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Question 1

Nongovernmental not-for-profit organizations are required to provide which of the following external financial statements?

A.
Statement of financial position, statement of activities, statement of cash flows.

B.
Statement of financial position, statement of comprehensive income, statement of cash flows.

C.
Statement of comprehensive income, statement of cash flows, statement of gains and losses.

D.
Statement of cash flows, statement of comprehensive income, statement of unrelated business income.

Answer 1

A.

Statement of financial position, statement of activities, statement of cash flows.

Question 2

Pahn, a nongovernmental not-for-profit organization, received an unconditional pledge of $50,000. The donor stipulated that the pledge must be used in the next fiscal year. Pahn received and spent the $50,000 in the next year. For the current fiscal year, what element of Pahn’s statement of financial position will increase as a result of the unconditional pledge?

A.
Cash and cash equivalents.

B.
Pledge receivables.

C.
Unrestricted support.

D.
Deferred contributions.

Answer 2

B.

Pledge receivables.

Question 3

Which of the following resources increases the net assets with donor restrictions of a nongovernmental, not-for-profit voluntary health and welfare organization?

A.
Refundable advances for purchasing playground equipment.

B.
Donor contributions to fund a resident camp program.

C.
Membership fees to fund general operations.

D.
Participants’ deposits for an entity-sponsored trip.

Answer 3

B.

Donor contributions to fund a resident camp program

Question 4

How should a nongovernmental, not-for-profit organization report donor-restricted cash contributions for long-term-purposes in its statement of cash flows?

A.
Operating activity inflow.

B.
Investing activity inflow.

C.
Financing activity inflow.

D.
As a noncash transaction.

Answer 4

C.

Financing activity inflow.

Question 5

A nongovernmental, not-for-profit organization had the following investments:

Investment Cost Fair value (beginning of year) Fair value (end of year)
Bonds $9,000 $10,000 $9,950
Stock A (100 shares) $50 per share $45 $51
Stock B (200 shares) $40 per share $41 $49
What amount should be the total value of investments reported in the year-end statement of financial position?

A.
$24,850

B.
$24,800

C.
$23,800

D.
$22,900

Answer 5

A.

$24,850

Question 6

State University received two contributions during the year that must be used to provide scholarships. Contribution A for $10,000 was collected during the year, and $8,000 was spent on scholarships. Contribution B is a pledge for $30,000 to be received next fiscal year. What amount of contribution revenue should the university report in its statement of activities?

A.
$8,000

B.
$10,000

C.
$38,000

D.
$40,000

Answer 6

D.

$40,000

Question 7

A nongovernmental not-for-profit organization borrowed $5,000, which it used to purchase a truck. In which section of the organization’s statement of cash flows should the transaction be reported?

A.
In cash inflow and cash outflow from investing activities.

B.
In cash inflow and cash outflow from financing activities.

C.
In cash inflow from financing activities and cash outflow from investing activities.

D.
In cash inflow from operating activities and cash outflow from investing activities.

Answer 7

C.

In cash inflow from financing activities and cash outflow from investing activities.

Question 8

not-for-profit voluntary health and welfare organization should report a contribution for the construction of a new building as cash flows from which of the following in the statement of cash flows?

A.
Operating activities.

B.
Financing activities.

C.
Capital financing activities.

D.
Investing activities.

Answer 8

B.

Financing activities.

Question 9

Pann, a nongovernmental not-for-profit organization, provides food and shelter to the homeless. Pann received a $15,000 gift with the stipulation that the funds be used to buy beds. In which net asset class should Pann report the contribution?

A.
Endowment.

B.
Net assets with donor restrictions.

C.
Operationally restricted.

D.
Net assets without donor restrictions.

Answer 9

B.

Net assets with donor restrictions.

Question 10

A storm damaged the roof of a nongovernmental, not-for-profit organization’s building. A professional roofer repaired the roof at no charge. How should the roof repairs be recognized in the statement of activities?

A.
As an increase in expenses and an increase in contributions from donated services.

B.
As an increase in the building account and an increase in net assets without donor restrictions.

C.
As an increase in fixed assets and an increase in contributions from donated services.

D.
No recognition is required in the financial statements, but a note disclosure is required.

Answer 10

A.

As an increase in expenses and an increase in contributions from donated services.

