SEC. (2002). Association for Investment Management and Research Financial Accounting Policy Committee. Retrieved from http://www.sec.gov/rules/proposed/s74202/jadams1.htm.St. Jude Children's Research Hospital. (2012). Retrieved from http://www.stjude.org/SJFile/combined-sjcrh-alsac-audited-fs-fy11.pdfRunning head: WEEK FIVE LEARNING TEAM CASE STUDY ASSIGNMENT 1Week Five Learning Team Case Study AssignmentACC/497WEEK FIVE LEARNING TEAM CASE STUDY ASSIGNMENT 2 Learning Team Case Study AssignmentAfter reading this paper, the readers should have a better understanding of the differences in charitable contributions and debts as well as the differences between St. Jude Children’s Research Hospital and Universal Health Services. We will discuss about the sources of revenues between organizations including profit, not-for-profit, and governmental hospitals. This paper also includes the answers of all related questions to this topic.The Financial Accounting Standard (FAS) Number 116 adjustment referencing Table 5.3-1 means that the adjustment is made for recognition of interest revenues and for pledge receivables. How contributions are recorded depends on the contribution. For example, there are three categories that contributions would fall under on the statement of activities: unrestricted, temporarily restricted, and permanently restricted. Unrestricted contributions have no strings attached. They lack any restraints from the contributor allowing the funds to be used as needed. Temporarily restricted funds have donor imposed restrictions. In these cases the restrictions will be fulfilled either because of a period of time, such as funds available for one year or for a specific purpose, such as using the funds for new equipment. Permanently restricted funds are similar to temporarily restricted funds because of the time period or purpose but the restrictions will remain permanently. Endowments are typically permanently restricted funds. Contributions are recorded immediately when received no matter if there are restrictions involved or not. In thecases of restrictions the use of the funds would show the restriction and limit, not how they are recorded. Contributions are not limited to cash either, they can also be in the form of services or assets like equipment and require the same recording principles. There is a distinction between pledges receivable and accounts receivable. Accounts receivables occur when an organization has provided a service or product and have sent theirWEEK FIVE LEARNING TEAM CASE STUDY ASSIGNMENT 3customer the bill, but have not been paid yet. For example, if St. Jude provided blood work for a patient they would send a bill and until a payment has been received the service would be considered an account receivable. Pledge receivables are promises to contribute cash or non-cash, and are recorded immediately even if the money may not be received for a great deal of time unlike accounts receivable that are typically received within a month from billing date. There are circumstances when financial statements can quantify volunteer services. If a volunteer is offering a specialized skill that a company would have had to purchase if they did not have the volunteer then the volunteer services could be quantified. An important note is that the value of the service provided would not be determined using earning potential but instead on their specific work. FASB Statement Number 116 would be helpful to review the impact of the volunteers work. Financial statements users of not-for-profit can expect to be fully informed regarding affiliated parties because according to the Securities and Exchange Commission (SEC) and the Financial Accounting Policies Committee (FAPC) “investors and other users of financial statements require complete, transparent, consistent, and comparable information about a company's commitments and other obligations in order to properly evaluate the firm's risks and future earning power” (paragraph 4). Therefore, the hospital should ensure they assess any possible risks with American Lebanese Syrian Associated Charities, Inc. (ALSAC) and provide any information not limited by materiality. Comparison of revenue mixWhen comparing the revenue mix of Universal Health Services, Inc. and St. Jude’s Children Research Hospital, Inc. ALSAC it is important to first note the main differences in these two corporations. Universal Health is a for profit company that operates 59 hospitals, whileWEEK FIVE LEARNING TEAM CASE STUDY ASSIGNMENT 4St. Jude’s/ALSAC is a not-for-profit entity whose main purpose is to provide research for catastrophic children’s diseases and to treat the children with these diseases. With these differences, the revenue mixes of the two entities are very different as far as what the revenues come from. Universal Health receives revenues from third party payers, such as Medicaid, Medicare, Managed Care (HMO’s and PPO’s), and a category labeled as other sources. St. Jude’s/ALSAC, in contrast, receives its revenues from contributions, patient care services (estimated value of third party payers), grants, and also has a category of other sources. As one can see, of these two revenue mixes, the only similarities is that both entities do receive payments from third party payers, however Universal Health receives most all revenues from these sources, while St. Jude’s only receives a portion.The strategies of investor owned companies in managing risk and ensuring adequate capital as compared to not-for-profits are comparably different. If one relies entirely on the financial statements and the source of revenues of the two entities for comparison, it is clear that investor owned companies rely very heavily on third party payers for revenue. Relying heavily on third party payers such as insurance or Medicaid appears to ensure that a major portion of the patient’s bills will be paid. A not-for-profit entity, such as St. Jude’s relies very heavily on the generous donations of others and grants. While St. Jude’s does receive revenue from third party payers, this is a small percentage compared to the amount of contributions and grants received. Government-owned If the government owned and operated the hospital, the government would process from its revenue and cash flow from the program services, bonds, and taxes instead of soliciting donations. There would not be any reason for adjustments as contributions or revenue