Question 1

How does the FASB require not-for-profit organizations to report expenses?

Accepted Answer

A)  Natural classification, such as salaries, rent, and supplies. 
B)  Functional classification, such as program and support. 
C)  Management has the option of reporting using natural classification or functional classification. 
D)  Both natural classification and functional classification must be reported. 
A)  Natural classification, such as salaries, rent, and supplies. 
B)  Functional classification, such as program and support. 
C)  Management has the option of reporting using natural classification or functional classification. 
D)  Both natural classification and functional classification must be reported. D

Question 2

Explain the purpose of FASB ASC 958-720-45 on joint-cost accounting as it relates to reporting fund-raising and program expenses of a not-for-profit organization. How is this standard applied?

Accepted Answer

The purpose of the standard is to provide guidance on when costs of joint activities that involve fund-raising and a program purpose can be allocated between fund-raising and programs. The FASB requires three criteria to be met before a cost can be reported as a program expense, 1) the purpose must be to advance the mission of the organization, 2) the cost must be directed to an audience who is capable of advancing that mission, and 3) the content of the material that is produced must include a call to action on the part of the audience to advance the mission of the organization. If all three of these criteria are met, the costs identifiable with a specific program function can be reported as a program expense rather than a fund-raising expense. If one of the criteria is not met the costs must be reported as fund-raising, they cannot be allocated.

Question 3

The FASB states that depreciation expense in a not-for-profit organization should be:

Accepted Answer

A)  Assigned to or allocated to the functions to which it relates. 
B)  Reported under the management and general function. 
C)  Disclosed in the notes to the financial statements. 
D)  Allocated to program but not support functions. 
A)  Assigned to or allocated to the functions to which it relates. 
B)  Reported under the management and general function. 
C)  Disclosed in the notes to the financial statements. 
D)  Allocated to program but not support functions. A

Question 4

Similar to the GASB, the FASB requires not-for-profit entities to prepare the statement of cash flows using the direct method.

Accepted Answer

A) True 
 B)False

Question 5

Board-designated net assets are net assets with donor restrictions the board sets aide for a specific purpose.

Accepted Answer

A) True 
 B)False

Question 6

GAAP for nongovernmental not-for-profit organizations is set by the FASB and the AICPA.

Accepted Answer

A) True 
 B)False

Question 7

If the program services expenses category includes both directly related costs and indirect costs allocated to it, why is it necessary to have a separate category of "supporting services expenses"?

Accepted Answer

It is desirable to know the full cost of

Question 8

According to the FASB, how should unrealized gains on the investment portfolio of a not-for-profit organization be recognized?

Accepted Answer

A)  Not recognized. 
B)  Reported in the net asset section of the balance sheet. 
C)  Reported according to whether the gains relate to trading, or held-to-maturity assets. 
D)  Reported on the statement of activities. 
A)  Not recognized. 
B)  Reported in the net asset section of the balance sheet. 
C)  Reported according to whether the gains relate to trading, or held-to-maturity assets. 
D)  Reported on the statement of activities.

Question 9

Under FASB standards how would a not-for-profit organization recognize a conditional pledge?

Accepted Answer

A)  Debit Pledges Receivable and credit Contributions-With Donor Restrictions. 
B)  Debit Pledges Receivable and credit Deferred Contributions. 
C)  Debit Conditional Pledges Receivable and Credit Deferred Contributions. 
D)  It would not recognize the conditional pledge until pledge conditions are substantially met. 
A)  Debit Pledges Receivable and credit Contributions-With Donor Restrictions. 
B)  Debit Pledges Receivable and credit Deferred Contributions. 
C)  Debit Conditional Pledges Receivable and Credit Deferred Contributions. 
D)  It would not recognize the conditional pledge until pledge conditions are substantially met.

Question 10

Not-for-profits can report expenses by nature and function:

Accepted Answer

A)  In the notes to the financial statements. 
B)  As a separate financial statement. 
C)  In the statement of activities. 
D)  All of the options are correct. 
A)  In the notes to the financial statements. 
B)  As a separate financial statement. 
C)  In the statement of activities. 
D)  All of the options are correct.

Question 11

Record the journal entry that would be made by a nongovernmental, not-for-profit organization involved in medical research. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) 
1. The entity received $1,500 in cash contributions. Of that amount, $1,000 is to be used for medical research.
2. The entity received pledges of $700,000 for its endowment fund. All pledges will be collected next year.
3. The entity received donated services of $1,200 from medical researchers who helped with the entity's on-going drug development research. It also received $300 in donated services from students, who helped clean the research facilities.
4. The entity paid medical research operating expenses of $5,000 that were related to restricted net assets it had received in prior years.