Question 11

Which of the following financial statements would provide information about the ongoing revenues and expenses associated with a voluntary health and welfare organization?

A.
The statement of activities

B.
The statement of cash flows

C.
The statement of functional expenses

D.
The statement of financial position

Answer 11

A.

The statement of activities

Question 12

The Turtle Society, a nongovernmental not-for-profit organization, receives numerous contributed hours from volunteers during its busy season. Chris, a clerk at the local tax collector’s office, volunteered ten hours per week for 24 weeks transferring turtle food from the port to the turtle shelter. His rate of pay at the tax office is $10 per hour, and the prevailing wage rate for laborers is $6.50 per hour. What amount of contribution revenue should Turtle Society record for this service?

A.
$0

B.
$840

C.
$1,560

D.
$2,400

Answer 12

A.

$0

Question 13

A nongovernmental, not-for-profit organization received the following donations of corporate stock during the year:

Donation 1 Donation 2

Number of shares 2,000 3,000
Adjusted basis $ 8,000 $ 8,000
Fair market value at time of donation 8,500 6,000
Fair market value at year end 10,000 4,000

What net value of investments will the organization report at the end of the year?

A.
$12,000

B.
$13,500

C.
$14,000

D.
$14,500

Answer 13

C.

$14,000

Question 14

A nongovernmental not-for-profit organization’s statement of activities is similar to which of the following for-profit financial statements?

A.
Balance sheet

B.
Statement of cash flows

C.
Statement of retained earnings

D.
Income statement

Answer 14

D.

Income statement

Question 15

Which of the following assets of a nongovernmental not-for-profit charitable organization must be depreciated?

A.
A freezer costing $150,000 for storing food for the soup kitchen.

B.
Building costs of $500,000 for construction in progress for senior citizen housing.

C.
Land valued at $1 million being used as the site of the new senior citizen home.

D.
A bulk purchase of $20,000 of linens for its nursing home.

Answer 15

A.

A freezer costing $150,000 for storing food for the soup kitchen.

Question 16

Which of the following types of information would be included in total net assets in the statement of financial position for a nongovernmental, not-for-profit organization?

A.
Total current net assets and total other assets.

B.
Total current assets and assets with donor restrictions.

C.
Net assets without donor restrictions and net assets with donor restrictions.

D.
Net assets without donor restrictions, net assets with donor restrictions, and total current assets.

Answer 16

C.

Net assets without donor restrictions and net assets with donor restrictions.

Question 17

Belle, a nongovernmental not-for-profit organization, received funds during its annual campaign that were specifically pledged by the donor to another nongovernmental not-for-profit health organization. How should Belle record these funds?

A.
Increase in assets and increase in liabilities.

B.
Increase in assets and increase in revenue.

C.
Increase in assets and increase in deferred revenue.

D.
Decrease in assets and decrease in fund balance.

Answer 17

A.

Increase in assets and increase in liabilities.

Question 18

Home Care, Inc., a nongovernmental voluntary health and welfare organization, received two contributions in 20X3. One contribution of $250,000 was restricted for use as general support in 20X4. The other contribution of $200,000 carried no donor restrictions. What amount should Home Care report as contributions with donor restrictions in its 20X3 statement of activities?

A.
$450,000

B.
$250,000

C.
$200,000

D.
$0

Answer 18

B.

$250,000

Question 19

A nongovernmental, not-for-profit organization provided the following data in regard to $500,000 of donations received during the year:

Purchase of investments to be held in perpetuity at the donor’s request

$100,000

Future repairs to the organization’s building and equipment at the donor’s request

250,000

General operations at the discretion of the board of directors

100,000

Specific program services as indicated by the donor

50,000

In order to properly reflect receipt of the donations, net assets should increase in the amount of

A.
$400,000 without donor restrictions and $100,000 with donor restrictions.

B.
$150,000 without donor restrictions and $350,000 with donor restrictions.

C.
$100,000 without donor restrictions and $400,000 with donor restrictions.

D.
$100,000 without donor restrictions and $350,000 with donor restrictions.

Answer 19

C.

$100,000 without donor restrictions and $400,000 with donor restrictions.

Question 20

A voluntary health and welfare organization received a $700,000 permanent endowment during the year. The donor stipulated that the income and investment appreciation be used to maintain its senior center. The endowment fund reported a net investment appreciation of $80,000 and investment income of $50,000. The organization spent $60,000 to maintain its senior center during the year. What amount of change in net assets with donor restrictions should the organization report?

