Question 1

Which of the following statements is correct regarding reporting of special events and related direct costs under current FASB standards?

Accepted Answer

A)   Special events and related direct costs must be reported separately at their gross amounts if they relate to the ongoing major operations of a not-for-profit.
B)   Special events revenues are to be reported at gross amounts, even if direct costs are of a peripheral or incidental nature.
C)   With few exceptions special events revenues are reported net of related direct costs.
D)   Expenses of promoting and conducting special events should be netted directly against special events revenue. A

Question 2

Donor-imposed restrictions must be clearly reflected in financial statements of not-for-profit organizations reporting under the FASB.

Accepted Answer

A) True 
 B)False  True

Question 3

Explain the purpose of FASB ASC 958-720-45 on joint-cost accounting as it relates to reporting fund-raising and program expenses of a not-for-profit organization.How is this standard applied?

Accepted Answer

The purpose of the standard is to provide guidance on when costs of joint activities that involve fund-raising and a program purpose can be allocated between fund-raising and programs.The FASB requires three criteria to be met before a cost can be reported as a program expense,1)the purpose must be to advance the mission of the organization,2)the cost must be directed to an audience who is capable of advancing that mission,and 3)the content of the material that is produced must include a call to action on the part of the audience to advance the mission of the organization.If all three of these criteria are met,the costs identifiable with a specific program function can be reported as a program expense rather than a fund-raising expense.If one of the criteria is not met the costs must be reported as fund-raising,they cannot be allocated.

Question 4

Museums and religious organizations reporting in accordance with FASB must capitalize and report assets such as works of art,historical treasures,and similar collectible items if they are held for public inspection.

Accepted Answer

A) True 
 B)False

Question 5

The FASB requires not-for-profits to prepare a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 6

The FASB requires that investments initially be recorded by a not-for-profit organization at cost,or in the case of donated investments at fair value as of the date of the donation.

Accepted Answer

A) True 
 B)False

Question 7

A local CPA volunteered his time to help install and test new computer accounting system software for an after-school development organization that serves disadvantaged children. If the services had not been donated the organization would have had to hire a consultant to install the system.In accordance with the FASB Codification,the value of the CPA's time devoted to helping the organization should be recorded as:

Accepted Answer

A)   Contribution-Temporarily Restricted.
B)   Program Expense.
C)   Machinery & Equipment.
D)   It would not be recorded.

Question 8

A not-for-profit organization incurred $10,000 in management and general expenses in the current fiscal year.In the organization's statement of activities prepared in conformity with FASB standards,the $10,000 would be reported as:

Accepted Answer

A)   A deduction from program revenue.
B)   Fund-raising expense.
C)   Program services expenses.
D)   Supporting services expenses.

Question 9

Would a not-for-profit library that receives the majority of its resources from a specific tax levy on local citizens remitted to the city follow the same financial reporting principles as would a library that operates without a dedicated tax and instead relies on contributions from individuals and grants from foundations and governments? Explain.

Accepted Answer

The answer of Would a not-for-profit library that receives the...

Question 10

Term endowments and quasi-endowments are classified as temporarily restricted net assets according to the FASB.

Accepted Answer

A) True 
 B)False

Question 11

Under FASB standards how would a not-for-profit organization recognize a conditional pledge?

Accepted Answer

A)   It would debit Pledges Receivable and credit Contributions-Temporarily Restricted.
B)   It would debit Pledges Receivable and credit Deferred Contributions.
C)   It would debit Conditional Pledges Receivable and Credit Deferred Contributions.
D)   It would not recognize the conditional pledge until pledge conditions are substantially met.

Question 12

A voluntary health and welfare organization (VHWO)is a type of not-for-profit that depends primarily on charges for services as a source of revenue,rather than on contributions from the public at large.

Accepted Answer

A) True 
 B)False

Question 13

According to the FASB,how should unrealized gains on the investment portfolio of a not-for-profit organization be recognized?

Accepted Answer

A)   Not recognized.
B)   Reported in the net asset section of the balance sheet.
C)   Reported according to whether the gains relate to trading, available-for-sale, or held-to-maturity assets.
D)   Reported on the statement of activities.