Accepted Answer

@#IMG-DLM& 
Note the $300 of student donated servi

Question 12

The FASB states that donated services should be recorded as contributions by a not-for-profit organization if they meet the recognition criteria and are material.

Accepted Answer

A) True 
 B)False

Question 13

Under the FASB Codification the costs incurred for a joint activity may be allocated between fund-raising expenses and program expenses if the criteria of purpose, audience, and content are met.

Accepted Answer

A) True 
 B)False

Question 14

Examples of organizations that can be either governmental or nongovernmental include colleges and universities, hospitals, and museums.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would be reported as an Asset with Restrictions on Use?

Accepted Answer

A)  A cash contribution for a program activity, such as diabetes research. 
B)  A cash contribution for a new building. 
C)  Cash restricted by debt covenants with lenders. 
D)  Cash restricted by the board for purchase of new computer equipment. 
A)  A cash contribution for a program activity, such as diabetes research. 
B)  A cash contribution for a new building. 
C)  Cash restricted by debt covenants with lenders. 
D)  Cash restricted by the board for purchase of new computer equipment.

Question 16

Which of the following characteristics of not-for-profit organizations (NFPs) can be used to distinguish a nongovernmental from a governmental NFP?

Accepted Answer

A)  Contributions by resource providers who do not expect a return on investment. 
B)  Ability to impose taxes on citizens. 
C)  Absence of ownership interests. 
D)  All of the given characteristics are generally different for nongovernmental versus governmental NFPs. 
A)  Contributions by resource providers who do not expect a return on investment. 
B)  Ability to impose taxes on citizens. 
C)  Absence of ownership interests. 
D)  All of the given characteristics are generally different for nongovernmental versus governmental NFPs.

Question 17

Under the FASB Codification a $5 million endowment that cannot be spent for 50 years should be classified as net assets with donor restrictions.

Accepted Answer

A) True 
 B)False

Question 18

According to the FASB Codification, which of the following is a condition that must be met for contributed services to a not-for-profit organization (NFP) to be recorded as both a contribution and as an expense?

Accepted Answer

A)  The service creates or enhances nonfinancial assets, such as a carpenter renovating a building. 
B)  The service requires a specialized skill and is provided by someone who possesses the specialized skill, such as a lawyer preparing contracts. 
C)  The service supplements the management function, such as an auditor preparing a program audit, which is not normally done. 
D)  All of the given conditions must be met for contributed services to be recognized as a contribution and an expense. 
A)  The service creates or enhances nonfinancial assets, such as a carpenter renovating a building. 
B)  The service requires a specialized skill and is provided by someone who possesses the specialized skill, such as a lawyer preparing contracts. 
C)  The service supplements the management function, such as an auditor preparing a program audit, which is not normally done. 
D)  All of the given conditions must be met for contributed services to be recognized as a contribution and an expense.

Question 19

The GASB provides guidance on generally accepted accounting principles for governmental not-for-profit organizations.

Accepted Answer

A) True 
 B)False

Question 20

According to the FASB, net assets with donor restrictions are released from restrictions:

Accepted Answer

A)  At the end of each fiscal year. 
B)  As assets are spent for the purposes intended by the donor. 
C)  When funds are returned to the donor. 
D)  When all donor conditions have been met. 
A)  At the end of each fiscal year. 
B)  As assets are spent for the purposes intended by the donor. 
C)  When funds are returned to the donor. 
D)  When all donor conditions have been met.

How does the FASB require not-for-profit organizations to report expenses?

Explain the purpose of FASB ASC 958-720-45 on joint-cost accounting as it relates to reporting fund-raising and program expenses of a not-for-profit organization. How is this standard applied?

The FASB states that depreciation expense in a not-for-profit organization should be:

Similar to the GASB, the FASB requires not-for-profit entities to prepare the statement of cash flows using the direct method.

Board-designated net assets are net assets with donor restrictions the board sets aide for a specific purpose.

GAAP for nongovernmental not-for-profit organizations is set by the FASB and the AICPA.

If the program services expenses category includes both directly related costs and indirect costs allocated to it, why is it necessary to have a separate category of "supporting services expenses"?

According to the FASB, how should unrealized gains on the investment portfolio of a not-for-profit organization be recognized?

Under FASB standards how would a not-for-profit organization recognize a conditional pledge?

Not-for-profits can report expenses by nature and function:

The FASB states that donated services should be recorded as contributions by a not-for-profit organization if they meet the recognition criteria and are material.

