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

Which of the following is the incorporating document of a not-for-profit organization that describes the purpose or mission of the organization?

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.

Describe the difficulty in comparing the financial performance of a not-for-profit organization to other similar organizations.What benchmarks are available to assist in this task?

A good measure that can be used to help assess whether a not-for-profit organization is spending too much on overhead,such as general and administrative expenses,is:

A state has the obligation to monitor and regulate a not-for-profit (NFP)organization because it granted the NFP tax-exempt status through the not-for-profit corporation laws.

The income most likely to be considered unrelated business income of a human service organization that provides immunizations to children in the community is:

Which of the following defines an appeal to the public to take action on a legislative matter?

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

A good measure of whether a not-for-profit organization is a "going concern" and can sustain its operations into the future is:

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 denies the application.

The following are key terms in Chapter 14 that relate to regulatory and taxation issues of not-for-profit organizations: A.Unrelated business income B.Public charity C.Charitable solicitation D.Lobbying E.Debt financed income F.Private foundation G.Propaganda For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition. _____1.A not-for-profit exempt under IRC Sec.501(c)(3)that receives most of its support from a small number of donors or investment income than it does from the public at large. _____ 2.A direct request for credit or financial assistance that will be used for the 501(c)(3)'s mission. _____ 3.Information that is skewed toward a particular belief with little basis in fact. _____ 4.Gross income from a trade or business regularly carried on by a tax-exempt organization. _____ 5.Contacting elected officials to encourage specific legislative action.

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.

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.

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

A good measure of whether a not-for-profit organization is "liquid" and can meet its short-term obligations is:

Which of the following would not be required under not-for-profit incorporation laws?

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?

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

A not-for-profit organization is granted its legal status by which of the following?