- There’s also certain accounting differences that should be pointed out
- Hospital generally does not require variety of funds required by the educational institution. Differences of
the two units are found to their operating summaries.

Educational Institution

 revenues were compared with expenditures

 a “modified accrual basis” was employed and depreciation of the educational plant was generally ignored.

Hospitals

 analysis and a summary of operations that comes closer to that of private business is normally warranted
 sell specific services
 expectation by patients, group purchasers of insurance protection, and insurance companies selling hospital
protection that charges for services will bear a close relationship to the costs of these services.
 although contributions may be available suggest that hospital revenues should be set at levels that will
provide for the ultimate replacements of properties
 these factors suggest that revenues, be compared with expenses, that a “full accrual basis” be employed,
and that depreciation of hospital properties be recognized in arriving at total operating costs.

Four Major Fund Groupings of Hospital

A.GENERAL OR CURRENT FUNDS
 summarized the current resources that are to be used in meeting the obligations arising from general
operations
 resources that can be applied without restriction are reported here
 Expenditures for which specific funds have not been provided are financed from these resources.
 This is the same in nature and function as the general or current fund of the educational institution.

*To illustrate the accounting for the general fund transactions affecting the general fund of NPO Hospital and entries
to record these transactions are listed below.

1. Charges for services to patients for year ended December 31,20B,P580000 of which P45000 is still due:
adjustments and allowances of P60000 apply to charges.

Cash P475000
Accounts Receivable 45000

Accounting For Non Profit organizations – Group 10 Page 23 of 38

Free service and adjustment-contractual patients 40000
Free service and adjustment-general patients 16500
Courtesy and miscellaneous allowances 3500
Earnings from routine services-inpatients P320000
Earnings from routine services-outpatients 50000
Earnings from special services 210000

2. Other hospital revenues, P420000 of which P10000 is still due from temporary fund in reimbursement of research
expenses.

Cash P410000
Due from temporary fund 10000
General contribution, donations, legacies and bequests P180000
Grants from community chests, foundations 122000
Donated services and commodities 10,000
Income transfers from temporary funds 57,500
Miscellaneous revenues 50,000

3. Collections of interest and dividends on endowment funds securities, P85000 of which P5000 is due from
endowment fund #1 representing bond premium amortization.

Cash P85, 000

Due from Endowment Fund #1 P5, 000
Income from investments 80,000

4. Expenditures for hospital supplies, P200000 of which P25 has not been paid.

Inventory supplies P200, 000

Cash P175, 000
Vouchers payable 25,000
5. Hospital supplies charged put, P170000

Administrative and general P5000

Household and property 10000
Professional care of patients 15000
Dietery 120000
Outpatient and emergency 5000
Other expenses 15000
Inventory of supplies P170000
6. Payment of hospital salaries and wages, P490000

Accounting For Non Profit organizations – Group 10 Page 24 of 38

Administrative and general P85000
Household and property 45000
Professional care of patients 220000
Dietery 60000
Outpatient and emergency 30000
Other expenses 50000
Cash P490000
7. Payment of hospital expenses other than salaries and wages

Administrative and general P20000

Household and property 10000
Professional care of patients 25000
Dietery 7500
Outpatient and emergency 2500
Other expenses 10000
Cash P75000
8. Payments of interest on mortgage, P60000 and of installment due on mortgage carried as liability in the plant
funds, P50000.

Interest expense P60000

General fund balance 50000
Cash P110000

9. Adjustments required on December 31,20B;

 allowance for uncollectible accounts, P2500

 accrued salaries and wages, P5000
 charges for depreciation on properties carried as assets by plant funds, P85000
 to recognize amount to be paid to plant funds equal to depreciation on properties.

Bad debts P2500

Allowance for doubtful accounts P2500

Administrative and general P1000

Household and property 250
Professional care of patients 1250
Dietery 750
Outpatient and emergency 250
Other expenses 1500
Cash P5000

Depreciation P85000
General or current fund balance P85000

General or current fund balance P85000

Due to plant funds P85000

Accounting For Non Profit organizations – Group 10 Page 25 of 38

*The transfer of cash to plant funds to finance the ultimate replacement of properties is recorded by a debit to
general fund balance and a credit to cash. In the example, recognition of reimbursement due to plant funds is
reported by a credit to a payable, the payable would be closed when the cash is transferred.

