ACCOUNTING FOR NON-PROFIT ORGANIZATION

Four Types Of Not-For-Profit / Service Organizations, Namely:

1.The professional organization;
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 of 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 organizations 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
This statement provides relevant information about the liquidity, financial flexibility and interrelationship of an organizations asset and liabilities in
order to let the external users of such, be able to assess the organizations 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 organizations resources are used in providing various programs or services.
The information in this statement used with related disclosures and information in order that financial statements helps donors, creditors and others to:
a. evaluate the organizations performance during a period;
b. assess an organizations service efforts and its ability to continue provide services; and
c. assess how an organizations 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
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 which 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:
1. Unrestricted or General; and
2. 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 enrolment, 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; and
6. Agency fund.
ACCOUNTING FOR NON-PROFIT ORGANIZATIONS IS ESSENTIALLYFUND ACCOUNTING
This means that the internal accounting form of any 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; and
7. Plant fund.
Unrestricted Fund/ General Fund/ Current Fund
This is also known as the general fund 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 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 non profit 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 Servicesthese 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.
All expenses of a non profit organization are 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 non profit organization.
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 non profit 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 non profit 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 non profit 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 beneficiarys lifetime.
Only the income on the fund is paid to the beneficiarys 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
Is 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 Positionreports that assets should equal liabilities and net assets
2. Statement of Activitiesreports the changes in net assets and their revenue, gains, expenses and losses.
This is equivalent to comprehensive 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 for voluntary health and welfare organizationsthis reports expenses both by function (program and supporting ) and natural classification
(salaries, depreciation etc. ).
CLASSIFICATIONS OF NET ASSETS
These are reported in the statement of Financial Position
1. Unrestricted net assetsassets in the unrestricted fund.
2. Temporarily restricted net assetassets in the restricted fund, loan fund, term endowment fund, annuity fund, life income fund and plant fund.
3. Permanently restricted net assetspermanently endowment fund.
UNCONDITIONAL PROMISES TREATMENT
Reported in the period pledges are made not in the period of cash collection.
Contribution that 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 non profit 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 OF NON PROFIT ORGANIZATIONS IN THE CASH FLOW STATEMENTS
1. Operating Activitiesincludes unrestricted cash contributions, unrestricted revenues and expenses;
2. Investing activitiesincludes cash flows from acquisition and disposal of property, plant and equipment, investments, and other long-term assets;
3. Financing activitiesincludes temporarily or permanently restricted cash contributions and cash flows from borrowings and repayment of
borrowings.

XXX Organization
Statement of Financial Position
December 31, 2011 and 2012
(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

XXX Organization
Statement of Activities
For the year ended December 31, 2011
(In thousands)
Temporarily Permanently
Unrestricted Restricted
Restricted Total
Revenues, Gains and Other Support
Contributions Pxxx Pxxx Pxxx Pxxx
Fees xxx xxx
Total Pxxx Pxxx
Expenses and Losses
Program A Pxxx Pxxx
Program B xxx xxx
Management and General xxx xxx
Fund raising xxx xxx
Total Pxxx Pxxx
Change in Net Assets Pxxx xxx xxx Pxxx
Net Assets at the Beginning
of the Year xxx xxx xxx xxx
Net Assets at the
end of the Year xxx xxx xxx xxx

XXX Organization
Statement of Cash Flows
For the year ended December 31, 2011
(In thousands)
Cash Flows From Operating Activities:

Cash Received from Members and Contributions Pxxx

 Cash Received from Service Recipients xxx

Cash Paid For:

Program A Pxxx

Program B xxx

Fund Raising xxx

Total P(xxx)

Cash Paid to Employees and Suppliers (xxx)

Net Cash From Operating Activities Pxxx

Cash and Cash Equivalents at the Beginning of the Year xxx

Cash and Cash Equivalent at the End of the Year Pxxx

Reconciliation of Change in Net Assets to Net Received From Operating Activities:

Change in Net Assets Pxxx

Adjustment to Reconcile Net Assets 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

Adjusted Net Cash flow From Operating Activities Pxxx

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 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 fund investment.
Transactions Related to Loan of NPO Universities
1. Receipt of cash gift to be used for loans to students, P50,000.00.

