Is fund accounting less appropriate for businesses thanfor not-for-profits?A newly formed not?for?profit advocacy organization,...Is...

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Accounting

Is fund accounting less appropriate for businesses thanfor not-for-profits?
A newly formed not?for?profit advocacy organization, the Centerfor Participatory Democracy, requests your advice on setting up itsfinancial accounting and reporting system. Meeting with thedirector, you learn the following:
• Member dues can be expected to account for approximately 80percent of the organization’s revenues.
• The organization plans to seek grants from private foundationsto carry out research projects pertaining to various politicalcauses.
• The center has already received a gift of $100,000. The donorspecified that the funds are to be placed in investment?gradesecurities and that only the income is to be used to support centeractivities.
• The center leases office space but owns its furniture,fixtures, and office equipment.
• The center has taken out a five?year term loan of $100,000.Although the loan is not due until its term expires, theorganization intends to set aside $17,740 each year with theprospect that, properly invested, these payments will provide thenecessary $100,000.
1. Do you believe that the center should establish itsaccounting system on a fund basis? If so, why?
2. Assume you answered “yes” to question 1. What specific fundtypes do you think the center should set up? Explain.
3. Alternatively, suppose the center was a privately owned,profit?oriented consulting firm that provided political advice toits clients. The firm would charge its clients a fixed fee eachmonth in return for which they would receive periodic newslettersand the opportunity to meet with the firm’s partners. In addition,the firm expects to enter into contracts to carry out specificresearch projects for its clients.
***Would you now recommend that the firm establish itsaccounting system on a fund basis (assuming, of course, that itwould prepare its external financial reports in accordance withgenerally accepted accounting principles applicable to businesses)?Explain.

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3.9 Ratings (694 Votes)

ANSWER First need to comprehend subsidize base bookkeeping Fund bookkeeping its a practical methods for control that guarantees that goverment or other association utilize assets just for the reason for which they are limited case wage assess withheld from representative deals impose gathered and so on must be spent on particular activitiesreason except if ordered by law not revenue driven orgazations require not worker finance representing motivation See Answer

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In: AccountingIs fund accounting less appropriate for businesses thanfor not-for-profits?A newly formed not?for?profit advocacy organization,...Is fund accounting less appropriate for businesses thanfor not-for-profits?A newly formed not?for?profit advocacy organization, the Centerfor Participatory Democracy, requests your advice on setting up itsfinancial accounting and reporting system. Meeting with thedirector, you learn the following:• Member dues can be expected to account for approximately 80percent of the organization’s revenues.• The organization plans to seek grants from private foundationsto carry out research projects pertaining to various politicalcauses.• The center has already received a gift of $100,000. The donorspecified that the funds are to be placed in investment?gradesecurities and that only the income is to be used to support centeractivities.• The center leases office space but owns its furniture,fixtures, and office equipment.• The center has taken out a five?year term loan of $100,000.Although the loan is not due until its term expires, theorganization intends to set aside $17,740 each year with theprospect that, properly invested, these payments will provide thenecessary $100,000.1. Do you believe that the center should establish itsaccounting system on a fund basis? If so, why?2. Assume you answered “yes” to question 1. What specific fundtypes do you think the center should set up? Explain.3. Alternatively, suppose the center was a privately owned,profit?oriented consulting firm that provided political advice toits clients. The firm would charge its clients a fixed fee eachmonth in return for which they would receive periodic newslettersand the opportunity to meet with the firm’s partners. In addition,the firm expects to enter into contracts to carry out specificresearch projects for its clients.***Would you now recommend that the firm establish itsaccounting system on a fund basis (assuming, of course, that itwould prepare its external financial reports in accordance withgenerally accepted accounting principles applicable to businesses)?Explain.