10. To close general operating revenue and expenses accounts at the end of the period.

Earnings from routine services-inpatients P320000

Earnings from routine services-outpatients 50000
Earnings from special services 210000
General or current fund balance P222500
Free service and adjustment-contractual patients 40000
Free service and adjustment-general patients 16500
Courtesy and miscellaneous allowances 3500
Bad debts 2500
Administrative and general 111000
Household and property 35250
Professional care of patients 261250
Dietery 188250
Outpatient and emergency 37750
Other expenses 76500

11. To close other revenue and expenses accounts at the end of the period.

General contribution, donations, legacies and bequests P180000

Grants from community chests, foundations 122500
Donated services and commodities 10000
Income transfers from temporary funds 57500
Income from investments 80000
Miscellaneous revenues 50000
Interest expense P60000
Depreciation 85000
General or current fund balance 355000

*In considering the presentation of hospital revenues for statement purposes, the following classifications are used;

 gross revenues from patients

 deductions from revenues and
 revenue sources

*In considering operating expenses, it recognizes the following classifications;

 administrative and general

 dietery
 household and property
 professional care of patients
 outpatient and emergency
 other expenses

Accounting For Non Profit organizations – Group 10 Page 26 of 38

B.TEMPORARY FUNDS
 Composed of current resources that, while available for current purposes, are subject to certain limitations
in their use
 For example, resources from gifts on grants and income from endowment funds that can be spent only for
specified purposes, such as research, a medical library, or nurses training, would be reported as temporary
funds
 Temporary funds are identical in nature and functions to the restricted current funds of the educational
institution.
 Temporary fund transactions of NPO Hospital and the entries to summarize these are listed below:

1. Receipt of cash gift to be used for medical research, P10000

Cash P100000
Temporary fund A balance P100000
2. Purchase of securities, P85000

Temporary investment -fund A P85000

Cash P85000
3. Receipts of cash gifts to be used for books and journals for hospital patients, P10000

Cash P10000
Temporary fund balance P10000
4. Sale of securities, book value, P25000, for P23500

Cash P23500
Temporary fund A balance 1500
Temporary investment -fund A P25000
5. Collections of interest and dividends

Cash P5000
Temporary fund A balance P5000
6. Expenditures during year by general fund for research chargeable to temporary fund A, P50000; cash transferred
to general fund, P40000.

Temporary investment -fund A P50000

Cash P40000
Due to general fund 10000
7. Payment of general fund for books and journals chargeable to temporary fund B balance, P7500.

Temporary fund A balance P7500

Cash P7500
8. Adjustments required on December 31,20B; accrued interest on securities, P250

Accrued interest in temporary fund P250

Temporary fund A balance P250

In the example, the temporary fund books summarize two temporary fund, and a separate fund balances are
maintained to report the respective fund equities. It should be observed that changes in temporary fund balances

Accounting For Non Profit organizations – Group 10 Page 27 of 38

arising from revenues, expenses and distributions are recorded directly in the fund balances; when there are many
changes and these are to be reported in special operating statements, nominal accounts would be established to
accumulate profit and loss derail.

C.ENDOWMENT FUNDS

 represent resources that have been transferred under conditions that limit expenditures to the income that
is produced by such resources.
 Assets may be transferred directly to the hospital, or they may be transferred to a trustee who administers
them for the benefit of the institution
 May also be created by the action of the governing board of the hospital.
 Terms of it may place no restrictions on the use of the endowment income, or they may specify a particular
purpose for which the income is to be used.
 In the absence of restrictions, its income becomes available to the general fund; when there are restrictions;
income is in a temporary fund.
 Endowment fund transactions of NPO Hospital and the entries to summarize these are listed below.

1. Receipt of bonds in establishment of Endowment fund #1 as follows: Co.S bonds Face value, P500000, market
value on date of transfer, P470000.