Cash P50,000.00
Loan Fund Net Assets P50,000.00
2. Purchase of securities for P25,000.00 which includes accrued interest of P600.00.

Investment 25,000.00
Accrued Interest 600.00
Cash 25,600.00
3. Loans to students of P20,000.00.
Notes Receivables 20,000.00
Cash 20,000.00

4. Collection of interest on investments-P1,500.00.

Cash 1,500.00
Accrued Interest 600.00
Loan Fund Net Assets 900.00

5. Collection of loans with interest of P150.00, P7,650.00.

Cash 7,650.00
Notes Receivables 7,500.00
 Loan Fund Net Assets 150.00

6. Uncollectible Loans written off.

Loan Fund Net Assets P 300.00
Notes Receivable 300.00
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 2011
(In Pesos)
ASSETS

Cash P13,550.00

Investments 25,000.00

Notes Receivable 12,200.00

TOTAL ASSETS P50,750.00

LIABILITIES AND NET ASSETS

TOTAL NET ASSETS P50,750.00

NPO University
Loan Fund
Statement of Activities
For the Year Ended June 30 20B
(In Pesos)
Revenues:

Interest on Investments P900.00

Interest on Loans 150.00

P1,050.00

Less Expense/Loss

Uncollectible Loans Written Off 300.00

Excess of Revenues Over Expense P 750.00

NPO University
Loan Fund
Statement of Cash Flows
For the Year Ended June 30 20B
(In Pesos)
Cash from Operating Activities
Receipt of Gifts P50,000.00
Excess of Receipts over Expenses 750.00
Net Cash from Operating Activities or Net Assets P50,750.00

ENDOWMENT AND OTHER NONEXPENDABLE FUNDS

a. 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;
b. 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;
c. 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;
d. Endowments are created by transfer of assets directly to the institution;
 e. 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;
f. 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.
g. Earnings dont 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 P1,000,000.00
Endowment Fund A P1,000,000.00

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 P715,000.00

Investments-Preference Shares 245,000.00
Endowment Fund B P715,000.00
Endowment Fund C 245,000.00

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 P1,000,000.00
Pooled Investments-Ordinary Shares 750,000.00
Pooled Investments-Preference Shares 250,000.00
Cash P1,000,000.00
Investments-Ordinary Shares 715,000.00
Investments-Preference Shares 245,000.00
Endowment Fund B 35,000.00
Endowment Fund C 5,000.00

4. Purchases of P900,000 of Z Co. bonds at a price of P105.

Pooled Investment Bonds P 900,000.00
Pooled Investments Unamortized Bond Premium 45,000.00
Pooled Cash P945,000.00

5. Collection of interest and dividends on pooled investments, P107,500.

Pooled Cash P107,500.00
Undistributed Pooled Income P107,500.00

6. Premium amortization on pooled investments, P2,250.

Undistributed Pooled Income P 2,250.00
Pooled Investments Unamortized Bond Premium P 2,250.00

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 orP39,375. Endowment Fund C: 250,000/2,000,000 x 105,000 or P13,125.
Undistributed Pooled Income P105,000.00
Pooled Cash P105,000.00

8. Sale of Y Co. preference shares for P260,000.

Pooled Cash P260,000.00
Pooled Investments-Preference Share P250,000.00
Gains and Losses on Pooled Investments 10,000.00

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 P125,000.00
Building 175,000.00
Endowment Fund D P300,000.00

10. Receipt of cash from unrestricted current fund to be used as an endowment fund until alternative use is authorized, P50,000.
Cash P 50,000.00
Principal Temporarily Functioning As Endowment Fund E P 50,000.00