A.
$700,000

B.
$770,000

C.
$780,000

D.
$830,000

Answer 20

B.

$770,000

Question 21

A portfolio of equity securities that are traded on a national exchange is donated to a private, not-for-profit college as an endowment fund. How should the equity portfolio be valued in the college’s year-end financial statements three years after the donation?

A.
Using the donor’s original cost basis

B.
Using the fair value at the time of donation

C.
Using fair value at the date of the financial statements

D.
Using the lower of fair value at donation and fair value at the date of the financial statements.

Answer 21

C.

Using fair value at the date of the financial statements

Question 22

In year 2, the Nord Association, a nongovernmental not-for-profit organization, received a $100,000 contribution to fund scholarships for medical students. The donor stipulated that only the interest earned on the contribution be used for the scholarships. Interest earned in year 2 of $15,000 was used to award scholarships in year 3. What amount should Nord report as net assets with donor restrictions at the end of year 2?

A.
$115,000

B.
$100,000

C.
$15,000

D.
$0

Answer 22

A.

$115,000

Question 23

An unrestricted cash contribution should be reported in a nongovernmental not-for-profit organization’s statement of cash flows as an inflow from

A.
Operating activities

B.
Investing activities

C.
Financing activities

D.
Capital and related financing activities

Answer 23

A.

Operating activities

Question 24

The Jackson Foundation, a private not-for-profit organization, had the following cash contributions and expenditures in year 4:

Unrestricted cash contributions of $500,000.
Cash contributions of $200,000 restricted by the donor to the acquisition of property.
Cash expenditures of $200,000 to acquire property with the donation in the above item.
Jackson’s statement of cash flows should include which of the following amounts?

A.
$700,000 in operating activities, $(200,000) in investing activities.

B.
$500,000 in operating activities.

C.
$500,000 in operating activities, $(200,000) in investing activities, $200,000 in financing activites.

D.
$500,000 in investing activities, $200,000 in financing activites.

Answer 24

C.

$500,000 in operating activities, $(200,000) in investing activities, $200,000 in financing activites.

Question 25

Terry, an auditor, is performing test work for a not-for-profit hospital. Listed below are components of the statement of operations: Revenue relating to charity care $100,000 Bad debt expense $70,000 Net assets released from restrictions used for operations $50,000 Other revenue $80,000 Net patient service revenue (includes revenue related to charity care) $500,000 What amount would be reported as total revenues, gains, and other support on the statement of operations? A. $460,000 B. $530,000 C. $580,000 D. $630,000

Answer 25

B. | $530,000

Question 26

RST Charities received equities securities valued at $100,000 as an unrestricted gift. During the year, RST received $5,000 in dividends from these securities; at year end, the securities had a fair market value of $110,000. By what amount did these transactions increase RST's net assets? A. $100,000 B. $105,000 C. $110,000 D. $115,000

Answer 26

D. | $115,000

Question 27

At which of the following amounts should a nongovernmental not-for-profit organization report investments in debt securities? A. Potential proceeds from liquidation sale. B. Discounted expected future cash flows. C. Quoted market prices. D. Historical cost.

Answer 27

C. | Quoted market prices.

Question 28

Candy Land, a nongovernmental not-for-profit organization, is preparing its year-end financial statements. Which of the following statements is required? A. Statement of changes in financial position. B. Statement of cash flows. C. Statement of changes in fund balance. D. Statement of revenue, expenses and changes in fund balance.

Answer 28

B. | Statement of cash flows.

Question 29

Fenn Museum, a nongovernmental not-for-profit organization, had the following balances in its statement of functional expenses: Education $300,000 Fundraising 250,000 Management and general 200,000 Research 50,000 What amount should Fenn report as expenses for support services? A. $350,000 B. $450,000 C. $500,000 D. $800,000

Answer 29

B. | $450,000

Question 30

Rosenthal Hospital, a nonprofit hospital affiliated with a private university, reported the following information for the year ended December 31, 20X5: Cash contributions received from donors for capital additions to be acquired in 20X6 $150,000 Proceeds from sales at hospital gift shop and snack bar $75,000 Dividend revenue not restricted by donors or by law $25,000 Using the information provided, what amount should be reported as “other revenue and gains” on the hospital’s statement of operations for the year ended December 31, 20X5? A. $25,000 B. $75,000 C. $100,000 D. $250,000

