Question 1

All not-for-profit organizations, including city-owned museums and two-year community colleges, must adhere to FASB accounting and financial reporting standards.

Accepted Answer

A) True 
 B)False  False

Question 2

Not-for-profits generally should not recognize as revenues contributions that they have agreed to pass along to other specific beneficiaries.

Accepted Answer

A) True 
 B)False  True

Question 3

The account titled "Resources released from restriction" is reported by a "restricted fund" as a

Accepted Answer

A) Revenue account. 
B) Contra-revenue account. 
C) Expense account. 
D) Contra-expense account. 
A) Revenue account. 
B) Contra-revenue account. 
C) Expense account. 
D) Contra-expense account. B

Question 4

The account titled "Resources released from restriction" is reported by an "unrestricted fund" as a

Accepted Answer

A) Revenue account. 
B) Contra-revenue account. 
C) Expense account. 
D) Contra-expense account. 
A) Revenue account. 
B) Contra-revenue account. 
C) Expense account. 
D) Contra-expense account.

Question 5

According to AICPA guidance, a not-for-profit organization (X)is required to consolidate a related not-for-profit organization (Y)in its financial statements when

Accepted Answer

A) The relationship results from a merger of X and Y. 
B) X has a controlling financial interest in Y through direct or indirect ownership of a majority voting interest. 
C) X can control Y through a contract or affiliation agreement, even though X does not have a majority ownership or voting interest. 
D) Any of the above. 
A) The relationship results from a merger of X and Y. 
B) X has a controlling financial interest in Y through direct or indirect ownership of a majority voting interest. 
C) X can control Y through a contract or affiliation agreement, even though X does not have a majority ownership or voting interest. 
D) Any of the above.

Question 6

FASB standards require not-for-profit organizations to classify their resources into three categories: unrestricted, temporarily restricted, and permanently restricted.

Accepted Answer

A) True 
 B)False

Question 7

"Net assets released from restriction" for a not-for-profit organization is comparable to which of the following for a government?

Accepted Answer

A) Other financing sources (uses)-Nonreciprocal transfer 
B) Expenditures 
C) Expenses 
D) Unassigned fund balance 
A) Other financing sources (uses)-Nonreciprocal transfer 
B) Expenditures 
C) Expenses 
D) Unassigned fund balance

Question 8

In 2017, the change in temporarily restricted net assets is

Accepted Answer

A) $0 
B) $200,000 decrease. 
C) $200,000 increase. 
D) $1,000,000 decrease. 
A) $0 
B) $200,000 decrease. 
C) $200,000 increase. 
D) $1,000,000 decrease.

Question 9

FASB Statement No.95 requires not-for-profits to use the direct method in their statements of cash flows.

Accepted Answer

A) True 
 B)False

Question 10

The Midwest Circulatory Diseases Society placed an advertisement in prominent publications in the region.The advertisement provided information about symptoms of the diseases and offered practical advice for controlling their immediate effects.The society's accountants estimate that about 75 percent of the advertising copy was devoted to information about the disease and the remainder was an appeal for funds.The advertisement cost $20,000.Using the physical units method of separating joint costs, how much of the cost of the advertisement should be reported as program costs?

Accepted Answer

A) $20,000. 
B) $15,000. 
C) $10,000. 
D) $5,000. 
A) $20,000. 
B) $15,000. 
C) $10,000. 
D) $5,000.

Question 11

Restricted gifts to not-for-profit organizations

Accepted Answer

A) Must always be shown as an increase in restricted net assets. 
B) Must always be shown as an increase in unrestricted net assets. 
C) May be shown as an increase in unrestricted net assets if the restriction is met in the same period. 
D) May be shown as an increase in unrestricted net assets at the discretion of management. 
A) Must always be shown as an increase in restricted net assets. 
B) Must always be shown as an increase in unrestricted net assets. 
C) May be shown as an increase in unrestricted net assets if the restriction is met in the same period. 
D) May be shown as an increase in unrestricted net assets at the discretion of management.

Question 12

Which of the following characteristics most clearly distinguishes an exchange transaction from a contribution?