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 P 400,000.00
Endowment Fund F P400,000.00
12. Amount receivable from restricted current fund representing recovery of depreciation on endowment properties (dormitory), P10,000.
Due From Restricted Current Fund P 10,000.00
Accumulated Depreciation Building P 10,000.00

Note: 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 Nonexpendable Fund
Statement of Financial Position
June 30, 2011
(In Pesos)

ASSETS

Cash P 50,000.00
Due From Restricted Current Fund 10,000.00
Pooled Cash 317,500.00
Pooled Investments:
Ordinary Shares P 750,000.00
Bonds 900,000.00
Unamortized Bond Premium 42,500.00 P 1,692,500.00
Land 125,000.00
Buildings P 175,000.00
Less: Accumulated Depreciation 10,000.00 P 165,000.00
Fund Held By Trustee 400,000.00
TOTAL ASSETS P2,760.000.00

LIABILITIES AND NET ASSETS

Gain and Losses on Pooled Investments P 10,000.00

Net Assets:
Unrestricted:
Endowment Fund A P1,000,000.00
Endowment Fund B 750,000.00
Endowment Fund C 250,000.00
Endowment Fund F 400,000.00
Total P2,400,000.00
Restricted:
Endowment Fund D P 300,000.00
Principal Temporarily Functioning
As Endowment Fund E 50,000.00
Total P 350,000.00
TOTAL LIABILITIES AND NET ASSETS P 2,760,000.00

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.
Cash P125,000.00
Annuity Net Assets P125,000.00

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

Investments P118,000.00
Accrued Interest 2,000.00
Cash P120,000.00

3. Collections of income for the year ended June 30, 2011, P9,500.
Cash P 9,500.00
Accrued Interest P 2,000.00
Annuity Net Assets 7,500.00

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

Annuity Net Assets P 5,000.00
Due to Annuitant P 5,000.00
5. Amount becoming available for educational and general purposes according to annuity agreement, P2,500.
Annuity Net Assets P 2,500.00
Due to Unrestricted Current Fund P 2,500.00

NPO University
Annuity Fund
Statement of Financial Position
June 30, 2011
(In Pesos)

ASSETS

Cash P 14,500.00
Investments 118,000.00
TOTAL ASSETS P132,500.00

LIABILITIES AND NET ASSETS

Due to Annuitant P 5,000.00

Due to Unrestricted Current Fund 2,500.00
Annuity Net Assets 125,000.00

TOTAL LIABILITIES AND NET ASSETS P132,500.00

NPO University
Annuity Fund
Statement of Changes in Equity
For the Year Ended June 30, 2011
(In Pesos)

ASSETS

Net Assets-Beginning P -0-

Add: Increase From Gift Subject to Annuity P125,000.00
Increase From Income for Year 7,500.00
Total P 132,500.00
Less: Amount Payable to Annuity For Year P 5,000.00
Amount Payable to Unrestricted Current Fund 2,500.00
7,500.00
Net Assets End P125,000.00

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; and
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; and

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 The Unrestricted Plant Funds of NPO University:

1. Receipt of cash gift to be used for plant acquisitions P100,000.

Cash P100,000
Unexpended Plant Funds Balance-Plant Addition P100,000
2. Payment of additions to buildings, P85,000.

Unexpended Plant Funds Balance-Plant Addition P 85,000

Cash P 85,000

3. Issue of bonds to raise funds for construction of buildings, P1,500,000.

Cash P1,500,000
Unexpended Plant Funds Balance-Plant Addition P1,500,000

4. Completion of Buildings at Contract Price of P1,500,000.

Unexpended Plant Funds Balance-Plant Addition P1,500,000
Contracts Payable P1,500,000

5. Payment of contract, 1,500,000.

Contracts Payable P1,500,000
Cash P1,500,000

6. Receipt of cash from unrestricted current fund plant renewals and replacements in subsequent periods,P30,000.
Cash P 30,000
Unexpended Plant Funds Balance-Plant Addition P30,000

7. Purchase of securities, P30,000.

Investments P 30,000
Cash P 30,000

8. Collection of interest on investments, P750.

Cash P 750
Unexpended Plant Funds Balance-Plant Addition P 750

Transactions Related to The Retirement on Indebtedness Plant Funds of NPO University.