Answer 30

C. | $100,000

Question 31

A $100,000 gift was received by Group Home Projects, a nongovernmental not-for-profit organization. Group's board of directors stipulated that this gift must be invested for a period of four years, with the income to be used for general operations. How should the gift be reported in Group Home's statement of activities? A. Contribution without donor restrictions. B. Contribution with donor restrictions. C. Contribution without donor restrictions of $25,000 and contribution with donor restrictions of $75,000. D. Deferred revenue.

Answer 31

A. | Contribution without donor restrictions.

Question 32

On December 30, 20X3, Leigh Museum, a not-for-profit organization, received a $7,000,000 donation of Day Co. shares with donor-stipulated requirements as follows: Shares valued at $5,000,000 are to be sold, with the proceeds used to erect a public viewing building. Shares valued at $2,000,000 are to be retained, with the dividends used to support current operations. As a consequence of the receipt of the Day shares, how much should Leigh report as net assets with donor restrictions on its 20X3 statement of financial position (balance sheet)? A. $0 B. $2,000,000 C. $5,000,000 D. $7,000,000

Answer 32

D. | $7,000,000

Question 33

Pica, a nongovernmental not-for-profit organization, received unconditional promises of $100,000 expected to be collected within one year. Pica received $10,000 prior to year end. Pica anticipates collecting 90% of the contributions and has a June 30 fiscal year end. What amount should Pica record as contribution revenue as of June 30? A. $10,000 B. $80,000 C. $90,000 D. $100,000

Answer 33

C. | $90,000

Question 34

A not-for-profit voluntary health and welfare organization should report a contribution for the construction of a new building as cash flows from which of the following in the statement of cash flows? A. Operating activities. B. Financing activities. C. Capital financing activities. D. Investing activities

Answer 34

B. | Financing activities

Question 35

A nongovernmental not-for-profit animal shelter receives contributed services from the following individuals valued at their normal billing rate: Veterinarian provides volunteer animal care $8,000 Board members volunteer to prepare books for audit 4,500 Registered nurse volunteers as receptionist 3,000 Teacher provides volunteer dog walking 2,000 What amount should the shelter record as contribution revenue? A. $8,000 B. $11,000 C. $12,500 D. $14,500

Answer 35

C. | $12,500

Question 36

Bryant Hospital, a nonprofit hospital affiliated with a religious group, reported the following information for the year ended December 31, 20X5: Gross patient service revenue at the hospital’s full established rates $980,000 Bad debts expense $10,000 Contractual adjustments with third-party payors $100,000 Allowance for discounts to hospital employees $15,000 On the hospital’s statement of operations for the year ended December 31, 20X5, what amount should be reported as net patient service revenue? A. $865,000 B. $880,000 C. $855,000 D. $955,000

Answer 36

A. | $865,000

Question 37

A not-for-profit organization receives $150 from a donor. The donor receives two tickets to a theater show and an acknowledgment in the theater program. The tickets have a fair market value of $100. What amount is recorded as contribution revenue? A. $0 B. $50 C. $100 D. $150

Answer 37

B. | $50

Question 38

Community Enhancers, a nongovernmental not-for-profit organization, received the following pledges: Unrestricted $400,000 Restricted for capital additions $300,000 All pledges are legally enforceable. However, Community’s experience indicates that 5% of all pledges prove to be uncollectible. What amount should Community report as pledges receivable, net of any required allowance account? A. $700,000 B. $665,000 C. $380,000 D. $285,000

Answer 38

B. | $665,000

Question 39

The purpose of a statement of financial position for a nongovernmental not-for-profit entity is to provide relevant information about A. The cash receipts and cash payments during a period in time. B. The effects of transactions and other events and circumstances that change the amount and nature of net assets. C. The assets, liabilities, and net assets, and about their relationships to one another at a moment in time. D. The changes in net assets with donor restrictions and net assets without donor restrictions for a period of time.

