Question 1

Private not-for-profit organizations are required to present a Statement of Functional Expenses instead of a Statement of Cash Flows, as required of businesses.

Accepted Answer

A) True 
 B)False  False

Question 2

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  False

Question 3

Private not-for-profit organizations record depreciation expense.

Accepted Answer

A) True 
 B)False  True

Question 4

Private not-for-profits use record encumbrances to maintain budgetary control.

Accepted Answer

A) True 
 B)False

Question 5

All not-for-profits must follow FASB standards so not-for-profit ?financial statements are similar across industries.

Accepted Answer

A) True 
 B)False

Question 6

The AICPA Not-for-Profit Organizations Not-for-Profit Guide) applies only to nongovernmental not-for-profit organizations.

Accepted Answer

A) True 
 B)False

Question 7

The three classes of net assets reported for a private not-for-profit organization include all of the following except:

Accepted Answer

A)   Unrestricted net assets.
B)   Temporarily restricted net assets.
C)   Capital restricted net assets.
D)   Permanently restricted net assets.

Question 8

Which of the following is part of the treatment of multi-year pledges as required by FASB Statement No. 116?

Accepted Answer

A)   The donation is recorded as a receivable at the present value of the future collections but revenue is not recorded until the pledge is received.
B)   At the end of each accounting period, the difference between the balance in the receivable account and the new present value is deducted from the amount of the amount received from the donor which is recorded as income
C)   At the end of each accounting period, the difference between the balance in the receivable account and the new present value is recorded as contribution revenue and the receivable is increased.
D)   Pledge receivable is recorded for the total amount to be received and revenue is recorded each year as monies are received by the organization.

Question 9

All private not-for-profit reports all expenses in unrestricted net asset class.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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 12

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

Accepted Answer

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

Question 13

Private not-for-profit organizations should have little to no profit.

Accepted Answer

A) True 
 B)False

Question 14

The Robbins Foundation is a voluntary health and welfare organization funded by contributions from the general public. Care sold equipment for $35,000 which cost $140,000 and had a book value of $45,000 at the time of sale. In recording the sale, the foundation should:

Accepted Answer

A)   Record a loss of $10,000.
B)   Record a gain of $10,000.
C)   Record a loss of $5,000.
D)   Record a gain of $5,000.

Question 15

A donor made a gift of cash to a private not-for-profit organization in 2017 with an expressed purpose restriction. All the funds were expended in 2017. The organization must:

Accepted Answer

A)   Record the gift as a temporarily restricted revenue, reclassify the funds to unrestricted, and then report the expense as unrestricted.
B)   Record the gift and expense as unrestricted.
C)   Record the gift and expense as temporarily restricted.
D)   Use either of the methods described in a)  or b) .

Question 16

Which of the following is not  correct with respect to acquisitions under the rules established by FASB Statement No. 164, Not-for-Profit Entities: Mergers and Acquisitions?

Accepted Answer

A)   If the combination qualifies as an acquisition, the not-for-profit may acquire control of a business enterprise or other not-for-profit organization and will be accounted for using the acquisition method.
B)   Combinations not meeting the definition of a merger are reported as acquisitions.
C)   Assets and liabilities of the acquired entity are recorded at fair value on the books of the not-for-profit
D)   Entities that derive their revenues from business-like activities are required to expense the goodwill at the date of acquisition.

Question 17

In 2017, Susan tells The Art Museum, a private not-for-profit organization, that she has named the museum in her will. When should the organization recognize the contribution revenue?

Accepted Answer

A)   When the Museum receives the contribution.
B)   Only after Susan dies and the will is declared valid.
C)   Ratably over a five year period beginning in 2017.
D)   All in 2017.

Question 18

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 19

With respect to the Statement of Cash Flows for a private 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 20

If fixed assets are recorded as temporarily restricted assets, then a reclassification is made each accounting period to unrestricted resources in the amount equal to the depreciation or an allocation based on the time the asset is restricted, whichever is shorter.

Accepted Answer

A) True 
 B)False

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

Private not-for-profit organizations are required to present a Statement of Functional Expenses instead of a Statement of Cash Flows, as required of businesses.

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.

Private not-for-profit organizations record depreciation expense.

Private not-for-profits use record encumbrances to maintain budgetary control.

All not-for-profits must follow FASB standards so not-for-profit ?financial statements are similar across industries.

The AICPA Not-for-Profit Organizations Not-for-Profit Guide) applies only to nongovernmental not-for-profit organizations.

The three classes of net assets reported for a private not-for-profit organization include all of the following except:

Which of the following is part of the treatment of multi-year pledges as required by FASB Statement No. 116?

All private not-for-profit reports all expenses in unrestricted net asset class.

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

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

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

Private not-for-profit organizations should have little to no profit.

The Robbins Foundation is a voluntary health and welfare organization funded by contributions from the general public. Care sold equipment for $35,000 which cost $140,000 and had a book value of $45,000 at the time of sale. In recording the sale, the foundation should:

A donor made a gift of cash to a private not-for-profit organization in 2017 with an expressed purpose restriction. All the funds were expended in 2017. The organization must:

Which of the following is not correct with respect to acquisitions under the rules established by FASB Statement No. 164, Not-for-Profit Entities: Mergers and Acquisitions?

In 2017, Susan tells The Art Museum, a private not-for-profit organization, that she has named the museum in her will. When should the organization recognize the contribution revenue?

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

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

If fixed assets are recorded as temporarily restricted assets, then a reclassification is made each accounting period to unrestricted resources in the amount equal to the depreciation or an allocation based on the time the asset is restricted, whichever is shorter.