1) Why is it important that not-for-profits coordinate their operating budgets with their capital budgets?
2) What is the main advantage of an object classification budget? What are its limitations? How do performance budgets overcome these limitations?
3) Why do most not-for-profits budget on a cash or near cash-basis even though the cash basis does not capture the full economic costs of activities in which they engage?
4) What are allotments? What purpose do they serve?
5) The Disability Research Institute receives its funding mainly from government grants and private contributions. In turn, it supports research and related projects carried out by universities and other not-for-profits. Most of its government grants are reimbursement (expenditure-driven) awards. That is, the government will reimburse the institute for the funds that it disburses to others. The institute estimates that the following will occur in the upcoming year: i. It will be awarded $5 million in government grants, all of which will be paid out to subrecipients during the year. Of this amount, only $4.5 million will be reimbursed by the government during the year. The balance will be reimbursed in the first six months of the next year. The institute will also receive $200,000 in grant funds that were due from the previous year. ii. It will receive$600,000 in pledges from private donors. It expects to collect $450,000 during the year and the balance in the following year. It also expects to collect $80,000 in pledges made the prior year. iii. It will purchase new furniture and office equipment at a cost of $80,000. It currently owns its building, which it had purchased for $800,000, and additional furniture and equipment, which it acquired for $250,000. The building has a useful life of 25 years; the furniture and equipment have a useful life of five years. iv. Employees will earn wages and salaries of $340,000 of which they will be paid $320,000 during the upcoming year and the balance in the next year. v. It will incur other operating costs of $90,000, of which it will pay $70,000 in the upcoming year and $20,000 in the next year. It will also pay another $10,000 in costs incurred in the previous year. a) Prepare two budgets, one on a cash basis and the other on a full accrual basis. For convenience, show both on the same schedule, with the cash budget in one column and the accrual in the other column.
(in thousands)		Accrual	Cash
Revenues:
Total Revenues:
Expenditures:
	Total Expenditures:
Excess of revenues over expenditures:
b) Comment on which budget better shows whether the institute is covering the economic cost of services that it provides. Why?
c) Which is likely to be more useful to i. Institute manager? ii. Members of the institutes board of trustees? iii. Bankers from whom the institute seeks a loan?

CHAPTER 9:

1) How would you compare the accounting for enterprise funds with that of (a) businesses and (b) government/non-profit funds? Summarize the reasons both for and against accounting for enterprise funds differently than governmental funds.

2) Although proprietary fund accounting is similar to business accounting, there are considerable differences in standards pertaining to the statement of cash flows. What are the main differences?