Question 1

What is the main source of financial support for most voluntary health and welfare entities?

Accepted Answer

Contributions (public support) represents the main source of financial support for most voluntary health and welfare entities. These contributions can come from sources such as individuals, foundations, government grants, and allocations from the United Way.

Question 2

What are the objectives of accounting for a not-for-profit entity?

Accepted Answer

The objectives of accounting for a not-for-profit entity are: (i) to provide contributors and potential contributors with a means of evaluating the use of resources by the entity; and (ii) to disclose how resources have been acquired, and how they have been used to accomplish the objectives of the entity.

Question 3

What term is often used by voluntary health and welfare entities as a category for resources received from contributions, as opposed to those from providing goods or services?

Accepted Answer

The term used by voluntary health and welfare entities for contributions is public support.

Question 4

Historically, what pattern of reporting was used by private not-for-profit entities? (1) The same as used with respect to for-profit entities.
(2) Reporting that utilizes a fund accounting approach.
(3) A pattern of reporting that does not consider the entire entity.

Accepted Answer

A)  1 only. 
B)  2 only. 
C)  1 and 2 only. 
D)  1, 2 and 3. 
E)  2 and 3 only. 
A)  1 only. 
B)  2 only. 
C)  1 and 2 only. 
D)  1, 2 and 3. 
E)  2 and 3 only.

Question 5

For May 2018, Carlington Hospital's charges for patient services were $608,000, of which 80% was billed to third-party payors.
Required:
Prepare the journal entry to accrue patient charges for the month.

Accepted Answer

SHAPE \* M

Question 6

On a statement of functional expenses for a voluntary health and welfare entity, how are expenses classified?

Accepted Answer

A)  Health services expenses and operating expenses. 
B)  Program services expenses and administrative services expenses. 
C)  Program services expenses and supporting services expenses. 
D)  Operating expenses and supporting services expenses. 
E)  Operating expenses and administrative expenses. 
A)  Health services expenses and operating expenses. 
B)  Program services expenses and administrative services expenses. 
C)  Program services expenses and supporting services expenses. 
D)  Operating expenses and supporting services expenses. 
E)  Operating expenses and administrative expenses.

Question 7

How does a not-for-profit entity account for: 1) cash contributions, and 2) donated goods that are received for operating purposes? What types of revenues are recognized by voluntary health and welfare entities?

Accepted Answer

Contributions are recorded as increases

Question 8

What is the appropriate account to credit when estimating a portion of health care entity's receivables that will prove to be uncollectible?

Accepted Answer

A)  Bad Debt Expense. 
B)  Allowance for Uncollectible Accounts. 
C)  Patient Service Revenues. 
D)  Accounts Receivable. 
E)  Contractual Adjustments. 
A)  Bad Debt Expense. 
B)  Allowance for Uncollectible Accounts. 
C)  Patient Service Revenues. 
D)  Accounts Receivable. 
E)  Contractual Adjustments.

Question 9

A local social worker, earning $12 per hour working for the state government, contributed 600 hours of time at no charge to the Sunny Homeless Shelter, a voluntary health and welfare entity.If not for these donated services, an additional staff person would have been hired by the entity.
Required:
How should the Sunny Homeless Shelter record the contributed services?

Accepted Answer

Donated services would be valued at $7,2

Question 10

A local business donated medical supplies to Wakefield Home with a value of $40,000.
Prepare the journal entry for the receipt of these supplies.

Accepted Answer

The answer of A local business donated medical supplies to...

Question 11

When individuals are considering whether to make a donation to a not-for-profit entity, the answer to which of the following questions is not typically sought?

Accepted Answer

A)  Will donated funds be used effectively by the entity to accomplish its purpose? 
B)  Will the donated funds be wasted? 
C)  How much should this entity receive? 
D)  Is this entity profitable? 
E)  Is contributing to this charity a wise allocation of resources? 
A)  Will donated funds be used effectively by the entity to accomplish its purpose? 
B)  Will the donated funds be wasted? 
C)  How much should this entity receive? 
D)  Is this entity profitable? 
E)  Is contributing to this charity a wise allocation of resources?

Question 12

For not-for-profit entities, what is the difference in identification of "control" between a merger and an acquisition?

Accepted Answer

In a merger, two or more not-for-profit

Question 13

Which account should be credited to record a gift of cash which is from an outside party to an animal rescue agency and is used for expenses to care for the animals?

