Reporting Various Activities Suppose the Institute of Management Accountants (IMA) has the following transactions during the year: 1. A retired CMA donates cash, with no stipulations as to use. 2. The IMA borrows money to finance construction of new facilities. 3. Money is collected in February from participants in the upcoming June annual conference. 4. The Board of Directors sets aside money for distribution to universities as awards for best management accounting doctoral dissertations. 5. Depreciation is recorded on IMA facilities. 6. Postretirement benefits are accrued for current employees. 7. A member’s dues, paid at the start of the membership period, expire. 8. A corporate partner contributes cash to finance promotion of the CMA certification program. Required Identify how each contribution is reported on the IMA’s statement of activities. The contribution either (a) increases or decreases net assets without donor restrictions, (b) increases or decreases net assets with donor restrictions, or (c) is not reported as a change in net assets. Transaction Reported on the IMA's statement of activities as: 1 Answer 2 Answer 3 Answer 4 Answer 5 Answer 6 Answer 7 Answer 8 Answer Answers to chose from: Decrease in net assests with doner restrictions Decrease in net assets without donor restrictions Increase and decrease in net assets with donor resitrictions Increase and decrease in net assets without donor restrictions Increase in net assets with donor restrictions Increase in net assets without donor restrictions No effect on net assets
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Reporting Various Activities
Suppose the Institute of Management Accountants (IMA) has the following transactions during the year:
1. A retired CMA donates cash, with no stipulations as to use.
2. The IMA borrows money to finance construction of new facilities.
3. Money is collected in February from participants in the upcoming June annual conference.
4. The Board of Directors sets aside money for distribution to universities as awards for best
5.
6. Postretirement benefits are accrued for current employees.
7. A member’s dues, paid at the start of the membership period, expire.
8. A corporate partner contributes cash to finance promotion of the CMA certification program.
Required
Identify how each contribution is reported on the IMA’s statement of activities. The contribution either (a) increases or decreases net assets without donor restrictions, (b) increases or decreases net assets with donor restrictions, or (c) is not reported as a change in net assets.
| Transaction | Reported on the IMA's statement of activities as: |
|---|---|
| 1 | Answer |
| 2 | Answer |
| 3 | Answer |
| 4 | Answer |
| 5 | Answer |
| 6 | Answer |
| 7 | Answer |
| 8 | Answer |
Answers to chose from:
Decrease in net assests with doner restrictions
Decrease in net assets without donor restrictions
Increase and decrease in net assets with donor resitrictions
Increase and decrease in net assets without donor restrictions
Increase in net assets with donor restrictions
Increase in net assets without donor restrictions
No effect on net assets
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