Question 1

What are the revenue recognition requirements for:
(1)unconditional promises to give (i.e.pledges),
(2)conditional promises to give,
(3)multi-year pledges,
(4)donated services,and
(5)Donated materials or fixed assets.

Accepted Answer

The answer of What are the revenue recognition requirements for:
(1)unconditional...

Question 2

In 2012,a major drug company agreed to give a not-for-profit private college $300,000 to perform testing of a new drug.An advance payment of $200,000 was received in 2012.The college was to receive $1,500 per individual test.In 2012,the college completed 100 tests.How much revenue should the college report for 2012?

Accepted Answer

A)  $300,000 
B)  $100,000 
C)  $150,000 
D)  $200,000

Question 3

Under which of the following conditions is it appropriate for a private not-for-profit to allocate the cost of mass mailings from fund raising to a program related activity,such as Public Education?

Accepted Answer

A)  The purpose of the mailing includes accomplishing program functions. 
B)  The audience is selected based on characteristics other than ability to make contributions. 
C)  The mailing calls for specific action by the recipient that is consistent with the goals of the not-for-profit's mission. 
D)  All of the above.

Question 4

Investments by private not-for-profit organizations in equity and debt securities should be carried at

Accepted Answer

A)  Historical cost. 
B)  Lower of cost or Market. 
C)  Fair Market Value. 
D)  None of the above.

Question 5

A private not-for-profit organization received a gift of $460,000 with purpose restrictions in 2011.In 2012 funds were expended for the purpose outlined in the gift,however,it was not possible to determine whether the restricted funds or unrestricted funds were used.The presumption should be:

Accepted Answer

A)  The restricted funds would have been used first. 
B)  The unrestricted funds would have been used first. 
C)  The restricted funds and unrestricted funds would have been used equally. 
D)  The restricted funds and unrestricted funds would have been used, based on a weighted average of the amounts.

Question 6

When might it be appropriate for a not-for-profit organization to report a surplus (increase in net assets)?

Accepted Answer

The answer of When might it be appropriate for a...

Question 7

A Statement of Functional Expenses is required for voluntary health and welfare organizations.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following financial statements are required for voluntary health and welfare organizations?

Accepted Answer

A)  Income Statement. 
B)  Statement of Net Assets. 
C)  Statement of Functional Expenses. 
D)  Budgetary Comparison Schedule.

Question 9

Which of the following is true regarding accounting and financial reporting for nongovernmental,not-for-profit organizations?

Accepted Answer

A)  All expenses reduce unrestricted net assets. 
B)  Expenses must be reported by function, either in the statements or in the notes. 
C)  Both of the above. 
D)  Neither of the above.

Question 10

Below are the complete set of published financial statements taken from the annual report of the Jamestown Museum.The statements do not comply with generally accepted accounting principles for private not-for-profits in a number of ways.Review these statements and describe instances in which the statements fail to comply with accepted accounting standards.You must be able to justify your assertions - for example you cannot say they failed to capitalize leases if there is no evidence they have a qualifying lease.
Example:
 (1)The financial statements contain no note disclosures.The notes are an integral part of the financial statements and many individual disclosures are required under FASB standards.

Accepted Answer

The answer of Below are the complete set of published...

Question 11

Expenditures,encumbrances,and budgetary accounts are not used by private not-for-profit organizations.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is not correct with respect to contributions to a private not-for-profit?

Accepted Answer

A)  Contributions to a not-for-profit are recorded at fair market value at the date of receipt. 
B)  Contributions of assets other than cash to a not-for-profit are recorded at the donor's basis. 
C)  Contributions to a not-for-profit may be restricted as to purpose or time or for plant acquisition. 
D)  Revenues, including contributions are considered to be unrestricted unless donor-imposed restrictions apply.

