| Course | ACC 460 Government and Non-Profit Accounting (ACC/460) |
|---|---|
| Week | 5 |
| Paper type | Nonprofit accounting and reporting paper |
| Length | about 1,063 words, 4 double-spaced pages plus title page and references |
| Format | APA 7 student paper |
| School | University of Phoenix |
| Program | BS in Accounting |
| Updated | September 2026 |
Free sample paper for ACC 460 Week 5
Pledges, Donated Food and a Matching Grant: Recognizing Contributions, Releasing Restrictions and Reporting Functional Expenses at a Composite Regional Food Bank
[Student Name]
University of Phoenix
ACC/460: Government and Non-Profit Accounting
Week 5 Assignment
[Instructor Name]
[Date]
The food bank, its donors and all figures are composites written for a model paper; standards and research findings come from the sources listed.
A composite regional food bank collects food from grocers, farms and manufacturers and distributes it through 140 partner pantries and meal programs in eleven counties. It has a staff of 48, a fleet of refrigerated trucks and about 6,000 volunteers a year. Its annual budget in cash is about $9 million, but the value of donated food it distributes is several times larger. For a food bank, the most important numbers on its financial statements are the ones no cash ever changed hands for. This paper applies the nonprofit standards to the food bank's year.
Net Assets and the Statements
Since the Financial Accounting Standards Board simplified nonprofit reporting, net assets have been divided into two classes: without donor restrictions and with donor restrictions (Financial Accounting Standards Board, 2016). The food bank prepares a statement of financial position, a statement of activities showing revenues, expenses and changes in each class, a statement of cash flows and an analysis of expenses by both function and nature.
A Three-Year Pledge
A regional health system pledged $300,000, payable $100,000 a year over three years with the first payment due at signing, to support the food bank's program delivering produce to clinics. The pledge is unconditional, so it is recognized when made, as contribution revenue with donor restrictions, because the gift is restricted to a program and to future periods. Pledges collectible after more than a year are measured at present value. Discounted at 4%, the pledge is recorded at about $288,600, and the $11,400 discount is added to contribution revenue a little at a time as the payments come due.
A Conditional Grant
A family foundation awarded $250,000 for a new freezer, but only if the food bank raises a matching $250,000 from other donors by June 30, and it must return any unmatched amount. The agreement contains a barrier, the match, and a right of return, so it is conditional (Financial Accounting Standards Board, 2018). By year end the food bank had raised $180,000 of the match. It recognizes $180,000 of the foundation's grant, the portion for which the condition has been met, and discloses the remaining $70,000 as a conditional promise.
Donated Food and Trucking
Grocers and farms donated 14 million pounds of food. The food bank values it using a per-pound wholesale value for each category, based on a national survey of food bank product values, and records contributed nonfinancial assets of about $23.8 million, with an equal amount of program expense as the food is distributed. A trucking company donated the use of two tractors and drivers for a month during a produce surge, valued at $38,000 at market rates. The standard for gifts in kind requires these contributions to be presented as a separate line in the statement of activities and disclosed by category, including the valuation method and whether any were monetized (Financial Accounting Standards Board, 2020).
Volunteer Services
Volunteers contributed about 90,000 hours of sorting and packing. These services do not create or enhance a nonfinancial asset and do not require specialized skills, so they are not recognized, although the food bank describes them in its notes. By contrast, a licensed electrician donated 60 hours rewiring the new freezer bay. That service requires specialized skills and would otherwise have been purchased, so it is recognized at $6,300.
Releasing Restrictions
Restricted gifts become unrestricted when the donor's purpose or time restriction is met. During the year the food bank spent $420,000 on the clinic produce program from restricted gifts, including the first pledge payment. That amount is reported as net assets released from restrictions, a decrease in net assets with donor restrictions and an increase in those without, and the related costs appear as program expenses. Expenses are always reported in net assets without donor restrictions.
Functional and Natural Expenses
The food bank reports expenses by function: food distribution and nutrition programs, management and general and fundraising. It also reports them by nature, such as salaries, occupancy, transportation and donated food. Shared costs are allocated on a reasonable basis; the warehouse is allocated by square footage and staff time by time studies. Of total expenses of about $33 million, including donated food, about 96% is program expense.
Exchange Transactions Versus Contributions
Not every payment to the food bank is a contribution. A county pays the food bank $210,000 a year to deliver a set number of senior meal boxes each month. Because the county receives commensurate value for its own program, the arrangement is an exchange transaction, recognized as revenue as the boxes are delivered under the revenue standard rather than as a contribution. The distinction matters: exchange revenue is never restricted by a donor, and it is reported separately from contributions so readers can see how much of the food bank's support comes from earned sources.
Liquidity
Nonprofits must disclose how they manage liquidity and the financial assets available for general expenditures within one year. The food bank reports $2.9 million available after excluding donor-restricted amounts and board-designated reserves, about four months of cash operating expenses.
Comparing With Governmental Reporting
Unlike the governments studied earlier, the food bank uses a single accrual basis and has no budgetary entries or fund balances. Its net asset classes are driven by donors, not laws. Both sectors, however, separate resources whose use is restricted from those that are not.