Question 14

Under current accounting and reporting standards nongovernmental,not-for-profit organizations must utilize the fund accounting structure set forth in the AICPA Audit and Accounting Guide Not-for-Profit Entities.

Accepted Answer

A) True 
 B)False

Question 15

Under FASB standards,which of the following contributions would not have to be reported as an asset on the statement of financial position of a not-for-profit organization?

Accepted Answer

A)   Land was donated to the Friends of the Forest Society for conversion into a nature trail.
B)   The original courthouse was donated to the Historical Preservation Society for conversion into a museum.
C)   An art collector donated a famous oil painting to a local art museum for display in its exhibit hall.
D)   A valuable coin collection was donated to the Youth for Conservation organization, which the organization plans to sell at current market prices.

Question 16

Under the FASB Codification the costs incurred for a joint activity may be allocated between fund-raising expenses and program expenses if the criteria of purpose,audience,and content are met.

Accepted Answer

A) True 
 B)False

Question 17

The FASB requires that support from special events,if related to the central ongoing and major activities of the organization,and related direct costs,be reported at their gross amounts in the statement of activities.

Accepted Answer

A) True 
 B)False

Question 18

In accordance with FASB standards,securities donated to a not-for-profit organization should be recorded at the:

Accepted Answer

A)   Donor's recorded amount.
B)   Fair market value at the date of the gift, or the donor's recorded amount, whichever is lower.
C)   Fair market value at the date of the gift, or the donor's recorded amount, whichever is higher.
D)   Fair market value at the date of the gift.

Question 19

Distinguish between "support" and "revenues from exchange transactions."

Accepted Answer

The answer of Distinguish between "support" and "revenues from exchange...

Question 20

The following are key terms in Chapter 13 that relate to accounting for not-for-profit organizations:
A.Nonexchange transactions
B.Temporarily restricted net assets
C.Collections
D.Variance power
E.Exchange transactions
F.Board-designated net assets
G.Permanently restricted net assets
H.Promise to give
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.

Accepted Answer

The answer of The following are key terms in Chapter...

Exam 13: Accounting for Not-For-Profit Organizations

Which of the following statements is correct regarding reporting of special events and related direct costs under current FASB standards?

Donor-imposed restrictions must be clearly reflected in financial statements of not-for-profit organizations reporting under the FASB.

Explain the purpose of FASB ASC 958-720-45 on joint-cost accounting as it relates to reporting fund-raising and program expenses of a not-for-profit organization.How is this standard applied?

Museums and religious organizations reporting in accordance with FASB must capitalize and report assets such as works of art,historical treasures,and similar collectible items if they are held for public inspection.

The FASB requires not-for-profits to prepare a statement of cash flows.

The FASB requires that investments initially be recorded by a not-for-profit organization at cost,or in the case of donated investments at fair value as of the date of the donation.

A not-for-profit organization incurred $10,000 in management and general expenses in the current fiscal year.In the organization's statement of activities prepared in conformity with FASB standards,the $10,000 would be reported as:

Term endowments and quasi-endowments are classified as temporarily restricted net assets according to the FASB.

Under FASB standards how would a not-for-profit organization recognize a conditional pledge?

A voluntary health and welfare organization (VHWO)is a type of not-for-profit that depends primarily on charges for services as a source of revenue,rather than on contributions from the public at large.

According to the FASB,how should unrealized gains on the investment portfolio of a not-for-profit organization be recognized?

Under current accounting and reporting standards nongovernmental,not-for-profit organizations must utilize the fund accounting structure set forth in the AICPA Audit and Accounting Guide Not-for-Profit Entities.

Under FASB standards,which of the following contributions would not have to be reported as an asset on the statement of financial position of a not-for-profit organization?

Under the FASB Codification the costs incurred for a joint activity may be allocated between fund-raising expenses and program expenses if the criteria of purpose,audience,and content are met.

The FASB requires that support from special events,if related to the central ongoing and major activities of the organization,and related direct costs,be reported at their gross amounts in the statement of activities.

In accordance with FASB standards,securities donated to a not-for-profit organization should be recorded at the:

Distinguish between "support" and "revenues from exchange transactions."