Question 1

Prior to ASU 2016-14, what are the three categories of net assets required by GAAP in reporting of a not-for-profit entity?

Accepted Answer

A)  Unrestricted, Temporarily Restricted, and Permanently Restricted. 
B)  Unrestricted, Restricted, and Fund Balance. 
C)  Restricted, Permanently Restricted, and Fund Balance. 
D)  Unrestricted, Temporarily Restricted, and Fund Balance. 
E)  None of these answer choices are correct. 
A)  Unrestricted, Temporarily Restricted, and Permanently Restricted. 
B)  Unrestricted, Restricted, and Fund Balance. 
C)  Restricted, Permanently Restricted, and Fund Balance. 
D)  Unrestricted, Temporarily Restricted, and Fund Balance. 
E)  None of these answer choices are correct. A

Question 2

Which entry would be the correct entry on the not-for-profit entity's books to record a donor's gift when the money is simply passing through the not-for-profit entity, it creates no direct benefit, and control of the assets has been relinquished by the donor? DEBIT CREDIT

Accepted Answer

A)  Expense-charitable contribution Cash 
B)  Refundable advance to charity Cash 
C)  Cash Liability to beneficiary 
D)  Cash Refundable advance 
E)  Cash Contribution revenue 
A)  Expense-charitable contribution Cash 
B)  Refundable advance to charity Cash 
C)  Cash Liability to beneficiary 
D)  Cash Refundable advance 
E)  Cash Contribution revenue C

Question 3

For a not-for-profit entity, when is recognition of contributions of artworks and historical treasures not required?

Accepted Answer

GAAP for not-for-profit entities allows gifts of artworks and historical treasures to not be recorded if: (i) they are added to a collection for public exhibition, education, or research; (ii) they are protected and preserved; and (iii) if they are ever sold, any receipts will be used to acquire other collection items.

Question 4

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.
-What amount should be reclassified on the Statement of Activities for 2017 from the Temporarily Restricted column to the Unrestricted column?

Accepted Answer

A)  $ 2,000. 
B)  $ 5,000. 
C)  $ 7,000. 
D)  $10,000. 
E)  $12,000. 
A)  $ 2,000. 
B)  $ 5,000. 
C)  $ 7,000. 
D)  $10,000. 
E)  $12,000.

Question 5

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 total amount should be recorded as an increase to Temporarily Restricted Net Assets?

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 6

What is the basis of accounting used in reporting the Statement of Activities?

Accepted Answer

A)  Cash basis. 
B)  Modified accrual basis. 
C)  Accrual basis. 
D)  Either cash basis or accrual basis, depending on the type of revenue. 
E)  Either modified accrual basis or accrual basis, depending on the type of revenue. 
A)  Cash basis. 
B)  Modified accrual basis. 
C)  Accrual basis. 
D)  Either cash basis or accrual basis, depending on the type of revenue. 
E)  Either modified accrual basis or accrual basis, depending on the type of revenue.

Question 7

What two classifications are used for the expenses incurred by voluntary health and welfare entities?

Accepted Answer

The two classifications of exp

Question 8

What are third party payors? Why are their interests important in accounting for health care entities?

Accepted Answer

Third party payors are entities that gua

Question 9

When an acquisition occurs in not-for-profit accounting, recognition of goodwill depends on:

Accepted Answer

A)  Whether control has been achieved by the acquiring not-for-profit entity. 
B)  Whether the acquired not-for-profit entity has the ability to generate significant amounts of revenue from providing goods or services or from membership fees, or whether it is expected to generate primarily contribution and investment revenue in the future. 
C)  Whether the acquired not-for-profit entity has the ability to generate significant amounts of revenues from goods or services or membership fees, as well as significant amounts of contribution revenues in the future. 
D)  Whether the acquired not-for-profit entity has a history of generating significant revenues of any type. 
E)  None of these answer choices are correct. Goodwill can only be recognized in an acquisition of a for-profit entity. 
A)  Whether control has been achieved by the acquiring not-for-profit entity. 
B)  Whether the acquired not-for-profit entity has the ability to generate significant amounts of revenue from providing goods or services or from membership fees, or whether it is expected to generate primarily contribution and investment revenue in the future. 
C)  Whether the acquired not-for-profit entity has the ability to generate significant amounts of revenues from goods or services or membership fees, as well as significant amounts of contribution revenues in the future. 
D)  Whether the acquired not-for-profit entity has a history of generating significant revenues of any type. 
E)  None of these answer choices are correct. Goodwill can only be recognized in an acquisition of a for-profit entity.

Question 10

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

Accepted Answer

Contributions (public support) represent

Question 11

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

Accepted Answer

The objectives of accounting for a not-f

Question 12

During 2017, 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 in building a new animal shelter.Also during 2017, 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 2017.

