Question 1

Net Assets must be presented separately in the Statement of Financial Position for the three classes (unrestricted, temporarily restricted and permanently restricted).

Accepted Answer

A) True 
 B)False

Question 2

If a donor selects a scholarship recipient and then donates cash to a ballet school to fund that scholarship, the ballet school would:

Accepted Answer

A)  Record a liability, as it is acting as an agent for the donation 
B)  Record the donated cash as a contribution 
C)  Not record the donation at all, but disclose it in the footnotes 
D)  Record the scholarship awarded as a reduction of revenue

Question 3

A donor made a pledge in 2008 of $ 50,000 to a not-for-profit organization with the intent to pay the cash in 2009 for unrestricted use in 2009. The organization should:

Accepted Answer

A)  Record the pledge receivable and deferred revenue in 2008. 
B)  Record the pledge as unrestricted revenue in 2008. 
C)  Record the pledge as temporarily restricted revenue in 2008 and reclassify it to unrestricted in 2009. 
D)  Record the pledge as temporarily restricted revenue in 2008 and reclassify it to unrestricted in 2009, but only in an amount equivalent to the amount that is spent in 2009.

Question 4

Supporting activities as classified in the Statement of Activities, normally include

Accepted Answer

A)  Management and general 
B)  Fund-raising 
C)  Membership development 
D)  All of the above

Question 5

Which of the following is true regarding the Statement of Cash Flows for nongovernmental, not-for-profit organizations?

Accepted Answer

A)  Either the direct or indirect method may be used 
B)  If a not-for-profit organization received a cash contribution for permanently restricted purposes, that cash contribution would be shown as a cash flow from financing activities 
C)  Both of the above 
D)  Neither of the above

Question 6

When should unconditional pledges be recorded as revenue?

Accepted Answer

A)  Never 
B)  When money is received 
C)  When the pledge is made 
D)  None of the above.

Question 7

What financial ratio is most commonly used to evaluate charitable organizations?

Accepted Answer

A)  Current assets / current liabilities 
B)  Increase in net assets / total assets 
C)  Total expenses / total revenues 
D)  Program expenses / total expenses

Question 8

Which of the following is not true of a Statement of Activities prepared for a not-for-profit organization?

Accepted Answer

A)  Expenses are shown only as decreases in unrestricted net assets 
B)  Reclassifications for expiration of time restrictions are shown in the revenues and support section 
C)  Unrealized gains or losses on investments are shown only as increases in unrestricted net assets 
D)  Expenses are classified by function within the categories of Program Services and Supporting Services either in the Statement or the footnotes

Question 9

With respect to the Statement of Cash Flows for a not-for-profit organization, donor restricted cash that must be used for long term purposes is classified as cash flows from financing activities.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true regarding the Statement of Financial Position for nongovernmental, not-for-profit organizations?

Accepted Answer

A)  The Statement must display assets and liabilities separated between the categories of unrestricted, temporarily restricted and permanently restricted 
B)  The Statement must display totals for net assets separated between the categories of unrestricted, temporarily restricted and permanently restricted 
C)  Both of the above 
D)  Neither of the above

Question 11

Country clubs and labor unions are not included in the category "other not-for-profit" organizations because they provide benefit to their members only and not to the general public.

Accepted Answer

A) True 
 B)False

Question 12

A civic ballet company sells 10 "Benefactor" status memberships for $500 each. The Benefactors each receive a season ticket valued at $200 and a listing in the company's program. How would the ballet company record the sale of these 100 memberships? 
A.
$\begin{array}{lll}
\text { Cash } & \$ 5,000 & \
 \text {  Deferred Revenue } && \$ 5,000 \
\end{array}$

B.
$\begin{array}{lcc}
\text { Cash - Restricted } & \$ 3,000 \
\text { Cash - Unrestricted } & 2,000 & \
\quad \text { Contributions - Restricted } & & \$ 3,000 \
\text { Revenue } & & 2,000
\end{array}$

C.
$\begin{array}{lll}
\text { Cash } & \$ 5,000 & \
 \text { Revenue } && \$ 2,000 \
 \text { Contributions - Restricted } && 3,000
\end{array}$

D.
$\begin{array}{l}
\text { Cash }& \$ 5,000 \
\text { Deferred Revenue } && \$ 2,000\
\text { Contributions }-\text { Unrestricted } &&3,000 \
\end{array}$

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

Question 13

Examples of voluntary health and welfare organizations would include the Girl Scouts and the American Heart Association.