Question 13

A donor gave $60,000 to a nongovernmental,not-for-profit charity with instructions that the funds be transferred to Sam Smith,an individual who lost his home in a fire.The not-for-profit would:

Accepted Answer

A)  Record the $60,000 cash and credit temporarily restricted revenue. 
B)  Record the $60,000 cash and credit a liability. 
C)  Do either (a) or (b), depending upon the policy of the not-for-profit. 
D)  Not record the transaction.

Question 14

How does a for-profit organization record contributions made to a private not-for-profit organization?

Accepted Answer

A)  As an expense when originally pledged. 
B)  As a reduction in revenue when pledged. 
C)  As an expense when contributed. 
D)  As a reduction in revenue when contributed.

Question 15

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 16

Which of the following is not a characteristic that distinguishes a private not-for-profit organization from a business?

Accepted Answer

A)  Contributions are from resource providers who expect nothing in return. 
B)  Financial statements are intended primarily for use by creditors. 
C)  Operating purposes are other than to provide goods or services at a profit. 
D)  Absence of ownership interests.

Question 17

State governments are required to prepare a Statement of Functional Expenses.
FALSE

Accepted Answer

A) True 
 B)False

Question 18

Donated services should be considered revenue if the service creates or enhances a nonfinancial asset and requires a specialized skill which would have had to be purchased if not donated.

Accepted Answer

A) True 
 B)False

Question 19

A donor gave artwork to a nongovernmental,not-for-profit museum.The artwork qualified as a "collection," under FASB rules.The not-for-profit could:

Accepted Answer

A)  Record the artwork at its fair market value at the time of receipt as an increase in permanently restricted net assets. 
B)  Not record the artwork, but provide information about the artwork in the notes. 
C)  Do either of the above, depending upon the policy of the not-for-profit. 
D)  Record the artwork as both a contribution and an expense.

Question 20

The Statement of Functional expenses presents a matrix of expenses classified by function (various programs,fund-raising,etc)and by object or natural classification (salaries,supplies,travel,etc.).

Accepted Answer

A) True 
 B)False

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

What are the revenue recognition requirements for: (1)unconditional promises to give (i.e.pledges), (2)conditional promises to give, (3)multi-year pledges, (4)donated services,and (5)Donated materials or fixed assets.

Under which of the following conditions is it appropriate for a private not-for-profit to allocate the cost of mass mailings from fund raising to a program related activity,such as Public Education?

Investments by private not-for-profit organizations in equity and debt securities should be carried at

A private not-for-profit organization received a gift of $460,000 with purpose restrictions in 2011.In 2012 funds were expended for the purpose outlined in the gift,however,it was not possible to determine whether the restricted funds or unrestricted funds were used.The presumption should be:

When might it be appropriate for a not-for-profit organization to report a surplus (increase in net assets)?

A Statement of Functional Expenses is required for voluntary health and welfare organizations.

Which of the following financial statements are required for voluntary health and welfare organizations?

Which of the following is true regarding accounting and financial reporting for nongovernmental,not-for-profit organizations?

Expenditures,encumbrances,and budgetary accounts are not used by private not-for-profit organizations.

Which of the following statements is not correct with respect to contributions to a private not-for-profit?

A donor gave $60,000 to a nongovernmental,not-for-profit charity with instructions that the funds be transferred to Sam Smith,an individual who lost his home in a fire.The not-for-profit would:

How does a for-profit organization record contributions made to a private not-for-profit organization?

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

Which of the following is not a characteristic that distinguishes a private not-for-profit organization from a business?

State governments are required to prepare a Statement of Functional Expenses. FALSE

Donated services should be considered revenue if the service creates or enhances a nonfinancial asset and requires a specialized skill which would have had to be purchased if not donated.

A donor gave artwork to a nongovernmental,not-for-profit museum.The artwork qualified as a "collection," under FASB rules.The not-for-profit could:

The Statement of Functional expenses presents a matrix of expenses classified by function (various programs,fund-raising,etc)and by object or natural classification (salaries,supplies,travel,etc.).