Investments in bonds at fair value(Endowment fund #1) P1000000

Investments-unamortized bond premium(Endowment fund #1) 50000
Investments-unamortized bond discount (Endowment fund #1) P30000
Endowment fund #1 balance 1020000

2. Receipt of cash in establishment of Endowment fund # 2, P250000.Endowment income is to be used for specified
research projects.

Cash P250000
Endowment fund #1 balance P250000
3. Purchase of 1000 shares of Co.T preference shares, P240000.

Investment in preference shares(Endowment fund #2) P240000

Cash P240000
4. Collection of interest by general or current fund that includes P5000 reimbursable to Endowment fund #1 for bond
premium amortization.

Due from general or current fund P5000

Investments-unamortized bond premium(Endowment fund #1) P5000
5. Sale of Co.S bonds at fair value, P250000

Cash P250000
Investments-unamortized bond discount (Endowment fund #1) 15000
Investments-at bonds at fair value(Endowment fund #1) P250000
Endowment fund #1 balance 15000

In the example, Endowment fund books summarize to endowment and separate endowment fund balances
summarize their respective fund equities. It should be observed in the example that endowment fund income is

Accounting For Non Profit organizations – Group 10 Page 28 of 38

reported directly in the fund that in entitled to such income. When revenue and expense are involved in a
determination of net income, revenue and expense can be summarized in the Endowment funds books; the fund net
income, when determined is then transferred to the appropriate fund.

D.PLANT FUNDS

Two Groups of Plant Resources

1. Physical resources comprising the hospital properties

2. Cash and other assets that is available for the improvement and the replacement of the hospital properties.

Although the two asset of groups are recognized, hospitals would nevertheless combined these within a single plant
funds category

When there are claims against plant fund resources in connection with original financing of properties, construction
in progress, or current property acquisitions, such obligations would be recognized in the plant funds.

Funds are balanced by two plant fund balances:

1. Investment in plant

2. Reserve for plant improvement and expansion

Transactions affecting the plant funds of NPO Hospital and the entries to record these transactions are shown below:

1. Acquisition of land construction of hospital financed by gifts of cash, P1500000 and cash raised through a
mortgage, P1000000.

Land P250000
Building 1750000
Equipment 500000
Mortgage Payable 1000000
Investment in Plant 1500000

2. Receipt of gifts of cash of P50000 and securities valued at P100000 for plant improvement and replacements

Cash P50000
Investments 100000
Reserve for plant improvement and replacements P150000
3. Acquisition of equipment, P30000 mortgage, P1000000.

Reserve for plant improvement and replacements P30000

Cash P30000

Equipment P30000
Investment in Plant P30000
4. Payment by general fund of mortgage installment, P50000.

Mortgage Payable P50000

Investment in Plant P50000

Accounting For Non Profit organizations – Group 10 Page 29 of 38

5. Adjustments required on December 31,20B:
a) accrued investments on investment,P1500;
b) depreciation for plant assets for year,P85000;
c) amount recoverable from general fund equal to depreciation on plant assets.
Accrued interest on investments P1500
Reserve for plant improvements and replacements P1500

Investment in plant P85000

Accumulated Depreciation-building P35000
Accumulated Depreciation-equipment 50000

Due from general fund P85000

Reserve for plant improvements and replacements P85000

Alternative approaches have been suggested for analyzing and recording plant funds transactions of the hospital.

Probably the best approach would recognize two self-balancing sets of accounts, one summarizing the existing
physical plant and the other summarizing resources that are held for plant improvement and replacement.

With such an approach, the analysis of transactions affecting hospital plant assets, liabilities, and fund balances or
net assets is the same as that employed for the educational unit. However, the entries relating to existing plant and
to improvement and replacement resources are made in self-balancing from within a single set of books instead of in
separate sets of books as in the case of the educational unit.