Accepted Answer

A)  Non-Operating Gain - Special Revenues. 
B)  Contractual Adjustments. 
C)  Patient Service Revenues. 
D)  Drugs and Medicines. 
E)  Unrestricted net assets - contributions. 
A)  Non-Operating Gain - Special Revenues. 
B)  Contractual Adjustments. 
C)  Patient Service Revenues. 
D)  Drugs and Medicines. 
E)  Unrestricted net assets - contributions.

Question 14

The following gifts are received in 2016 by a not-for-profit entity:
I.$2,000 specified by the donor to be used to pay salaries.
II.$10,000 specified by the donor for new conference room furniture.
III.$5,000 specified by the donor to be held for one year before being expended.
The salaries are paid in 2017 and the conference room furniture is purchased in 2016. The donor did not specify any time restriction on holding the conference room furniture.
-With respect to the donations received in 2016, what amount should be reported in the Statement of Activities as net increase to Temporarily Restricted Net Assets for the year 2016?

Accepted Answer

A)  $ 2,000 
B)  $ 7,000 
C)  $12,000 
D)  $15,000 
E)  $17,000 
A)  $ 2,000 
B)  $ 7,000 
C)  $12,000 
D)  $15,000 
E)  $17,000

Question 15

Which entry would be the correct entry to record that a not-for-profit entity collected $80,000 of amounts pledged and also wrote off $3,000 of amounts pledged that were previously estimated as amounts uncollectible? DEBIT CREDIT

Accepted Answer

A)  Pledges Receivable $80,000 Cash $80,000 
B)  Cash $80,000 Pledges Receivable $80,000 
C)  Pledges Receivable $80,000 Allowance for uncollectible pledges 3,000 Cash $83,000 
D)  Cash $80,000 Pledges Receivable $83,000 Allowance for uncollectible
Pledges $3,000 
E)  Cash $80,000 Unrestricted net assets-contributions $83,000 Allowance for uncollectible
Pledges $3,000 
A)  Pledges Receivable $80,000 Cash $80,000 
B)  Cash $80,000 Pledges Receivable $80,000 
C)  Pledges Receivable $80,000 Allowance for uncollectible pledges 3,000 Cash $83,000 
D)  Cash $80,000 Pledges Receivable $83,000 Allowance for uncollectible
Pledges $3,000 
E)  Cash $80,000 Unrestricted net assets-contributions $83,000 Allowance for uncollectible
Pledges $3,000

Question 16

During 2018, the Garfield Humane Society, a voluntary health and welfare entity, received cash donations of $892,000 and membership dues of $62,000.A member of the Humane Society donated services valued at $8,000 that would otherwise have been performed by a paid staff member.A pet food manufacturer donated dog food valued at $16,400.The Humane Society received a gift of $140,000, to be used for building a new animal shelter.Also during 2018, investments held by the Humane Society earned interest of $2,000.
Required:
Prepare a schedule showing the amount that the Garfield Humane Society should have recorded for contributions from public support for 2018, according to ASU 2016-14.

Accepted Answer

The answer of During 2018, the Garfield Humane Society, a...

Question 17

A gift to a not-for-profit school that is not restricted by the donor is recorded with a credit to:

Accepted Answer

A)  Fund Balance. 
B)  Deferred Revenues. 
C)  Contribution Revenues. 
D)  Non-Operating Revenues. 
E)  Encumbrances. 
A)  Fund Balance. 
B)  Deferred Revenues. 
C)  Contribution Revenues. 
D)  Non-Operating Revenues. 
E)  Encumbrances.

Question 18

Which entry would be the correct entry to record that a hospital has provided patient services for $200,000, of which 25% will be billed to a third party? DEBIT CREDIT

Accepted Answer

A)  Accounts Receivable-Patients $200,000 Patient Service Revenue $200,000 
B)  Accounts Receivable-Patients $150,000 Patient Service Revenue $200,000 Accounts Receivable-Third Party $50,000 
C)  Accounts Receivable-Patients $50,000 Accounts Receivable-Third Party $150,000 Patient Service Revenue $200,000 
D)  Accounts Receivable-Patients $200,000 Patient Service Revenue $50,000 Accounts Receivable - Third Party $150,000 
E)  Patient Service Revenue $200,000 Accounts Receivable-Patients $150,000 Accounts Receivable-Third Party $50,000 
A)  Accounts Receivable-Patients $200,000 Patient Service Revenue $200,000 
B)  Accounts Receivable-Patients $150,000 Patient Service Revenue $200,000 Accounts Receivable-Third Party $50,000 
C)  Accounts Receivable-Patients $50,000 Accounts Receivable-Third Party $150,000 Patient Service Revenue $200,000 
D)  Accounts Receivable-Patients $200,000 Patient Service Revenue $50,000 Accounts Receivable - Third Party $150,000 
E)  Patient Service Revenue $200,000 Accounts Receivable-Patients $150,000 Accounts Receivable-Third Party $50,000