Accepted Answer

A) A contribution is always in cash. 
B) An exchange transaction is a reciprocal transfer of resources. 
C) An exchange transaction is a nonreciprocal transfer of assets. 
D) Contributions of assets always have restrictions attached as to their use. 
A) A contribution is always in cash. 
B) An exchange transaction is a reciprocal transfer of resources. 
C) An exchange transaction is a nonreciprocal transfer of assets. 
D) Contributions of assets always have restrictions attached as to their use.

Question 13

The basis of accounting used by not-for-profit organizations in their external financial reports is

Accepted Answer

A) Industry-specific basis of accounting. 
B) Cash basis of accounting. 
C) Modified accrual basis of accounting. 
D) Accrual basis of accounting. 
A) Industry-specific basis of accounting. 
B) Cash basis of accounting. 
C) Modified accrual basis of accounting. 
D) Accrual basis of accounting.

Question 14

The Friends of the Library (FOL), a not-for-profit entity, received a gift restricted to the acquisition of a special piece of equipment used to restore books.Late last year FOL acquired the machine at a total cost of $19,000.The machine is estimated to have a useful life of eight years and a salvage value of $3,000.In what fund should FOL make the entry to record the depreciation for the current year?

Accepted Answer

A) Unrestricted fund. 
B) Temporarily restricted fund. 
C) Permanently restricted fund. 
D) FOL should not recognize depreciation. 
A) Unrestricted fund. 
B) Temporarily restricted fund. 
C) Permanently restricted fund. 
D) FOL should not recognize depreciation.

Question 15

Not-for-profit organizations should report interest and dividends earned and restricted for long-term purposes in which of the following cash flows categories?

Accepted Answer

A) Operating 
B) Financing. 
C) Capital financing. 
D) Investing. 
A) Operating 
B) Financing. 
C) Capital financing. 
D) Investing.

Question 16

During the annual fund-raising drive, the Cancer Society raised $900,000 in pledges of financial support for general operations.By fiscal year-end, the society had collected $600,000 of the pledges.The society estimates that 10% of the remaining pledges will be uncollectible.The NET amount of revenue the society should recognize during the current year from this pledge drive is

Accepted Answer

A) $900,000. 
B) $870,000. 
C) $810,000. 
D) $600,000.
Use the following information to answer Questions 17 through 20.
United Charities' annual fund-raising drive in 2016 raised pledges of $1,200,000 of which $800,000 were collected in 2016 and $200,000 were collected in 2017.United Charities estimates $150,000 of the remaining pledges will never be collected. 
A) $900,000. 
B) $870,000. 
C) $810,000. 
D) $600,000.
Use the following information to answer Questions 17 through 20.
United Charities' annual fund-raising drive in 2016 raised pledges of $1,200,000 of which $800,000 were collected in 2016 and $200,000 were collected in 2017.United Charities estimates $150,000 of the remaining pledges will never be collected.

Question 17

Temporarily restricted funds related to plant and equipment generally account only for resources restricted to their purchase or construction, not for the plant and equipment itself, which are typically reported in the unrestricted fund.

Accepted Answer

A) True 
 B)False

Question 18

The FASB requires external financial reports to provide information about

Accepted Answer

A) Donor-imposed restrictions on resources. 
B) All restrictions on resources. 
C) Donor and creditor restrictions on resources. 
D) None of the above. 
A) Donor-imposed restrictions on resources. 
B) All restrictions on resources. 
C) Donor and creditor restrictions on resources. 
D) None of the above.

Question 19

What is a charitable remainder trust? How should it be accounted for?

