Question 1

The primary standards-setting body for a public museum that receives the majority of its funding from local property taxes is

Accepted Answer

A) American Institute of CPAs (AICP
A) . 
B) Financial Accounting Standards Board (FAS
B) . 
C) Government Accountability Office (GAO). 
D) Governmental Accounting Standards Board (GAS
B) .

Question 2

The following are key terms in Chapter 14 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...

Question 3

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 that is converting the courthouse to a museum. 
C) An art collector donated a famous oil painting to a local nongovernmental 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 4

A local philanthropist pledged to make a donation of $100,000 to an NPO to be paid in five equal installments of $20,000 beginning in the next fiscal year.Under FASB standards the pledge would be recognized as

Accepted Answer

A) Support of $20,000 in each of the following five years. 
B) Support of $20,000 in the year the pledge was made and $80,000 as deferred support. 
C) Deferred support of $100,000 in the year the pledge was made. 
D) Support of $100,000 in the year the pledge was made,discounted at an appropriate rate for future receipts.

Question 5

Which of the following is not a condition that must be met for contributed services to a not-for-profit organization (NPO)to be recorded as both a contribution and as an expense?

Accepted Answer

A) The service creates or enhances nonfinancial assets,such as a carpenter renovating a building. 
B) The service is provided by someone who possesses specialized skills,such as a lawyer preparing contracts. 
C) The service provides tangible benefit,such as serving food to clients. 
D) The service would have to be purchased if not donated,such as a pro bono annual audit by a local audit firm.

Question 6

When a not-for-profit (nongovernmental)organization spends money for the purpose for which an external donor intended,then the expense is reported as a

Accepted Answer

A) Decrease in temporarily restricted net assets. 
B) Decrease in unrestricted net assets. 
C) Decrease in permanently restricted net assets. 
D) Decrease in current-restricted fund balance.

Question 7

Contributions received in a prior period and restricted by the donor for construction of a building were reported as increases to "temporarily restricted net assets" in the period received.When the building is constructed in a subsequent period an NPO would report "contributions" for the amount released from restrictions.

Accepted Answer

A) True 
 B)False

Question 8

Supporting services expenses include fund-raising and management and general expenses that are not directly attributable to specific programs.

Accepted Answer

A) True 
 B)False

Question 9

The purpose of a statement of functional expenses is to

Accepted Answer

A) Report on the net income of each program compared to that of supporting the programs. 
B) Report on program expenses and supporting expenses. 
C) Report on the natural expenses (object-of-expense),as well as program and support functions expenses. 
D) Report on the cash flows of each program and that of supporting the programs.

Question 10

Explain the purpose of AICPA Statement of Position 98-2 as it relates to reporting fund-raising expenses of a not-for-profit organization.How is this statement applied?

Accepted Answer

The answer of Explain the purpose of AICPA Statement of...

Question 11

Accounting standards for NPOs require

Accepted Answer

A) Accrual accounting. 
B) Modified accrual accounting. 
C) Fund accounting. 
D) Capitalization of collections.

Question 12

All not-for-profit organizations covered by the AICPA Audit and Accounting Guide Not-for-Profit Organizations are under the standards-setting jurisdiction of the FASB.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following organizations would be covered by the AICPA Audit and Accounting Guide Not-for-Profit Organizations?

Accepted Answer

A) Political parties. 
B) Employee benefit and pension plans. 
C) Proprietary hospitals. 
D) Farm cooperatives.

Question 14

Explain how SFAS No.136 provides for the recognition and reporting of funds received by one not-for-profit organization on behalf of another.

Accepted Answer

The answer of Explain how SFAS No.136 provides for the...

Question 15

A good reason for an NPO to adopt fund accounting even though FASB standards do not require it is that

Accepted Answer

A) The NPO provides more than one type of program service. 
B) The NPO's capital assets are significant. 
C) Restrictions have been placed on the use of certain of its assets by donors. 
D) The NPO's donated services are significant.

Question 16

The statement of activities for an NPO must be prepared exactly as prescribed by the Financial Accounting Standards Board in SFAS No.117.

Accepted Answer

A) True 
 B)False

Question 17

Investments should be recorded at cost,or in the case of donated investments,at fair value as of the date of the gift.On subsequent balance sheets investments should be marked to and reported at market value with the valuation method disclosed and consistently followed.

Accepted Answer

A) True 
 B)False

Question 18

If the program services expenses category includes both directly related costs and indirect costs allocated to it,why is it necessary to have a separate category of "supporting services expenses"?

Accepted Answer

The answer of If the program services expenses category includes...

Question 19

A statement of functional expenses is not required of all voluntary health and welfare organizations.

Accepted Answer

A) True 
 B)False

Question 20

Securities donated to an NPO 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.

Exam 14: Not-For-Profit Organizations Regulatory, taxation, and Performance Issues

The primary standards-setting body for a public museum that receives the majority of its funding from local property taxes is

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?

A local philanthropist pledged to make a donation of $100,000 to an NPO to be paid in five equal installments of $20,000 beginning in the next fiscal year.Under FASB standards the pledge would be recognized as

Which of the following is not a condition that must be met for contributed services to a not-for-profit organization (NPO) to be recorded as both a contribution and as an expense?

When a not-for-profit (nongovernmental) organization spends money for the purpose for which an external donor intended,then the expense is reported as a

Supporting services expenses include fund-raising and management and general expenses that are not directly attributable to specific programs.

The purpose of a statement of functional expenses is to

Explain the purpose of AICPA Statement of Position 98-2 as it relates to reporting fund-raising expenses of a not-for-profit organization.How is this statement applied?

Accounting standards for NPOs require

All not-for-profit organizations covered by the AICPA Audit and Accounting Guide Not-for-Profit Organizations are under the standards-setting jurisdiction of the FASB.

Which of the following organizations would be covered by the AICPA Audit and Accounting Guide Not-for-Profit Organizations?

Explain how SFAS No.136 provides for the recognition and reporting of funds received by one not-for-profit organization on behalf of another.

A good reason for an NPO to adopt fund accounting even though FASB standards do not require it is that

The statement of activities for an NPO must be prepared exactly as prescribed by the Financial Accounting Standards Board in SFAS No.117.

Investments should be recorded at cost,or in the case of donated investments,at fair value as of the date of the gift.On subsequent balance sheets investments should be marked to and reported at market value with the valuation method disclosed and consistently followed.

If the program services expenses category includes both directly related costs and indirect costs allocated to it,why is it necessary to have a separate category of "supporting services expenses"?

A statement of functional expenses is not required of all voluntary health and welfare organizations.

Securities donated to an NPO should be recorded at the