COOPERATIVES

A cooperative is a business organization owned and operated by a group of individuals for their mutual
benefit. Cooperatives are defined by the International Co-operative Alliance's Statement on the Co-operative Identity
as autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs
and aspirations through jointly owned and democratically controlled enterprises. A cooperative may also be defined
as a business owned and controlled equally by the people who use its services or by the people who work there.
Cooperative enterprises are the focus of study in the field of cooperative

A credit cooperative is financial organization owned and operated by its member with the following objectives:

 to encourage saving among its members

 to create pool of such savings from which loan for productive purpose may be granted to its member
 to provide related services to its members to maximize the benefit from such loan.

Current accounting policies and procedures adopted by credit cooperatives were used as basis in
development of this manual. Key officers of cooperatives were interviewed and financial statements and relevant
reference materials were gathered from organizations during capacity building for cooperatives.

As a general rule, a good accounting system includes the following:

1. A well-conceived chart of accounts and general ledger system.

2. Clearly laid out procedures for keeping accounting records accurate and up to date.
3. Skilled personnel whose primary responsibility is to track, update and report financial information
4. A sound system for monitoring loan disbursements, collection and

Accounting For Non Profit organizations – Group 10 Page 30 of 38

 5. Deposit transaction.
6. Appropriate accounting safeguard and control to provide reasonable assurance that accounting books are
complete and accurate.

CONCEPTS AND GENERAL PRINCIPLE

1. Separate Enterprise
Each cooperative is a separate business enterprise requiring the maintenance of comprehensive accounting
records and financial reporting practices to provide meaningful information to members, officers, directors and audit
committee of cooperative, government agencies, the apex organization and other interested third parties.
2. "Going Concern" Concept
Each credit cooperative should normally maintain its account s as "going concern: on the basis that its
operation will continue definitely. Therefore , Assets and liabilities should be presented in the financial statement at
historical cost and not as liquidation value.
3. Monetary Basis of Accounting
Financial Statements in the Philippines are expressed in terms of Philippine Peso (Php), hence, accounts of
credit cooperative should be stated in peso amounts involve at the time the transaction occur
4. Consistency in Accounting Practice From Period to Period.
Consistent accounting practices should be followed by each cooperative from one accounting period to the
next.
5. Timely Recognition in Accounting Records
Accounting record should be recorded on a timely basis so that all material information applicable to each
accounting period will be shown in the record. To properly recognize in accounting record and financial reports the
reasonable value of assets, liabilities, equity revenues and expenses, each credit cooperative should make provision
for losses that may be sustained I the collection or conversion of loans and other assets by charge against current
operation.
6. Materiality
Material fact relating to the credit cooperative's activity must be recognize in the accounts of said
cooperative and reports in its financial statements. A statement, fact or item is material if, fiving full consideration to
the surrounding circumstances as they exist at the time, it is of such a nature that its disclosure would likely influence
or "make a difference" in the judgment and conduct of a reasonable person.
7. Principle of Disclosure
This accounting principle requires that the members of the cooperative and other users of the financial
statements should be informed of material and relevant information about economic and financial affair of the
cooperative. This can be done either in the financial statements or in the notes that company the statements of
supplementary schedules and other presentation. Full disclosure requires reporting of all facts that can make a
difference in the decision of the users and that the accounting information reported must be understandable and not
susceptible to misinterpretation. Such disclosure makes the financial statements more relevant and useful and less
subject to misinterpretation.
Adequate information to be disclosed in the financial statements may not be presented in detail provided
that important and relevant facts are revealed and made clear. The full-disclosure principle requires the financial
report to give more emphasis to substance over form. This means that the substance should not be made less clear
or hidden.
There are, however, limits to the amount of disclosure that can be made in financial statements or in
accompanying notes. As minimum information, the following should generally be disclosed.

a. Accounting method used I preparing financial statements

b. Changes in the use of accounting method during current period
c. Term of major borrowing arrangements
d. Existence of large contingent liabilities
e. Major proposed asset acquisition
f. Contractual provision relating to leasing arrangements and employee pension and bonus