Reading the Program Ratio
Donors and charity rating services often look at the share of expenses spent on programs. The food bank's 96% ratio is high partly because donated food is large and counted as program expense. Krishnan et al. (2006) found evidence that some nonprofits misreport expenses, understating fundraising costs to improve these ratios. The food bank's auditors test its allocations, and its annual report explains that the ratio reflects the value of donated food and should be read alongside pounds distributed and meals provided.
Conclusion
The food bank recognized an unconditional pledge at present value, recognized a matching grant only as the match was met, valued and disclosed donated food and trucking, recognized only skilled volunteer services, released restricted gifts as their purpose was met and reported expenses by function and nature. Its statements show a charity whose largest resource is donated, which is why careful recognition and clear disclosure matter.
References
Financial Accounting Standards Board. (2016). Not-for-profit entities (Topic 958): Presentation of financial statements of not-for-profit entities (Accounting Standards Update No. 2016-14).
Financial Accounting Standards Board. (2018). Not-for-profit entities (Topic 958): Clarifying the scope and the accounting guidance for contributions received and contributions made (Accounting Standards Update No. 2018-08).
Financial Accounting Standards Board. (2020). Not-for-profit entities (Topic 958): Presentation and disclosures by not-for-profit entities for contributed nonfinancial assets (Accounting Standards Update No. 2020-07).
Krishnan, R., Yetman, M. H., & Yetman, R. J. (2006). Expense misreporting in nonprofit organizations. The Accounting Review, 81(2), 399-420. https://doi.org/10.2308/accr.2006.81.2.399
What the ACC 460 Week 5 instructions ask
ACC 460 Week 5 usually asks students to apply accounting and reporting standards for private not-for-profit organizations. Typical requirements include the statement of financial position with net assets with and without donor restrictions, the statement of activities, the statement of functional expenses or equivalent analysis and the statement of cash flows, together with recognition of contributions, pledges, conditional and unconditional gifts, contributed nonfinancial assets and services and releases from restriction. Some prompts compare nonprofit and governmental reporting or ask about exchange transactions versus contributions. Students should show entries or amounts, explain each recognition decision and cite FASB standards and research in APA style.
How this ACC 460 Week 5 example is built
A food bank receives nearly every kind of support a nonprofit can: cash from individuals, multi-year pledges, foundation grants with conditions, donated food from grocers and farms, donated trucking and thousands of volunteer hours. That variety lets the paper apply each recognition rule to a realistic item. The paper moves from contributions to restrictions to expenses, so the reader sees how each decision flows into the statement of activities. Donated food receives extra attention because it is the food bank's largest resource and its valuation is a matter of judgment. The functional expense section explains allocations, and a closing section discusses how the reported ratios are used and misused.
ACC 460 Week 5 grading rubric: where the points go
Faculty usually grade the nonprofit week on correct recognition and classification of contributions and correct presentation of net assets and expenses. Unconditional pledges must be recognized when made, at present value if long-term, while conditional gifts with a barrier and a right of return are not recognized until the barrier is overcome. Donor-restricted gifts must be reported as net assets with donor restrictions and released when restrictions are met. Contributed nonfinancial assets must be valued and disclosed, and contributed services recognized only if they create or enhance nonfinancial assets or require specialized skills. Functional expense reporting, with a stated basis for allocating shared costs, and a liquidity disclosure complete the requirements, supported by FASB citations.
ACC 460 Week 5 help: mistakes to avoid
A common ACC 460 Week 5 error is recognizing a conditional grant as revenue when it is signed. Look for a barrier, such as a matching requirement, and a right of return; if both exist, wait until the condition is met. Another is recording all volunteer hours as revenue. Only services that create or enhance nonfinancial assets or require specialized skills qualify. Students also report restricted gifts as unrestricted revenue. Classify them with donor restrictions and show releases separately. Value donated food carefully and explain the method. Allocate shared costs, such as the warehouse, across functions on a reasonable basis. Finally, avoid treating a high program ratio as proof of effectiveness, and say what else a donor should look at.
Related ACC 460 sample papers
Other ACC 460 week samples
- ACC 460 Week 1: Funds and the Reporting Entity
- ACC 460 Week 2: Budgets and Budgetary Control
- ACC 460 Week 3: Fund Revenues and Expenditures
- ACC 460 Week 4: Government-Wide and Fund Statements
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ACC 460 Week 5 questions, answered
What does ACC/460 Week 5 usually cover?
It usually covers accounting and reporting for private not-for-profit organizations: net assets with and without donor restrictions, contributions and pledges, contributed goods and services, functional expenses and the required statements.
Where can I find a free ACC 460 Week 5 sample paper?
The regional food bank example, covering pledges, a conditional grant, donated food and functional expenses with margin notes, is posted on this page for free. Describe your own nonprofit case; the opening paper we prepare from it is free.
When is a grant conditional?
When the agreement includes a barrier the recipient must overcome, such as a matching requirement or a specific performance target, and gives the donor a right of return or release from its promise if the barrier is not met.
How are volunteer services recorded?
They are recognized only if they create or enhance nonfinancial assets or require specialized skills, are provided by people with those skills and would otherwise have to be purchased.
What are net assets with donor restrictions?
Net assets subject to donor-imposed limits on use or timing, such as gifts for a specific program or endowment gifts to be held permanently.
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