Answer 39

C. | The assets, liabilities, and net assets, and about their relationships to one another at a moment in time.

Question 40

Settam, a nongovernmental not-for-profit organization, received a donation of stock with donor-stipulated requirements as follows: Shares valued at $8,000,000 are to be sold with the proceeds used for renovation. Shares valued at $2,000,000 are to be retained with the dividends used to support current operations. What amount should Settam include as net assets without donor restrictions as a result of this donation? A. $0 B. $2,000,000 C. $8,000,000 D. $10,000,000

Answer 40

A. | $0

Question 41

What is the primary purpose of the statement of activities of a nongovernmental not-for-profit organization? A. To report the change in net assets for the period. B. To report the liquidity of the entity as of a specific date. C. To report assets, liabilities, and net assets as of a specific date. D. To report the cash flow position of the entity for the period.

Answer 41

A. | To report the change in net assets for the period.

Question 42

Which of the following comprise functional expense categories for a nongovernmental not-for-profit organization? A. Program services, management and general, and fund-raising. B. Membership dues, fund-raising, and management and general. C. Grant expenses, program services, and membership development. D. Membership development, professional fees, and program services.

Answer 42

A. | Program services, management and general, and fund-raising.

Question 43

Ragg Coalition, a nongovernmental not-for-profit organization, received a gift of treasury bills. The cost to the donor was $20,000, with an additional $500 for brokerage fees that were paid by the donor prior to the transfer of the treasury bills. The treasury bills had a fair value of $15,000 at the time of the transfer. At what amount should Ragg report the treasury bills in its statement of financial position? A. $15,000 B. $15,500 C. $20,000 D. $20,500

Answer 43

A. | $15,000

Question 44

During the current year, a voluntary health and welfare organization receives $300,000 in unrestricted pledges. Of this amount, $100,000 has been designated by donors for use next year to support operations. If 15% of the unrestricted pledges are expected to be uncollectible, what amount of unrestricted support should the organization recognize in its current-year financial statements? A. $300,000 B. $200,000 C. $170,000 D. $270,000

Answer 44

C. | $170,000

Question 45

A not-for-profit voluntary health and welfare organization received a $500,000 permanent endowment during the year. The donor stipulated that the income must be used for a mental health program. The endowment fund reported a $60,000 net decrease in market value and $30,000 in investment income. The organization spent $45,000 on the mental health program during the year. What amount of change in net assets with donor restrictions should the organization report? A. $425,000 increase B. $475,000 increase C. $500,000 increase D. $440,000 increase

Answer 45

C. | $500,000 increase

Question 46

How should a nongovernmental not-for-profit organization report investments in its financial statements? A. Historical cost with no gains or losses reported. B. Par value with gains and losses reported in the statement of activities. C. Fair value with gains and losses reported in the statement of activities. D. Amortized value with gains and losses reported in the statement of comprehensive income.

Answer 46

C. | Fair value with gains and losses reported in the statement of activities.

Question 47

What is the appropriate characterization of the net assets of a nongovernmental not-for-profit organization? A. Residual interest B. Ownership interest C. Donor's interest D. Equity interest

Answer 47

A. | Residual interest

Question 48

During the year, Public College received the following: An unrestricted $50,000 pledge to be paid the following year. A $25,000 cash gift restricted for scholarships. A notice from a recent graduate that the college is named as a beneficiary of $10,000 in that graduate's will. What amount of contribution revenue should Public College report in its statement of activities? A. $25,000 B. $35,000 C. $75,000 D. $85,000

Answer 48

C. | $75,000

Question 49

At the beginning of the year, the Baker Fund, a nongovernmental not-for-profit corporation, received a $125,000 contribution restricted to youth activity programs. During the year, youth activities generated revenues of $89,000 and had program expenses of $95,000. What amount should Baker report as net assets released from restrictions for the current year? A. $0 B. $6,000 C. $95,000 D. $125,000

Answer 49

C. | $95,000

Question 50

Which of the following financial categories are used in a nongovernmental, not-for-profit organization's statement of financial position? A. Net assets, income, and expenses. B. Income, expenses, and net assets without donor restrictions. C. Assets, liabilities, and net assets. D. Changes in net assets with and without donor restrictions.

Answer 50

C. | Assets, liabilities, and net assets.

Question 51

Arkin Corp. is a nongovernmental not-for-profit organization involved in research. Arkin's statement of functional expenses should classify which of the following as support services? A. Salaries of staff researchers involved in research. B. Salaries of fundraisers for funds used in research. C. Costs of equipment involved in research. D. Costs of laboratory supplies used in research.

