Question 1

Explain the purpose of "intermediate sanctions".

Accepted Answer

Intermediate sanctions exist to allow the Internal Revenue Service (IRS)to assess penalties on a not-for-profit organization when a transaction confers a substantial benefit on a disqualified person.A disqualified person is one who has substantial influence over the organization's affairs.Examples of excess benefit transactions include unreasonable compensation,sales of assets at bargain prices,and lease arrangements.Intermediate sanctions allow the IRS to penalize the organization and the disqualified party who received the benefits rather than revoking the not-for-profit's tax-exempt status (its other option).

Question 2

All officers of a not-for-profit organization have the same responsibilities to the organization and its constituents.

Accepted Answer

A) True 
 B)False  False

Question 3

Income a not-for-profit organization earns from a rental property on which it has a mortgage is subject to unrelated business income tax.

Accepted Answer

A) True 
 B)False  True

Question 4

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?

Accepted Answer

A)  The Shelter sold art work it had received as a donation. 
B)  Volunteers raised several thousand dollars in a marathon sponsored for the benefit of the Shelter. 
C)  The Shelter earned revenues from the self-service laundry facilities it provides for the benefit of tenants of its low-income temporary housing facilities. 
D)  None of the items listed would be subject to unrelated business income taxes. 
A)  The Shelter sold art work it had received as a donation. 
B)  Volunteers raised several thousand dollars in a marathon sponsored for the benefit of the Shelter. 
C)  The Shelter earned revenues from the self-service laundry facilities it provides for the benefit of tenants of its low-income temporary housing facilities. 
D)  None of the items listed would be subject to unrelated business income taxes.

Question 5

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.

Accepted Answer

The unrelated business income tax (UBIT)

Question 6

Not-for-profit corporations cannot lobby or attempt to influence legislation or politicians.

Accepted Answer

A) True 
 B)False

Question 7

The Charleston Principles provide guidance to state governments in setting registration requirements for not-for-profits wanting to raise funds over the Internet.

Accepted Answer

A) True 
 B)False

Question 8

The following are types of ratios described in Chapter 14 that can be used to assess the financial performance of not-for-profit organizations:
A.Liquidity
B.Going concern
C.Capital structure
D.Program effectiveness
E.Efficiency
F.Leverage and debt coverage
G.Fund-raising ratio
H.Fund-raising efficiency
I.Investment performance
For each of the following performance indicators,indicate the type of ratio from the list above that best matches by placing the appropriate letter in the blank space next to the phrase.
 .Are earnings on investments on target?
_____ 2.What percentage of contributions remains after deducting the cost of raising the contributions?
_____ 3.Does the organization rely more on debt or net assets to finance its operations?
_____ 4.Is an appropriate amount spent on accomplishing the organization's program goals?
_____ 5.Are revenues sufficient to cover expenses?
A. Liquidity
B. Going concern
C. Capital structure
D. Program effectiveness
E. Efficiency

Accepted Answer

The answer of The following are types of ratios described...

Question 9

All of the following are reasons why the Internal Revenue Service (IRS)overhauled the Form 990 for tax years beginning in 2008 except:

Accepted Answer

A)  To minimize the burden of filing on tax-exempt organizations. 
B)  To shorten the time it takes to complete a return for large not-for-profit organizations. 
C)  To enhance transparency about the organization. 
D)  To allow the IRS to efficiently assess noncompliance. 
A)  To minimize the burden of filing on tax-exempt organizations. 
B)  To shorten the time it takes to complete a return for large not-for-profit organizations. 
C)  To enhance transparency about the organization. 
D)  To allow the IRS to efficiently assess noncompliance.

Question 10

Intermediate sanctions are often imposed by the Internal Revenue Service,in addition to revoking the tax-exempt status for organizations that confer excessive economic benefits on officers of the organization.

Accepted Answer

A) True 
 B)False

Question 11

The Internal Revenue Service requires that information from the audited financial statements be used to complete the Form 990.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  Beta Kappa Alpha Sorority. 
B)  Peaceful Dreams Cemetery Association. 
C)  Regional Association of Tree Trimmers. 
D)  Survivors of Breast Cancer Club. 
A)  Beta Kappa Alpha Sorority. 
B)  Peaceful Dreams Cemetery Association. 
C)  Regional Association of Tree Trimmers. 
D)  Survivors of Breast Cancer Club.

Question 13

The federal government's primary objective in regulating not-for-profit organizations through the income tax laws is to limit the number of exempt organizations that operate at any one point in time.

Accepted Answer

A) True 
 B)False

Question 14

Only 501(c)(3)organizations receiving at least 50 percent of their support from the public at large rather than a few individual donors can be considered public charities.

Accepted Answer

A) True 
 B)False

Question 15

A not-for-profit typically has gross receipts of $4,500 or less each year.According to the IRS it would not have to file with the IRS to be considered tax-exempt under Sec.501(c)(3).

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  Fund-raising expenses as a percentage of public support. 
B)  The ratio of program expenses to number of clients served. 
C)  Total revenues divided by total expenses. 
D)  Percentage of program expenses to total expenses. 
A)  Fund-raising expenses as a percentage of public support. 
B)  The ratio of program expenses to number of clients served. 
C)  Total revenues divided by total expenses. 
D)  Percentage of program expenses to total expenses.