1. Receipt of cash from unrestricted current for payment of mortgage instalment due, P25,000.
Cash P 25,000
Retirement of Indebtedness Funds Balance P 25,000

2. Payment of mortgage instalment due, P25,000.

Retirement of Indebtedness Funds Balance P 25,000
Cash P 25,000

3. Receipt of cash gift to be used for payment of instalments due on mortgage in 20C-20E, P75,000.
Cash P 75,000
Retirement of Indebtedness Funds Balance P 75,000

Transactions Related to the 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 P 850,000
Improvements Other Than Buildings 150,000
Buildings 2,500,000
Equipment 500,000
Mortgage Payable P1,000,000
` Investment in Plants From Gifts 3,000,000

2. Addition to buildings financed by gifts reported in unexpected plant funds, P85,000.

Buildings P 85,000
Investment in Plants From Gifts P 85,000

3. Issue of bonds to be used for construction of buildings, P1,500,000.

Buildings To Be Acquired P1,500,000
Bonds Payable P1,500,000

4. Completion of buildings financed by bond issue.

Buildings P1,500,000
Buildings To Be Acquired P1,500,000

5. Payment by retirement of indebtedness funds of current instalment due on mortgage, P25,000.

Mortgage Payable P 25,000
Investment in Plant-From Current Fund P 25,000
6. Acquisition by general current fund of equipment, P15,000.
Equipment P 15,000
Investment in Plant-From Current Fund P 15,000

7. Acquisition by endowment fund of a dormitory valued at P300,000

Land P 125,000
Buildings 175,000
Investment in Plant-From Endowments P 300,000

8. To record depreciation on buildings represented by endowment, P10,000

Investment in Plant-Endowments P 10,000
Accumulated Depreciation P 10,000

9. Retirement of equipment carried at P5,000

Investment in Plants From Gifts P 5,000
Equipment P 5,000

NPO University
Plant Funds
Statement of Financial Position
June 30, 2011
(In Pesos)
ASSETS
Unexpended Plant Funds
Cash P 15,750.00
Investments 30,000.00
P 45,750.00
Retirement of Indebtedness of Funds:
Cash 75,000.00

Invested in Plant:
Land 975,000.00
Improvements Other Than Buildings 150,000.00
Buildings P4,260,000
Less Accumulated Depreciation 10,000 4,250,000.00
Equipment 510,000.00
Total P5,885,000.00
Less: Items Carried in Endowment Funds 290,000.00
5,595,000.00
TOTAL ASSETS P5,715,750.00

LIABILITIES AND NET ASSETS

Unexpended Plant Funds:
Balance Pant-Additions P 15,000.00
Balance Renewals and Replacements 30,750.00
P 45,750.00
Retirement of Indebtedness Funds:
Balance 75,000.00

Investment in Plant:
Mortgage Payable P 975,000.00
Bonds Payable 1,500,000.00 2,475,000.00

Investment in Plant:
From Gifts P3,080,000.00
From Current Funds 40,000.00 3,120,000.00
5,595,000.00
TOTAL LIABILITIES AND NET ASSETS P5,715,750.00

AGENCY
Educational institution acts as an agent or trustee, holding certain assets on behalf of others.

