Exam 14: Accounting for Not-for-Profit Organizations

Which of the following statements is correct regarding reporting of special events and related direct costs under current FASB standards?

Which of the following statements is True regarding fund accounting for not-for-profit organizations (NFPs)?

An example of an increase in net assets for a not-for-profit organization that would be labeled revenue rather than support is:

A donor provides a large cash contribution that is to be used for acquisition of a new building. Under FASB standards, how would this contribution be reported by a not-for-profit organization on its statement of cash flows?

Long-term unconditional pledges (those that will not be collected within a year) are generally reported at fair value.

Under FASB standards, which of the following contributions would not have to be reported as an asset on the statement of financial position of a not-for-profit organization?

Supporting services expenses include fund-raising and management and general expenses that are not directly attributable to specific programs.

An organization that can directly issue debt paying interest exempt from federal taxation may be a governmental not-for-profit or a nongovernmental not-for-profit.

The FASB requires that if a financial intermediary has variance power it recognize a donation as a contribution payable on its financial statements.

The board of directors for a nongovernmental not-for-profit organization decided to designate $20,000 each year for the next three years to fund a special research project it was planning to conduct at the end of the three-year period.  How would these board-designated resources be reported on the statement of financial position?

Distinguish between "support" and "revenues from exchange transactions."

The FASB states that if a not-for-profit has a controlling financial interest in a for-profit it should consolidate the for-profit over which it has a controlling financial interest into its financial statements.

Under FASB standards the statement of activities for a not-for-profit organization is required to be separated into operating and nonoperating activity.

For each of the following definitions, indicate the key term from the list that best matches by placing the appropriate terms. A. Nonexchange transactions B. Net assets with donor restrictions C. Collections D. Variance power E. Exchange transactions F. Board-designated net assets G. Endowment H. Promise to give ________ 1. Unrestricted net assets that the governing body decides to set aside for specific purposes ________ 2. The unilateral power of an organization to redirect donated assets to a different beneficiary than initially indicated by the donor ________ 3. Net assets for which the donor has indicated use in a future period or for a particular purpose ________ 4. Transactions in which the donor derives no direct tangible benefits ________ 5. Works or art, historical treasures, or similar assets held and protected for public exhibition, and, if sold, proceeds would be used to acquire similar assets

Under FASB standards, expenses of a not-for-profit organization can only be shown as reductions of net assets without donor restrictions.

Donor-imposed restrictions must be clearly reflected in financial statements of not-for-profit organizations reporting under the FASB.

A local CPA volunteered his time to prepare the Form 990 for an after-school development organization that serves disadvantaged children. If the services had not been donated the organization would have had to hire a CPA to prepare the return. In accordance with the FASB Codification, the value of the CPA's time devoted to helping the organization should be recorded as:

Fixed-term endowments and board-designated endowments are classified as net assets with donor restrictions according to the FASB.

Which of the following is not one of the criteria specified in the FASB Codification for determining whether joint costs with a fund-raising appeal can be reported with program expenses rather than as fund-raising expenses?

Would a not-for-profit library that receives the majority of its resources from a specific tax levy on local citizens remitted to the city follow the same financial reporting principles as would a library that operates without a dedicated tax and instead relies on contributions from individuals and grants from foundations and governments? Explain.