Question 17

Political parties and campaign committees can qualify for tax-exempt status.

Accepted Answer

A) True 
 B)False

Question 18

A 501(c)(3)organization must provide donors with a written disclosure of the amount of the donation if the donation is $1,000 or more.

Accepted Answer

A) True 
 B)False

Question 19

Not-for-profit organizations risk loss of their tax-exempt status if they engage in any political activity.

Accepted Answer

A) True 
 B)False

Question 20

Public disclosure rules require that a tax-exempt not-for-profit organization:

Accepted Answer

A)  Make available a copy of its Form 990 to the public for a period of up to three years. 
B)  Post a copy of its articles of incorporation and by-laws on its Web site. 
C)  Provide a copy of the minutes to all board meetings to any person who requests the minutes within 90 days of the board meeting. 
D)  Make available a copy of its Form 990-T, but not its Form 990, to the public for a period of up to two years. 
A)  Make available a copy of its Form 990 to the public for a period of up to three years. 
B)  Post a copy of its articles of incorporation and by-laws on its Web site. 
C)  Provide a copy of the minutes to all board meetings to any person who requests the minutes within 90 days of the board meeting. 
D)  Make available a copy of its Form 990-T, but not its Form 990, to the public for a period of up to two years.

Explain the purpose of "intermediate sanctions".

All officers of a not-for-profit organization have the same responsibilities to the organization and its constituents.

Income a not-for-profit organization earns from a rental property on which it has a mortgage is subject to unrelated business income tax.

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?

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.

Not-for-profit corporations cannot lobby or attempt to influence legislation or politicians.

The Charleston Principles provide guidance to state governments in setting registration requirements for not-for-profits wanting to raise funds over the Internet.

All of the following are reasons why the Internal Revenue Service (IRS)overhauled the Form 990 for tax years beginning in 2008 except:

Intermediate sanctions are often imposed by the Internal Revenue Service,in addition to revoking the tax-exempt status for organizations that confer excessive economic benefits on officers of the organization.

The Internal Revenue Service requires that information from the audited financial statements be used to complete the Form 990.

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

The federal government's primary objective in regulating not-for-profit organizations through the income tax laws is to limit the number of exempt organizations that operate at any one point in time.

Only 501(c)(3)organizations receiving at least 50 percent of their support from the public at large rather than a few individual donors can be considered public charities.

A not-for-profit typically has gross receipts of $4,500 or less each year.According to the IRS it would not have to file with the IRS to be considered tax-exempt under Sec.501(c)(3).

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

Political parties and campaign committees can qualify for tax-exempt status.

A 501(c)(3)organization must provide donors with a written disclosure of the amount of the donation if the donation is $1,000 or more.

Not-for-profit organizations risk loss of their tax-exempt status if they engage in any political activity.

Public disclosure rules require that a tax-exempt not-for-profit organization:

Introduction to Accounting and Financial Reporting for Governmental 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 Activitiesillustrative 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 Activitiesagency and Trust Funds

Financial Reporting of State and Local Governments

Analysis of Governmental Financial Performance

Auditing of Governmental and Not-For-Profit Organizations

Budgeting and Performance Measurement

Accounting for Not-For-Profit Organizations

Accounting for Colleges and Universities

Accounting for Health Care Organizations

Accounting and Reporting for the Federal Government Glossary

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

Explain the purpose of "intermediate sanctions".

All officers of a not-for-profit organization have the same responsibilities to the organization and its constituents.

Income a not-for-profit organization earns from a rental property on which it has a mortgage is subject to unrelated business income tax.

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?

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.

Not-for-profit corporations cannot lobby or attempt to influence legislation or politicians.

The Charleston Principles provide guidance to state governments in setting registration requirements for not-for-profits wanting to raise funds over the Internet.

All of the following are reasons why the Internal Revenue Service (IRS)overhauled the Form 990 for tax years beginning in 2008 except:

Intermediate sanctions are often imposed by the Internal Revenue Service,in addition to revoking the tax-exempt status for organizations that confer excessive economic benefits on officers of the organization.

The Internal Revenue Service requires that information from the audited financial statements be used to complete the Form 990.

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

The federal government's primary objective in regulating not-for-profit organizations through the income tax laws is to limit the number of exempt organizations that operate at any one point in time.

Only 501(c)(3)organizations receiving at least 50 percent of their support from the public at large rather than a few individual donors can be considered public charities.

A not-for-profit typically has gross receipts of $4,500 or less each year.According to the IRS it would not have to file with the IRS to be considered tax-exempt under Sec.501(c)(3).

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

Political parties and campaign committees can qualify for tax-exempt status.

A 501(c)(3)organization must provide donors with a written disclosure of the amount of the donation if the donation is $1,000 or more.

Not-for-profit organizations risk loss of their tax-exempt status if they engage in any political activity.

Public disclosure rules require that a tax-exempt not-for-profit organization:

Introduction to Accounting and Financial Reporting for Governmental 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 Activitiesillustrative 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 Activitiesagency and Trust Funds

Financial Reporting of State and Local Governments

Analysis of Governmental Financial Performance

Auditing of Governmental and Not-For-Profit Organizations

Budgeting and Performance Measurement

Accounting for Not-For-Profit Organizations

Accounting for Colleges and Universities

Accounting for Health Care Organizations

Accounting and Reporting for the Federal Government Glossary

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