Non-for-profit organization

Unrestricted funds

Unrestricted Fund
All

assets of a nonprofit
organization that are available for
use as authorized by the board of
directors and not restricted for
specific purposes.

Revenues and gains from

Unrestricted Funds

1.

For example:
Hospital

.Patient

services

.Unrestricted

donations

.Unrestricted

income from endowment funds

2.

Colleges and Universities

.Student

tuition fees

.Government
.Donations

grants

and private grants

.Unrestricted

income from endowment funds

Revenues from services

Reported in the period in which services are rendered,

even though part or al of the revenue is to be waived
or reduced.

Illustration:
Hospital
a.

Gross patient services (before charity care or contractual adjustments) 200,000

b.

Charity care for poor and indigent persons patients 10,000

Accounts Receivable 190,000

Service Revenue- Patients
c.

190,000

Contractual adjustment allowed to Medicare patients 30,000

Contractual Adjustments 30,000

Accounts Receivable 30,000
. For

hospitals, accounts receivable are collectible from a third party payor, rather than
from the patient.

. Deducted

d.

from the total service revenue to arrive at the net service revenue.

Provision for doubtful accounts 20,000

Doubtful Accounts

20,000

Allowance for Doubtful accounts

20,000

Colleges and Universities

a.

Gross Tuition fees 500,000

Accounts Receivable 500,000

Service Revenue Tuition Fees
b.

500,000

Tuition wavers provided under fellowship program 50,000

Expenditure for Student Aid 50,000

Accounts Receivable 50,000
. Deducted

c.

from the total service revenue to arrive at the net service revenue

Provision for doubtful accounts (5%) 25,000

Doubtful Accounts

25,000

Allowance for Doubtful Accounts

25,000

Contributed Materials , Services

and Facilities
1.

Contributed Materials

Inventories (at current fair value)

Contributions Revenue
2.

Contributed services

Salary Expense

xx

Contributions Revenue
3.

xx

xx

Contributed facilities

Rent expense xx
Contributions Revenue

xx

xx

Other Operating Revenues

Income derived from other related activities, other

than service revenues of nonprofit organizations

Cash (or Accounts Receivable)

Other Operating Revenue

xx
xx

Pledges

Commitment by a prospective donor to contribute a

specific amount of cash or property to a nonprofit
organization a future date or installments.

Under accrual basis, unconditional pledges are recorded

as receivables and revenues in the unrestricted fund
with appropriate provision for doubtful pledges.

Pledge Receivable

xx

Contributions Revenue

xx

Doubtful Pledges expenses xx

Allowance for doubtful pledges xx

Expenses of Unrestricted Fund

Usually recognizes all expense in its unrestricted fund.

Classifications
Program services

organizations activities that result in the distribution of goods and services

to fulfill the purpose of the organization.

Supporting services

All activities of the organization other than program services, such as

administrative expenses and fund-raising costs

Expense account (classified according to function)

Cash (or accounts payable)

xx

xx

Depreciation expense

Required on all the property and equipment's of nonprofit organizations,

except for individual works of art or historical treasures having
extraordinary long economic lives.

Assets and Liabilities of

Unrestricted Funds

Current assets and liabilities

similar of a business enterprise

Fixed assets

nonprofit organizations use fund accounting

generally account for fixed assets in a property and
equipment fund.