Answer 51

B. | Salaries of fundraisers for funds used in research.

Question 52

During the current year, Mill Foundation, a nongovernmental not-for-profit organization, received $100,000 in unrestricted contributions from the general public. Mill's board of directors stipulated that $75,000 of these contributions would be used to create an endowment. At the end of the current year, how should Mill report the $75,000 in the net assets section of the statement of financial position? A. Endowment B. Without donor restrictions C. With donor restrictions D. With public restrictions

Answer 52

B. | Without donor restrictions

Question 53

Gridiron University is a private university. A successful alumnus has recently donated $1,000,000 to Gridiron for the purpose of funding a "center for the study of sports ethics." This donation is conditional upon the university raising matching funds within the next 12 months. The university administrators estimate that they have a 50% chance of raising the additional money. How should this donation be accounted for? A. As a temporarily restricted support. B. As unrestricted support. C. As a refundable advance. D. As a memorandum entry reported in the footnotes.

Answer 53

C. | As a refundable advance.

Question 54

A nongovernmental, not-for-profit organization received a $2 million gift from a donor who specified it to be used to create an endowment fund that would be invested in perpetuity. The income from the fund is to be used to support a specific program in the second year and beyond. An investment purchased with the gift earned $40,000 during the first year. At the end of the first year, the fair value of the investment was $2,010,000. What is the net effect on net assets with donor restrictions at year end? A. $0 B. $10,000 increase C. $40,000 increase D. $50,000 increase

Answer 54

D. | $50,000 increase

Question 55

In the preparation of the statement of activities for a nongovernmental not-for-profit organization, all expenses are reported as decreases in which of the following net asset classes? A. Total net assets. B. Net assets without donor restrictions. C. Donor-restricted endowment fund. D. Globally-restricted net assets.

Answer 55

B. | Net assets without donor restrictions.

Question 56

Janna Association, a nongovernmental not-for-profit organization, received a cash gift with the stipulation that the principal be held for at least 20 years. How should the cash gift be recorded? A. As an asset with donor restrictions. B. As unrestricted cash. C. As a refundable advance. D. As a liability.

Answer 56

A. | As an asset with donor restrictions.

Question 57

Chris donated securities with a cost of $20,000 and a fair market value of $50,000 to a local civic theater. Chris's tax deduction was limited to $35,000. At what amount should the theater record the securities at the date of donation? A. $0 B. $20,000 C. $35,000 D. $50,000

Answer 57

D. | $50,000

Question 58

On January 1, Read, a nongovernmental not-for-profit organization, received $20,000 and an unconditional pledge of $20,000 for each of the next four calendar years to be paid on the first day of each year. The present value factor for an ordinary annuity for four years at a constant interest rate of 8% is 3.312. What amount of net assets with donor restrictions is reported in the year the pledge was received? A. $66,240 B. $80,000 C. $86,240 D. $100,000

Answer 58

A. | $66,240

Question 59

How should a nongovernmental, not-for-profit organization report depreciation expense in its statement of activities? A. It should not be included. B. It should be included as a decrease in net assets without donor restrictions. C. It should be included as an increase in net assets with donor restrictions. D. It should be reclassified from net assets without donor restrictions to net assets with donor restrictions, depending on donor-imposed restrictions on the assets.

Answer 59

B. | It should be included as a decrease in net assets without donor restrictions.

Question 60

The net asset reclassifications of a nongovernmental not-for-profit organization would be reported on which of the following? A. Statement of financial position B. Statement of activities C. Statement of cash flows D. Statement of functional expenses

Answer 60

B. | Statement of activities

Question 61

How should operating expenses for a nongovernmental not-for-profit organization be reported? A. Change in net assets with donor restrictions. B. Change in net assets without donor restrictions. C. Change in globally restricted net assets. D. Contra-account to associated revenues.

Answer 61

B. | Change in net assets without donor restrictions.

Question 62

A statement of financial position for a nongovernmental, not-for-profit organization reports amounts for which of the following classes of net assets? A. Current. B. Long-term. C. With Board of Director restrictions. D. Without donor restrictions.

Answer 62

D. | Without donor restrictions.

Question 63

A not-for-profit organization is exempt from reporting which of the following contributed services as revenue? A. A CPA prepares the organization's tax return. B. A special education teacher tutors children with learning disabilities. C. A carpenter builds shelves for the office. D. An attorney solicits contributions on behalf of the organization.