Accepted Answer

A charitable remainder trust is a type o

Question 20

The Save the Animals Foundation received a gift of $500,000 from a donor who wanted the gift used to acquire habitat for endangered snails.The money may be invested but all earnings are restricted to habitat acquisition.During the year the entire gift was invested in corporate securities.At year-end, the securities had a value of $501,000.The appropriate way to recognize the change in fair value is

Accepted Answer

A) Debit Investments $1,000; Credit Unrestricted revenue $1,000. 
B) Debit Investments $1,000; Credit Temporarily restricted revenue $1,000. 
C) Debit Investments $1,000; Credit Permanently restricted revenue $1,000. 
D) No entry should be made until the securities are sold. 
A) Debit Investments $1,000; Credit Unrestricted revenue $1,000. 
B) Debit Investments $1,000; Credit Temporarily restricted revenue $1,000. 
C) Debit Investments $1,000; Credit Permanently restricted revenue $1,000. 
D) No entry should be made until the securities are sold.

All not-for-profit organizations, including city-owned museums and two-year community colleges, must adhere to FASB accounting and financial reporting standards.

Not-for-profits generally should not recognize as revenues contributions that they have agreed to pass along to other specific beneficiaries.

The account titled "Resources released from restriction" is reported by a "restricted fund" as a

The account titled "Resources released from restriction" is reported by an "unrestricted fund" as a

According to AICPA guidance, a not-for-profit organization (X)is required to consolidate a related not-for-profit organization (Y)in its financial statements when

FASB standards require not-for-profit organizations to classify their resources into three categories: unrestricted, temporarily restricted, and permanently restricted.

"Net assets released from restriction" for a not-for-profit organization is comparable to which of the following for a government?

In 2017, the change in temporarily restricted net assets is

FASB Statement No.95 requires not-for-profits to use the direct method in their statements of cash flows.

Restricted gifts to not-for-profit organizations

Which of the following characteristics most clearly distinguishes an exchange transaction from a contribution?

The basis of accounting used by not-for-profit organizations in their external financial reports is

Not-for-profit organizations should report interest and dividends earned and restricted for long-term purposes in which of the following cash flows categories?

Temporarily restricted funds related to plant and equipment generally account only for resources restricted to their purchase or construction, not for the plant and equipment itself, which are typically reported in the unrestricted fund.

The FASB requires external financial reports to provide information about

What is a charitable remainder trust? How should it be accounted for?

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Long-Term Obligations

Business-Type Activities

Pensions and Other Fiduciary Activities

Issues of Reporting, Disclosure, and Financial Analysis

Colleges and Universities

Health Care Providers

Managing for Results

Auditing Governments and Notforprofit Organizations

Federal Government Accounting

Filters

Exam 12: Not-For-Profit Organizations

All not-for-profit organizations, including city-owned museums and two-year community colleges, must adhere to FASB accounting and financial reporting standards.

Not-for-profits generally should not recognize as revenues contributions that they have agreed to pass along to other specific beneficiaries.

The account titled "Resources released from restriction" is reported by a "restricted fund" as a

The account titled "Resources released from restriction" is reported by an "unrestricted fund" as a

According to AICPA guidance, a not-for-profit organization (X)is required to consolidate a related not-for-profit organization (Y)in its financial statements when

FASB standards require not-for-profit organizations to classify their resources into three categories: unrestricted, temporarily restricted, and permanently restricted.

"Net assets released from restriction" for a not-for-profit organization is comparable to which of the following for a government?

In 2017, the change in temporarily restricted net assets is

FASB Statement No.95 requires not-for-profits to use the direct method in their statements of cash flows.

Restricted gifts to not-for-profit organizations

Which of the following characteristics most clearly distinguishes an exchange transaction from a contribution?

The basis of accounting used by not-for-profit organizations in their external financial reports is

Not-for-profit organizations should report interest and dividends earned and restricted for long-term purposes in which of the following cash flows categories?

Temporarily restricted funds related to plant and equipment generally account only for resources restricted to their purchase or construction, not for the plant and equipment itself, which are typically reported in the unrestricted fund.

The FASB requires external financial reports to provide information about

What is a charitable remainder trust? How should it be accounted for?

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Long-Term Obligations

Business-Type Activities

Pensions and Other Fiduciary Activities

Issues of Reporting, Disclosure, and Financial Analysis

Colleges and Universities

Health Care Providers

Managing for Results

Auditing Governments and Notforprofit Organizations

Federal Government Accounting

Filters