1. Statement of Activities. (LO14-3) The Atkins Museum recently hired a new controller. He was considered well qualified for the position given his experience with managerial accounting and his strong communication skills. The new controller sent each member of the Board of Trustees Finance Committee a set of the financial statements for their review one week before the monthly meeting. The set included the following statement of activities.

THE ATKINS MUSEUM Statement of Activities For the Year Ended June 30, 2023 (in hundreds of dollars)
	Public Exhibits	Abstract Exhibit	Mgmt. & General	Total
Revenues:
Contributions	$ 61,400	$50,000	$ 0	$111,400
Charges for services	478,800	0	0	478,800
Interest income	0	0	2,500	2,500
Total revenues	540,200	50,000	2,500	592,700
Expenses:
Salaries and wages	381,900	24,700	44,200	450,800
Occupancy costs	38,100	12,000	14,900	65,000
Supplies	7,100	2,300	8,300	17,700
Equipment	5,000	0	6,500	11,500
Travel and development	2,800	0	6,900	9,700
Depreciation	12,000	1,500	6,300	19,800
Interest	0	0	3,700	3,700
Total variable expenses	446,900	40,500	90,800	578,200
Allocated management and general expenses	85,300	5,500	(90,800)	0
Total costs	532,200	46,000	0	578,200
Excess of revenues over expenses	$ 8,000	$ 4,000	$ 2,500	$ 14,500

Other information: The management and general expenses are first allocated to the programs to which they directly relate; for example, the executive directors salary is allocated to the Public Exhibit Program according to the percentage of time spent working on the program. Remaining unallocated management and general expenses are allocated to the programs as indirect costs based on the relative amount of salaries and wages to total salaries and wages for the programs.

Required

As a member of The Atkins Museums Board of Directors Finance Committee, review this statement and answer the following questions:

1. Is the statement in proper form according to FASB standards?

2. The Atkins Museum would like to open an Impressionists exhibit. If its operating expenses are expected to be similar to those of the Abstract Exhibit, how much should the organization solicit in contributions or grants to cover the full cost of the program?

3. If you were a potential contributor to the Atkins Museum, do you think you have enough information from this statement on which to base your decision?

4. What questions might you ask the controller about this statement and the museum?

5. Prepare journal entries and financial statements in accordance with the generally accepted accounting principles governing NFP organizations.

The not-for-profit sector is a very large and diverse sector of the US economy. The compassion and generosity of individuals supply the not-for-profit sector with tremendous amounts of resources. The amount of resources, combined with the opportunity for unscrupulous fund-raisers and illegal scams, means the not-for-profit organizations (NFPs) need to be held accountable for how contributions are used. In addressing the issue of the accountability of NFPs, it is important to understand the financial reporting requirements for NFPs. Therefore, this chapter identifies the bodies responsible for setting accounting and financial standards for NFPs, explains the financial and reporting requirements for NFPs, and illustrates the preparation of financial statements in accordance with generally accepted accounting principles (GAAP).