Exam 12: Accounting for Not-For-Profit Organizations

Matt Shaw buys 100 shares of common stock for $8,000 in January.The value of the stock fluctuates in a narrow range (averaging $8,700)throughout the year.In November,when it has a value of $9,500,he donates it to a not-for-profit entity.On December 31,the stock has a fair value of $8,200.At what amount should the entity value the stock on its December 31 statement of financial position?

According to the Financial Accounting Standards Board,the distinguishing characteristics of not-for-profit organizations (NFPOs)do not include which of the following?

The National Kidney Foundation,a voluntary health and welfare organization,is required by GAAP to present an additional operating statement-a statement of functional expenses.What will this statement present?

A not-for-profit organization enters into an agreement with a local bank to provide it with a letter of credit for a building project.The bank requires the organization to put aside 10% of pledges collected for the building project in a separate account as a good faith deposit for the line of credit.At year-end,the organization has $255,000 in this separate account.How should the $255,000 of net assets be classified?

Ken Labich promises to give a not-for-profit university $2 million for a new library,but only if the university is able to raise an equal amount in cash from other donors.When should the university recognize Ken's promise as revenue?

A not-for-profit arts organization receives a $300,000 gift from a donor who specifies that the gift must be maintained in perpetuity and that the income from the gift is to be used only to take disabled persons to the theater.How should the entity report the $300,000 gift in the net asset section of its statement of financial position?

A not-for-profit museum holds a collection of historical treasures.It manages the treasures in a manner that meets all three criteria permitting the option to either capitalize the collection or not.The museum has chosen not to capitalize its collection.It then receives a donation of several items that it intends to sell to help meet operating expenses.How should the museum account for the donated items?

In not-for-profit accounting,under what circumstances does a reclassification occur?

A not-for-profit secondary school sends a 8-page brochure to the parents and alumni of the school.The brochure describes the school's programs and discusses the achievements of some of its graduates.Five pages list the names of all contributors during the previous year and the last page contains an appeal for funds.How should the organization report the expense of printing and mailing the brochure?

Not-for-profit colleges and universities are required to follow the accounting standards of which standard-setting body?

Showing the amount and nature of donor-imposed restrictions on the statement of net assets helps financial statement readers to assess a not-for-profit organization's

Which of the following is an example of a mandatory transfer in college and university accounting?

A not-for-profit organization uses fund accounting.Which of the following transactions is likely to be accounted for in a Restricted Current Fund?

A donor had previously donated $2,000 to a not-for-profit entity,stipulating that the gift must be used to finance the annual Fall Harvest festival.The festival is held and the gift is used for the stipulated purpose.Which of the following best describes the effect of the journal entries needed to record the expense resulting from use of the gift?

A not-for-profit organization receives $3,400,000 of pledges in its annual telethon.When should the organization recognize contribution revenue?

A not-for-profit entity receives a donation of 100 shares of securities listed on the American Stock Exchange.As a general rule,when it prepares its statement of financial position at year-end,the entity must report the securities at:

On March 1,2012,a not-for-profit organization received a donation of securities worth $4,500.When it prepared its financial statements at December 31,2012,the securities had a fair value of $5,200.When it sold the securities on June 30,2013,it received $4,600.The entity's accounting procedures call for reporting all unrealized and realized gains and losses in a single account.How should it report its gains and losses in 2012 and 2013?

A not-for-profit museum owns a building and a large collection of art works.Both the building and the art works are capitalized on the entity's statement of financial position.What is the general rule regarding depreciation of the building and the art works?

A not-for-profit museum holds a valuable collection of art works.On reviewing the museum's financial statements,a new trustee notices that the statement of financial position contains no line item for inventory of art works.He is told by the accountant that the museum has never taken an inventory because "it would cost too much." What are the accounting requirements regarding capitalization of the art works?

Steve Watson,a local certified public accountant (CPA),donates a significant amount of his spare time to Beth's Gallery,a not-for-profit museum.He donates 50 hours to audit the books and 80 hours selling products at the museum store.He charges his regular clients $200 an hour as a CPA.How should the Gallery report Mr.Watson's donation of time?