Accepted Answer

A) True 
 B)False

Question 14

The AICPA Not-for-Profit Guide applies to both governmental and nongovernmental not-for-profit organizations.

Accepted Answer

A) True 
 B)False

Question 15

All donated services are recognized as revenue.

Accepted Answer

A) True 
 B)False

Question 16

The Statement of Functional expenses can be classified by function (various programs, fund-raising, etc) or by natural classification (salaries, supplies, travel, etc.).

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would not be recognized as contribution revenue by a not-for-profit organization?

Accepted Answer

A)  A pledge to support an educational program for the next 3 years 
B)  A health clinic is paid to perform clinical trials of a new medicine 
C)  A gift restricted to purchase equipment 
D)  Dues paid in excess of the fair value of benefits received

Question 18

Cash flows must be presented separately in the Statement of Cash Flows for the three classes (unrestricted, temporarily restricted and permanently restricted).

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is true regarding the Statement of Activities for nongovernmental, not-for-profit organizations?

Accepted Answer

A)  FASB requires that the change in net assets be reported, for each of the net asset classes and in total 
B)  Information for the Statement of Activities may be presented in two statements: Statement of Revenues, Expenses and Changes in Unrestricted Net Assets and Statement of Changes in Net Assets 
C)  Both of the above 
D)  Neither of the above

Question 20

The following statement is true of not-for-profits

Accepted Answer

A)  Financial statements are standardized across industries 
B)  Different types of not-for-profit organizations follow very different accountings practices 
C)  The AICPA is only the governing body for not-for-profits 
D)  All of the above are false

Exam 10: Accounting for Private Not-For-Profit Organizations

Net Assets must be presented separately in the Statement of Financial Position for the three classes (unrestricted, temporarily restricted and permanently restricted).

If a donor selects a scholarship recipient and then donates cash to a ballet school to fund that scholarship, the ballet school would:

A donor made a pledge in 2008 of $ 50,000 to a not-for-profit organization with the intent to pay the cash in 2009 for unrestricted use in 2009. The organization should:

Supporting activities as classified in the Statement of Activities, normally include

Which of the following is true regarding the Statement of Cash Flows for nongovernmental, not-for-profit organizations?

When should unconditional pledges be recorded as revenue?

What financial ratio is most commonly used to evaluate charitable organizations?

Which of the following is not true of a Statement of Activities prepared for a not-for-profit organization?

With respect to the Statement of Cash Flows for a not-for-profit organization, donor restricted cash that must be used for long term purposes is classified as cash flows from financing activities.

Which of the following is true regarding the Statement of Financial Position for nongovernmental, not-for-profit organizations?

Country clubs and labor unions are not included in the category "other not-for-profit" organizations because they provide benefit to their members only and not to the general public.

Examples of voluntary health and welfare organizations would include the Girl Scouts and the American Heart Association.

The AICPA Not-for-Profit Guide applies to both governmental and nongovernmental not-for-profit organizations.

All donated services are recognized as revenue.

The Statement of Functional expenses can be classified by function (various programs, fund-raising, etc) or by natural classification (salaries, supplies, travel, etc.).

Which of the following would not be recognized as contribution revenue by a not-for-profit organization?

Cash flows must be presented separately in the Statement of Cash Flows for the three classes (unrestricted, temporarily restricted and permanently restricted).

Which of the following is true regarding the Statement of Activities for nongovernmental, not-for-profit organizations?

The following statement is true of not-for-profits