Exam 14: Not-For-Profit Organizations-Regulatory, Taxation, and Performance Issues

If a tax-exempt organization dissolves and goes out of business,it must distribute its assets to another tax-exempt organization or a governmental entity.

Not-for-profit organizations are so diverse in nature that it is not feasible to find benchmarks with which to compare their financial and operating performance.

Why do states and the federal government exercise oversight responsibility over not-for-profit,tax-exempt corporations? How do states and the federal government differ in the way they exercise this responsibility?

A good measure of whether a not-for-profit organization is spending too much on overhead,such as general and administrative expenses,is

Which of the following not-for-profit organizations is most likely to be tax-exempt under IRC Sec.501(c) (3)?

Describe the process for becoming a tax-exempt organization.Why do you believe it is important for an accountant to understand this process?

A measure of program effectiveness frequently used to assess not-for-profit organizations is the ratio of program expenses to total expenses.

A good measure of whether a not-for-profit organization is efficient in its fund-raising efforts is

One of the limitations of financial ratio analysis for not-for-profit organizations is that donors may incorrectly assume that there are federal or state laws that govern the percentage of annual revenues that a charity must spend on its programs.

The term that means information skewed toward a particular belief with a tendency to have little or no factual basis is

The ratio unrestricted net assets as a percent of operating expenses is helpful in determining if the not-for-profit organization can cover its debt service expense.

Board members of a not-for-profit organization have a fiduciary responsibility to provide fiscal guidance and ongoing governance over the not-for-profit organization to ensure that its exempt mission is carried out as described in the incorporating documents and exempt application.

The Internal Revenue Service may impose intermediate sanctions on all of the following transactions between a not-for-profit organization and its executive officer except

The not-for-profit organization applying for tax-exempt status determines the appropriate subsection under IRC Sec.501 for which it wants to be considered and the Internal Revenue Service then approves or does not approve the application.

The Form 990 consists of 12 parts (core form)and several schedules.Which of the following would not be included as one of the parts of the core form of the Form 990?

All not-for-profit organizations are required to file some type of Form 990 with the Internal Revenue Service.

The organization Shelter the Needy is completing its Form 990 and it is trying to determine if it has unrelated business income on which it must pay taxes.Which of the following would be subject to unrelated business income taxes?

Which of the following is a reason why an not-for-profit organization might fail to qualify for tax-exempt status?

Your client is a nongovernmental not-for-profit museum that operates a gift shop.Explain the unrelated business income tax to your client and suggest ways to avoid this tax.

Which of the following is a not a true statement about tax-exempt organizations?