Accepted Answer

The answer of During 2017, the Garfield Humane Society, a...

Question 13

Wakefield Home is a private not-for-profit health care entity offering services for a fee. In the first quarter of 2017, Wakefield Home rendered services of $300,000 to patients. Of this amount, patients bear responsibility for 75% and the remaining amount is to be paid by third-party insurance providers. However, at the end of 2017, Wakefield Home realizes that $25,000 of the patients' responsibility to pay their share of the billed amounts is estimated to be uncollectible and $3,000 of the amounts from the third-party payors will not be collected.
-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 Wakefield Home is a private not-for-profit health...

Question 14

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 15

For the month of December 2017, patient charges at Northfield Hospital (a not-for-profit hospital) were $2,720,000. Third-party payors were billed $1,800,000.
-In this month, there were several patients that had no health insurance and due to their low income level, the hospital decided that $85,000 of receivables would not be collectible.
Required:
Prepare the necessary journal entry to reflect the decision to consider the $85,000 as charity care.

Accepted Answer

The answer of For the month of December 2017, patient...

Question 16

Which of the following topics are not included in the Form 990 which tax-exempt entities file to maintain their tax-exempt status?

Accepted Answer

A)  Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees and Independent Contractors. 
B)  Donor Disclosure: Identification of Every Donor by Name, Contribution Value & Contribution Type. 
C)  Statement of Revenue. 
D)  Balance Sheet. 
E)  Statement of Functional Expenses. 
A)  Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees and Independent Contractors. 
B)  Donor Disclosure: Identification of Every Donor by Name, Contribution Value & Contribution Type. 
C)  Statement of Revenue. 
D)  Balance Sheet. 
E)  Statement of Functional Expenses.

Question 17

Which entry would be the correct entry on the donor's books when the donor relinquishes control of an asset, such as cash, which it contributes to a not-for-profit entity? DEBIT CREDIT

Accepted Answer

A)  Expense-charitable contribution Cash 
B)  Refundable advance to charity Cash 
C)  Charitable pledge Cash 
D)  Cash Liability to beneficiary 
E)  Cash Refundable advance 
A)  Expense-charitable contribution Cash 
B)  Refundable advance to charity Cash 
C)  Charitable pledge Cash 
D)  Cash Liability to beneficiary 
E)  Cash Refundable advance

Question 18

Which of the following is not true about a merger of two not-for-profit entities?

Accepted Answer

A)  The two entities will continue to legally exist but there will be a new governing board. 
B)  Neither entity is considered to be acquired. 
C)  Identifiable assets and liabilities are not adjusted to their fair values at the date of the merger. 
D)  The two entities will together form an entirely new entity with a new governing board. 
E)  There will be no acquisition value or goodwill determination. 
A)  The two entities will continue to legally exist but there will be a new governing board. 
B)  Neither entity is considered to be acquired. 
C)  Identifiable assets and liabilities are not adjusted to their fair values at the date of the merger. 
D)  The two entities will together form an entirely new entity with a new governing board. 
E)  There will be no acquisition value or goodwill determination.

Question 19

On a Statement of Activities for a not-for-profit entity, what is the minimum required classification for categories of expenses?

Accepted Answer

A)  Fund-raising 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)  Fund-raising 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 20

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

Exam 18: A: Accounting for Not-For-Profit Entities

Prior to ASU 2016-14, what are the three categories of net assets required by GAAP in reporting of a not-for-profit entity?

Which entry would be the correct entry on the not-for-profit entity's books to record a donor's gift when the money is simply passing through the not-for-profit entity, it creates no direct benefit, and control of the assets has been relinquished by the donor? DEBIT CREDIT

For a not-for-profit entity, when is recognition of contributions of artworks and historical treasures not required?

What is the basis of accounting used in reporting the Statement of Activities?

What two classifications are used for the expenses incurred by voluntary health and welfare entities?

What are third party payors? Why are their interests important in accounting for health care entities?

When an acquisition occurs in not-for-profit accounting, recognition of goodwill depends on:

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?

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

Which of the following topics are not included in the Form 990 which tax-exempt entities file to maintain their tax-exempt status?

Which entry would be the correct entry on the donor's books when the donor relinquishes control of an asset, such as cash, which it contributes to a not-for-profit entity? DEBIT CREDIT

Which of the following is not true about a merger of two not-for-profit entities?

On a Statement of Activities for a not-for-profit entity, what is the minimum required classification for categories of expenses?

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

Accounting for Not-For-Profit Entities

Accounting for Estates and Trusts

A: Accounting for Estates and Trusts

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