WHEN AGENCY OPERATIONS ARE:

a) Simple and limited duration=both asset accounts and accounts expressing the institutions accountability to others may be carried in the general
or current fund;

b) Involved and continuing=an agency fund may be recognized and special agency books established for the properties subject to agency control;
c) Agency funds may be established for pension and retirement resources, special organization resources, student deposits, and tax withholding amounts;
and

d) 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;
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;
Theres 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 in 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 it is suggested 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, 2011, P580,000 of which P45,000 is still due: adjustments and allowances of P60,000
apply to charges.
Cash P475,000
Accounts Receivable 45,000
Free Service and Adjustment-Contractual Patients 40,000
Free Service and Adjustment-General Patients 16,500
Courtesy and Miscellaneous Allowances 3,500
Earnings From Routine-Inpatients P320,000
Earnings From Routine-Outpatients 50,000
Earnings Special Services 210,000
2. Other hospital revenues, P420,000 of which P10,000 is still due from temporary fund in reimbursement of research expenses.
Cash P410,000
Due From Temporary Fund 10,000
General Contribution, Donations, Legacies
And Bequests P180,000
Grants From Community Chests , Foundations 122,500
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, P85,000 of which P5,000 is due from endowment fund #1 representing
bond premium amortization.
Cash P 85,000
Due From Endowment Fund #1 P 5,000
Income From Investments 80,000

4. Expenditures for hospital supplies, P200,000 of which P25,000 has not been paid.
Inventory Supplies P200,000
Cash P175,000
Vouchers Payable 25,000

5. Hospital supplies charged , P170,000.

Administrative and General P 5,000
Household and Property 10,000
Professional Care of Patients 15,000
Dietary 120,000
Outpatient and Emergency 5,000
Other Expenses 15,000
Inventory of Supplies P170,000

6. Payment of hospital salaries and wages, P490,000.

Administrative and General P 85,000
Household and Property 45,000
Professional Care of Patients 220,000
Dietary 60,000
Outpatient and Emergency 30,000
Other Expenses 50,000
Cash P490,000

7. Payment of hospital expenses other than salaries and wages, P75,000.

Administrative and General P 20,000
Household and Property 10,000
Professional Care of Patients 25,000
Dietery 7,500
and Emergency 2,500
Other Expenses 10,000
Cash P 75,000

8. Payments of interest on mortgage, P60,000 and of instalment due on mortgage carried as liability in the plant funds, P50,000.

Interest Expense P 60,000

Mortgage Payable 50,000
Cash P110,000

9. Adjustments required on December 31, 2011.

Allowance for uncollectible accounts, P2,500.
Accrued salaries and wages, P5,000.
Charges for depreciation on properties carried as assets by plant funds, P85,000.
To recognize amount to be paid to plant funds equal to depreciation on properties.
Bad Debts P 2,500
Allowance for Doubtful Accounts P 2,500

Administrative and General 1,000

Household and Property 250
Professional Care of Patients 1,250
Dietery 750
Outpatient and Emergency 250
Other Expenses 1,500
Accrued Salaries & Wages Payable 5,000
Depreciation 85,000
General or Current Fund Balance 85,000

General or Current Fund Balance 85,000

Due to Plant Funds 85,000

*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 P320,000
Earnings from routine services-outpatients 50,000
Earnings from special services 210,000
General or current fund balance 222,500
Free service and adjustment-contractual patients 40,000
Free service and adjustment-general patients 16,500
Courtesy and miscellaneous allowances 3,500
Bad debts 2,500
Administrative and general 111,000
Household and property 65,250
Professional care of patients 261,250
Dietary 188,250
Outpatient and emergency 37,750
Other expenses 76,500

11. To close other revenue and expenses accounts at the end of the period.
General contribution, donations, legacies and bequests P180,000
Grants from community chests, foundations 122,500
Donated services and commodities 10,000
Income transfers from temporary funds 57,500
Income from investments 80,000
Miscellaneous revenues 50,000
Interest expense P60,000
Depreciation 85,000
General or current fund balance 355,000

*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;
Dietary;
Household and property;
Professional care of patients;
Outpatient and emergency;
Other expenses.

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 - P10,000.