Accounting For Non Profit organizations – Group 10 Page 31 of 38

 g. plan
h. Significant events affecting financial position, including major contracts for sale of services and
pending legislation which mat affect significantly the operations of the cooperative
i. Other materials and significant events which will occur after the end of accounting period and
before the financial statements are released and which are relevant to users.
8. Principle of Conservatism
Each credit cooperative should maintain its accounting records on a conservative basis. It should make
reasonable provision in the accounts for probable losses on assets and for the settlement of liabilities. It should not
materially overstate nor understate its asset, liabilities, revenues or expenses.
9. Accounting Basis
Modified Cash Basis is the prescribed accounting basis for a cooperative. This is a combination of cash basis
of accounting and accrual basis of accounting. Under the modified cash basis, the accounting is based on actual
receipt s and disbursements of the credit cooperative except that provision should be made to reflect:
a. Liabilities which are not paid when due;
b. Unpaid interest on share capital and patronage refund applicable to the accounting period;
c. Deferred credits and charges that are applicable to future periods;
d. Estimated losses on loans outstanding and other risk assets; and
e. The depreciation of property and equipment

Other two accounting bases are;

a. Cash Basis - Revenue is recorded and accounted for when actually collected and expenses are accounted for when
actually paid.
b. Accrual Basis - It provides the most complete and informative record of the financial activities of the cooperative.
Under accrual basis of accounting, the credit cooperatives record revenue when earned and expenses and liabilities
as incurred regardless of the timing of the actual receipt or payment.

10. Accounting Safeguard and Control

Each credit cooperative should adopt appropriate accounting safeguard and control to provide its members
and the general public reasonable assurance that accounting records are complete and accurate.
11. Accounting period
The accounting period shall be 12-month period starting January 1 and ending December 31, as common
practiced.
FINANCIAL STATEMENTS
Financial statements are the means by which the information accumulated and processed in financial
accounting is periodically communicated to those who use it. They are designed to serve the needs of a variety of
users, particularly owners and creditors. Trough the financial accounting process, the myriad and complex effect of
the economic activities of a cooperative are accumulated, analyzed, quantified, recorded, summarized and reported
as information of two basic types;
a. financial condition, which relates to a point in time
b. financial operations, which relates to a period of time
Notes to financial statement, which may explain headings, captions or amounts in the statements or present
information that cannot be expressed in terms of money and those descriptions of accounting policies are integral
part of the statements.
A. Statement of Financial Condition (Balance Sheet)
The statement of financial condition presents the difference between the total assets and total liabilities. The
statement at any date present s an indication in conformity with generally accepted accounting principles of the
financial status on the cooperative at a particular point of time.
B. Statement of Operation (Statement of Net Surplus)
Presents the revenues, expenses, gain, losses and net surplus (net loss) recognized during the period and thereby
presents an indication in conformity with GAAP of the result of the cooperative's service directed activities during the
period. The information presented in the statement of operation is usually considered as the most important

Accounting For Non Profit organizations – Group 10 Page 32 of 38

information provided by financial accounting because the net surplus is paramount concern to those interested in
economic activities of cooperative.
C. Statement of Cash Flow is a formal statement summarizing all operating, investing and financiang activities of a
cooperative.
D. Other Schedules such as:
a. Bank Reconciliation
b. Aging of Loans receivables
d. Property and equipment
e. Members loans receivable, saving/time deposit, subscribed and paid-up share capital.
f. Investment
g. Accounts Payable
h. Loans Payable
i. Use of:
i. Reserve refund
ii Optional refund
iii Education and training Fund
Apex
Local

Attachments:
Comparable Financial Statements of Baguio- Benguet Community Credit Cooperative for
the year ended 2008- 2009

1. Statements of Financial position

2. Statement of Changes in Equity
3. Statement of Financial Operations
4. Statements of Cash Flows

Accounting For Non Profit organizations – Group 10 Page 33 of 38

Accounting For Non Profit organizations – Group 10 Page 34 of 38
Accounting For Non Profit organizations – Group 10 Page 35 of 38
Accounting For Non Profit organizations – Group 10 Page 36 of 38
Reference:

 Accounting for Government and Non-Profit organizations by Josephine Antonio –

Ocampo, CPA, MPA 2010 Edition
 Theory of Accounts by Conrado Valix, 2009 edition
 BBCCC Financial Statements published magazine courtesy of BBCCC.

Accounting For Non Profit organizations – Group 10 Page 37 of 37