Under the FASB Codification the costs incurred for a joint activity may be allocated between fund-raising expenses and program expenses if the criteria of purpose, audience, and content are met.

Examples of organizations that can be either governmental or nongovernmental include colleges and universities, hospitals, and museums.

Which of the following would be reported as an Asset with Restrictions on Use?

Which of the following characteristics of not-for-profit organizations (NFPs) can be used to distinguish a nongovernmental from a governmental NFP?

Under the FASB Codification a $5 million endowment that cannot be spent for 50 years should be classified as net assets with donor restrictions.

According to the FASB Codification, which of the following is a condition that must be met for contributed services to a not-for-profit organization (NFP) to be recorded as both a contribution and as an expense?

The GASB provides guidance on generally accepted accounting principles for governmental not-for-profit organizations.

According to the FASB, net assets with donor restrictions are released from restrictions:

Introduction to Accounting and Financial Reporting for Government and Not-for-Profit Entities

Principles of Accounting and Financial Reporting for State and Local Governments

Governmental Operating Statement Accounts; Budgetary Accounting

Accounting for Governmental Operating Activities–Illustrative Transactions and Financial Statements

Accounting for General Capital Assets and Capital Projects

Accounting for General Long-Term Liabilities and Debt Service

Accounting for the Business-type Activities of State and Local Governments

Accounting for Fiduciary Activities—Custodial and Trust Funds

Financial Reporting of State and Local Governments

Analysis of Government Financial Performance

Auditing of Government and Not-for-Profit Organizations

Budgeting and Performance Measurement

Not-for-Profit Organizations—Regulatory, Taxation, and Performance Issues

Accounting for Colleges and Universities

Accounting for Health Care Organizations

Accounting and Reporting for the Federal Government

Filters

Exam 14: Accounting for Not-for-Profit Organizations

How does the FASB require not-for-profit organizations to report expenses?

Explain the purpose of FASB ASC 958-720-45 on joint-cost accounting as it relates to reporting fund-raising and program expenses of a not-for-profit organization. How is this standard applied?

The FASB states that depreciation expense in a not-for-profit organization should be:

Similar to the GASB, the FASB requires not-for-profit entities to prepare the statement of cash flows using the direct method.

Board-designated net assets are net assets with donor restrictions the board sets aide for a specific purpose.

GAAP for nongovernmental not-for-profit organizations is set by the FASB and the AICPA.

If the program services expenses category includes both directly related costs and indirect costs allocated to it, why is it necessary to have a separate category of "supporting services expenses"?

According to the FASB, how should unrealized gains on the investment portfolio of a not-for-profit organization be recognized?

Under FASB standards how would a not-for-profit organization recognize a conditional pledge?

Not-for-profits can report expenses by nature and function:

The FASB states that donated services should be recorded as contributions by a not-for-profit organization if they meet the recognition criteria and are material.

Under the FASB Codification the costs incurred for a joint activity may be allocated between fund-raising expenses and program expenses if the criteria of purpose, audience, and content are met.

Examples of organizations that can be either governmental or nongovernmental include colleges and universities, hospitals, and museums.

Which of the following would be reported as an Asset with Restrictions on Use?

Which of the following characteristics of not-for-profit organizations (NFPs) can be used to distinguish a nongovernmental from a governmental NFP?

Under the FASB Codification a $5 million endowment that cannot be spent for 50 years should be classified as net assets with donor restrictions.

According to the FASB Codification, which of the following is a condition that must be met for contributed services to a not-for-profit organization (NFP) to be recorded as both a contribution and as an expense?

The GASB provides guidance on generally accepted accounting principles for governmental not-for-profit organizations.

According to the FASB, net assets with donor restrictions are released from restrictions:

Introduction to Accounting and Financial Reporting for Government and Not-for-Profit Entities

Principles of Accounting and Financial Reporting for State and Local Governments

Governmental Operating Statement Accounts; Budgetary Accounting

Accounting for Governmental Operating Activities–Illustrative Transactions and Financial Statements

Accounting for General Capital Assets and Capital Projects

Accounting for General Long-Term Liabilities and Debt Service

Accounting for the Business-type Activities of State and Local Governments

Accounting for Fiduciary Activities—Custodial and Trust Funds

Financial Reporting of State and Local Governments

Analysis of Government Financial Performance

Auditing of Government and Not-for-Profit Organizations

Budgeting and Performance Measurement

Not-for-Profit Organizations—Regulatory, Taxation, and Performance Issues

Accounting for Colleges and Universities

Accounting for Health Care Organizations

Accounting and Reporting for the Federal Government

Filters