Cash P100,000
Temporary Fund A balance P100,000

2. Purchase of securities - P85,000.

Temporary Investment -Fund A P85,000
Cash P85,000

3. Receipts of cash gifts to be used for books and journals for hospital patients - P10,000.
Cash P10,000
Temporary Fund Balance P10,000
4. Sale of securities, book value, P25,000, for P23,500.
Cash P23,500
Temporary Fund A Balance 1,500
Temporary Investment -Fund A P25000

5. Collections of interest and dividends

Cash P5,000
Temporary Fund A Balance P5,000

6. Expenditures during year by general fund for research chargeable to temporary fund A, P50,000; cash transferred to general fund, P40,000.
Temporary Investment -Fund A P50,000
Cash P40,000
Due to General Fund 10,000

7. Payment of general fund for books and journals chargeable to temporary Fund B Balance, P7,500.
Temporary Fund A Balance P7,500
Cash P7,500

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 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 detail.

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, P500,000, market value on date of transfer,
P470,000.

Investments in bonds at fair value (Endowment Fund #1) P1,000,000

Investments unamortized bond premium (Endowment Fund #1) 50,000
Investments unamortized bond discount (Endowment Fund #1) P 30,000
Endowment Fund #1 Balance 1,020,000
2. Receipt of cash in establishment of Endowment Fund # 2, P250,000. Endowment income is to be used for specified research projects.
Cash P250,000
Endowment Fund #2 Balance P250,000

3. Purchase of 1,000 shares of Co. T preference shares, P240,000.

Investment in preference shares(Endowment Fund #2) P240,000
Cash P240,000

4. Collection of interest by general or current fund that includes P5,000 reimbursable to Endowment fund #1 for bond premium amortization.
Due from General or Current Fund P5,000
Investments-Unamortized Bond Premium (Endowment Fund #1) P5,000

5. Sale of Co. S bonds at fair value, P250,000.

Cash P 250,000
Investments-Unamortized Bond Discount (Endowment Fund #1) 15,000
Investments-at Bonds at Fair Value(Endowment Fund #1) P250,000
Endowment Fund #1 Balance 15,000

In the example, Endowment fund books are summarize to endowment and separate endowment fund balances are summarize in their respective fund
equities. It should be observed in the example that endowment fund income is reported directly in the fund that is 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 assets 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; and
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, P1,500,000 and cash raised through a mortgage, P1,000,000.
Land P 250,000
Building 1,750,000
Equipment P 500,000
Mortgage Payable 1,000,000
Investment in Plant 1,500,000

2. Receipt of gifts of cash of P50,000 and securities valued at P100,000 for plant improvement and replacements.
Cash P50,000
Investments 100,000
Reserve for Plant Improvement and Replacements
P150,000
3. Acquisition of equipment, P30,000.
Reserve for plant improvement and replacements P30,000
Cash P30,000

4. Payment by general fund of mortgage instalment, P50,000.

Mortgage Payable P50,000
Investment in Plant P50,000

5. Adjustments required on December 31, 2011:

a) Accrued investments on investment, P1,500;
b) Depreciation for plant assets for year, P85,000;
c) Amount recoverable from general fund equal to depreciation on plant assets.

Accrued interest on investments P1,500

Reserve for plant improvements and replacements
P1,500

Investment in plant P85,000

Accumulated Depreciation-building P35,000
Accumulated Depreciation-equipment 50,000

Due from general fund P85,000

Reserve for plant improvements and replacements
P85,000

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

CONCEPTS AND GENERAL PRINCIPLES

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 indefinitely. 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 occurs.

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 in
the collection or conversion of loans and other assets by charging 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, giving 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 to the financial statements or in the 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 notes. As minimum information, the following should
generally be disclosed:

a. Accounting method used in 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;
g. Plan;
h. Significant events affecting financial position, including major contracts for sale of services and pending legislation which might 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 receipts 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. Through 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 (Financial Position), which relates to a point in time;
b. Financial Operations(Statement of Net Surplus), 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 (FINANCIAL POSITION)-

The statement of financial position presents the difference between the total assets and total liabilities. The statement at any date presents 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 there by 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 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 financing 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

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