Govt. & Non-Profit Accounting

Week

1

Assignment

Government

and

Not

-

For

-

Profit

Accounting

A Loan for Not

-

for

-

Profit

Financial statements of a government or not

-

for

-

profit organization may not provide sufficient

information on which to make a loan decisions.

Assume that you are a loan officer of a bank. A local church is seeking a $4 million, 20

-

year loan to

construct a

new classroom building. Church officers submit a comprehensive financial report that

was audited by a reputable CPA firm. In summary form (the actual statement showed details), the

church’s statement of revenues and expenditures indicated the following (i

n millions):

Revenues

from

dues

and

contributions

$1.8

Revenues from other sources

0.20

Total Revenues

$20.0

Less: total expenditures

2.0

Excess of revenues over expenditures

$0.0

The church prepared its financial statements on a near

-

cash basis, accounting for all capital asset

acquisitions as expenditures when acquired.

The church’s balance sheet reported assets, mainly cash and investments (at market value), of

$0.20 million. In

addition, a note to the financial statements indicated that equipment is

approximately $3 million. The church has no outstanding debt.

Write a 1000 word, APA style paper where you answer the following questions:

1.

Is there any information in the financial st

atements that would make you reluctant to approve the

loan? If so, indicate and explain.

2.

Is there any other financial information of the type likely to be reported in a conventional annual

report that you would like to review prior to making a loan decisio

n? If so, indicate and explain.

3.

Is there any other information, of any type, that you would like to review prior to making a loan

decision? If so, indicate and explain.

4.

Comment on the inherent limitations of the financial statements of this church, or any

comparable

not

-

for

-

profit organization, as a basis for making loan decisions.

Be sure to include a title page and 2 references. Only one reference may come from the internet (not

wikipedia). The other reference must be found in the Grantham University Onli

ne library. Only the

body of the paper will count towards the word requirement. Please review the rubric below.

Week 1 Assignment

Government and Not-For-Profit Accounting

A Loan for Not-for-Profit

Financial statements of a government or not-for-profit organization may not provide sufficient

information on which to make a loan decisions.

Assume that you are a loan officer of a bank. A local church is seeking a $4 million, 20-year loan to

construct a new classroom building. Church officers submit a comprehensive financial report that

was audited by a reputable CPA firm. In summary form (the actual statement showed details), the

church’s statement of revenues and expenditures indicated the following (in millions):

Revenues from dues and contributions $1.8

Revenues from other sources 0.20

Total Revenues $20.0

Less: total expenditures 2.0

Excess of revenues over expenditures $0.0

The church prepared its financial statements on a near-cash basis, accounting for all capital asset

acquisitions as expenditures when acquired.

The church’s balance sheet reported assets, mainly cash and investments (at market value), of

$0.20 million. In addition, a note to the financial statements indicated that equipment is

approximately $3 million. The church has no outstanding debt.

Write a 1000 word, APA style paper where you answer the following questions:

1. Is there any information in the financial statements that would make you reluctant to approve the

loan? If so, indicate and explain.

2. Is there any other financial information of the type likely to be reported in a conventional annual

report that you would like to review prior to making a loan decision? If so, indicate and explain.

3. Is there any other information, of any type, that you would like to review prior to making a loan

decision? If so, indicate and explain.

4. Comment on the inherent limitations of the financial statements of this church, or any comparable

not-for-profit organization, as a basis for making loan decisions.

Be sure to include a title page and 2 references. Only one reference may come from the internet (not

wikipedia). The other reference must be found in the Grantham University Online library. Only the

body of the paper will count towards the word requirement. Please review the rubric below.