Answer 63

D. | An attorney solicits contributions on behalf of the organization.

Question 64

Kind Nurses Assoc. is a voluntary health and welfare organization. Nurses are paid to visit homes of elderly people and are reimbursed for mileage and supplies. Which of the following items should Kind record as a support activity expense in its statement of functional expense? A. Nurses' mileage expense B. Payment for nurses' employee benefits C. Payment for nurses' supplies D. Fundraising costs

Answer 64

D. | Fundraising costs

Question 65

During year 2, Jones Foundation received the following support: A cash contribution of $875,000 to be used at the board of directors’ discretion. A promise to contribute $500,000 in year 3 from a supporter who has made similar contributions in prior periods. Contributed legal services with a value of $100,000, which Jones would have otherwise purchased. At what amounts would Jones classify and record these transactions? A. Revenues without donor restrictions: $1,375,000 Revenues with donor restrictions: $0 B. Revenues without donor restrictions: $875,000 Revenues with donor restrictions: $500,000 C. Revenues without donor restrictions: $975,000 Revenues with donor restrictions: $0 D. Revenues without donor restrictions: $975,000 Revenues with donor restrictions: $500,000

Answer 65

D. | Revenues without donor restrictions: $975,000 Revenues with donor restrictions: $500,000

Question 66

A donor gives $10,000 to a nongovernmental, not-for-profit organization with instructions that it must be used to fund the organization’s general operating expenses during the following fiscal year. The donation will increase the organization's A. Net assets without donor restrictions. B. Net assets with donor restrictions. C. Liabilities. D. Restricted retained earnings.

Answer 66

B. | Net assets with donor restrictions.

Question 67

Hann School, a nongovernmental not-for-profit organization, spent $1 million of temporarily restricted cash to acquire land and a building. How should this be reported in the statement of activities? A. Increase in net assets without donor restrictions. B. Decrease in use-sensitive net assets. C. Increase in net assets with donor restrictions. D. Decrease in expenses with donor restrictions.

Answer 67

A. | Increase in net assets without donor restrictions.

Question 68

The Jones family lost its home in a fire. On December 25, 20X3, a philanthropist sent money to the Amer Benevolent Society, a not-for-profit organization, to purchase furniture for the Jones family. During January 20X4, Amer purchased this furniture for the Jones family. How should Amer report the receipt of the money in its 20X3 financial statements? A. As a contribution without donor restrictions. B. As a contribution with donor restrictions. C. As part of net assets released from restrictions. D. As a liability.

Answer 68

D. | As a liability.

Question 69

How should a nongovernmental, not-for-profit organization classify gains and losses on investments purchased with an endowment fund? A. Gains may not be netted against losses in the statement of activities. B. Gains and losses can only be reported net of expenses in the statement of activities. C. Unless explicitly restricted by donor or law, gains and losses should be reported in the statement of activities as increases or decreases in net assets without donor restrictions. D. Unless explicitly restricted by donor or law, gains and losses should be reported in the statement of activities as increases or decreases in the endowment fund itself.

Answer 69

C. Unless explicitly restricted by donor or law, gains and losses should be reported in the statement of activities as increases or decreases in net assets without donor restrictions.

Question 70

During the current year, a nongovernmental, not-for-profit hospital received a gift of $10 million to be used for an addition to the physical therapy unit. In addition, the hospital also received an investment valued at $3 million with a donor-imposed restriction allowing only the use of the investment earnings for paying the salary of an additional physical therapist. As of the end of the current year, a physical therapist had notbeen hired, and earnings on the investment for the year were $150,000. What amount should be reported as net assets with donor restrictions in the year-end statement of financial position? A. $150,000 B. $10,000,000 C. $10,150,000 D. $13,150,000

Answer 70

D. | $13,150,000

Question 71

During the current year, the Finn Foundation, a nongovernmental not-for-profit organization, received a $1,000,000 permanent endowment from Chris. Chris stipulated that the income must be used to provide recreational activities for the elderly. The endowment reported income of $80,000 in the current year. What amount of donor-restricted contribution revenue should Finn report at the end of the current year? A. $1,080,000 B. $1,000,000 C. $80,000 D. $0

Answer 71

A. | $1,080,000

Question 72

Which of the following would a nongovernmental not-for-profit educational institution report as program services? A. Publicity costs. B. Teacher salaries C. Management salaries. D. Fundraising expenses.