Question 19

In not-for-profit accounting, an acquisition occurs when one not-for-profit entity obtains:

Accepted Answer

A)  Significant influence over another not-for-profit entity. 
B)  More than 50% of another not-for-profit entity's fixed assets. 
C)  The right to collect more than 20% of pledged contributions. 
D)  Control over another not-for-profit entity. 
E)  None of these answer choices are correct. An acquisition can only occur for profit-oriented entities. 
A)  Significant influence over another not-for-profit entity. 
B)  More than 50% of another not-for-profit entity's fixed assets. 
C)  The right to collect more than 20% of pledged contributions. 
D)  Control over another not-for-profit entity. 
E)  None of these answer choices are correct. An acquisition can only occur for profit-oriented entities.

Question 20

When are unconditional promises to give recognized as revenues?

Accepted Answer

A)  In the period the promise is received. 
B)  In the period the promise is collected. 
C)  In the period in which the conditions upon which they are contingent are substantially met. 
D)  In the period in which the conditions upon which they are contingent have begun to be met. 
E)  Unconditional promises from potential donors are not revenues. 
A)  In the period the promise is received. 
B)  In the period the promise is collected. 
C)  In the period in which the conditions upon which they are contingent are substantially met. 
D)  In the period in which the conditions upon which they are contingent have begun to be met. 
E)  Unconditional promises from potential donors are not revenues.

Exam 18: Accounting for Not-For-Profit Entities

What is the main source of financial support for most voluntary health and welfare entities?

What are the objectives of accounting for a not-for-profit entity?

What term is often used by voluntary health and welfare entities as a category for resources received from contributions, as opposed to those from providing goods or services?

Historically, what pattern of reporting was used by private not-for-profit entities? (1) The same as used with respect to for-profit entities. (2) Reporting that utilizes a fund accounting approach. (3) A pattern of reporting that does not consider the entire entity.

For May 2018, Carlington Hospital's charges for patient services were $608,000, of which 80% was billed to third-party payors. Required: Prepare the journal entry to accrue patient charges for the month.

On a statement of functional expenses for a voluntary health and welfare entity, how are expenses classified?

How does a not-for-profit entity account for: 1) cash contributions, and 2) donated goods that are received for operating purposes? What types of revenues are recognized by voluntary health and welfare entities?

What is the appropriate account to credit when estimating a portion of health care entity's receivables that will prove to be uncollectible?

A local business donated medical supplies to Wakefield Home with a value of $40,000. Prepare the journal entry for the receipt of these supplies.

When individuals are considering whether to make a donation to a not-for-profit entity, the answer to which of the following questions is not typically sought?

For not-for-profit entities, what is the difference in identification of "control" between a merger and an acquisition?

Which account should be credited to record a gift of cash which is from an outside party to an animal rescue agency and is used for expenses to care for the animals?

Which entry would be the correct entry to record that a not-for-profit entity collected $80,000 of amounts pledged and also wrote off $3,000 of amounts pledged that were previously estimated as amounts uncollectible? DEBIT CREDIT

A gift to a not-for-profit school that is not restricted by the donor is recorded with a credit to:

Which entry would be the correct entry to record that a hospital has provided patient services for $200,000, of which 25% will be billed to a third party? DEBIT CREDIT

In not-for-profit accounting, an acquisition occurs when one not-for-profit entity obtains:

When are unconditional promises to give recognized as revenues?

The Equity Method of Accounting for Investments

A: the Equity Method of Accounting for Investments

Consolidation of Financial Information

A: Consolidation of Financial Information

Consolidations - Subsequent to the Date of Acquisition

A: Consolidations - Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

A: Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

A: Consolidated Financial Statements Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

A: Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Consolidated Financial Statements - Ownership Patterns and Income Taxes

A: Consolidated Financial Statements - Ownership Patterns and Income Taxes

Segment and Interim Reporting

A: Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

A: Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

A: Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Accounting Standards

A: Worldwide Accounting Diversity and International Accounting Standards

Financial Reporting and the Securities and Exchange Commission

A: Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

A: Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operation

A: Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

A: Partnerships: Termination and Liquidation

Accounting for State and Local Governments, Part I

A: Accounting for State and Local Governments, Part I

Accounting for State and Local Governments, Part II

A: Accounting for State and Local Governments, Part II

A: Accounting for Not-For-Profit Entities

Accounting for Estates and Trusts

A: Accounting for Estates and Trusts

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