Answer 72

B. | Teacher salaries

Question 73

A nongovernmental not-for-profit college has a portfolio of bond investments that had an original cost of $2,000,000. The college's board of trustees voted to hold the principal of this fund intact in perpetuity and designated the earnings to reimburse faculty for travel to academic conferences. During the year, interest of $50,000 was earned in cash. The fair value of the bonds was $1,980,000. What amount should the college report as net assets with donor restrictions at year end? A. $0 B. $1,980,000 C. $2,000,000 D. $2,030,000

Answer 73

A. | $0

Question 74

In a not-for-profit organization, which of the following should be included in total expenses? A. Both grants to other organizations and depreciation. B. Grants to other organizations, not depreciation. C. Neither grants to other organizations nor depreciation. D. Depreciation, not grants to other organizations.

Answer 74

A. | Both grants to other organizations and depreciation.

Question 75

When should a conditional pledge to a nongovernmental not-for-profit organization be recognized as revenue? A. Immediately B. When the cash is received C. When the pledge conditions are met D. At the beginning of the next fiscal period

Answer 75

C. | When the pledge conditions are met

Question 76

Hospital, Inc., a not-for-profit organization with no governmental affiliation, reported the following in its accounts for the current year ended December 31: Gross patient service revenue from all services provided at the established billing rates of the hospital (note that this figure includes charity care of $25,000) $775,000 Provision for bad debts $100,000 Difference between established billing rates and fees negotiated with third-party payors (contractual adjustments) $70,000 What amount would the hospital report as net patient service revenue in its statement of operations for the current year ended December 31? A. $680,000 B. $690,000 C. $705,000 D. $735,000

Answer 76

A. | $680,000

Question 77

On December 31, 20X1, Dahlia, a nongovernmental not-for-profit organization, purchased a vehicle with $15,000 in cash without donor restrictions and received a donated second vehicle having a fair value of $12,000. Dahlia expects each vehicle to provide it with equal service value over each of the next five years and then to have no residual value. Dahlia has an accounting policy implying a time restriction on gifts of long-lived assets. In Dahlia’s 20X2 statement of activities, what depreciation expense should be included under changes in net assets without donor restrictions? A. $0 B. $2,400 C. $3,000 D. $5,400

Answer 77

D. | $5,400

Question 78

The Cats and Dogs League was organized as a nongovernmental not-for-profit organization. The League received a pledge of $10,000 to be used to build an addition to the kennel. This donation will not be received for three years. How should this pledge be recorded? A. As donor-restricted support of the present value of $10,000. B. As donor-restricted support of $10,000. C. As a conditional promise to give of $10,000. D. It should not be accounted for until it is received.

Answer 78

A. | As donor-restricted support of the present value of $10,000.

Question 79

Oz, a nongovernmental not-for-profit organization, received $50,000 from Ame Company to sponsor a play given by Oz at the local theater. Oz gave Ame 25 tickets, which generally cost $100 each. Ame received no other benefits. What amount of ticket sales revenue should Oz record? A. $0 B. $2,500 C. $47,500 D. $50,000

Answer 79

B. | $2,500

Question 80

During the current fiscal year, Foxx, a nongovernmental not-for-profit organization, received unrestricted pledges of $300,000. Of the pledged amount, $200,000 was designated by donors for use during the current year, and $100,000 was designated for next year. Five percent of the pledges are expected to be uncollectible. What amount should Foxx report as restricted support (contributions) in the statement of activities for the current year? A. $200,000 B. $190,000 C. $100,000 D. $95,000

Answer 80

D. | $95,000

Question 81

During the current year, the local humane society, a nongovernmental not-for-profit organization, received a $100,000 permanent endowment from Cobb. Cobb stipulated that the income must be used to care for older horses that can no longer race. The endowment reported income of $8,000 in the current year. What amount of unrestricted contribution revenue should the humane society report for the current year? A. $108,000 B. $100,000 C. $8,000 D. $0

Answer 81

D. | $0

Question 82

How should unconditional pledges received by a nongovernmental not-for-profit organization that will be collected over more than one year be reported? A. Long-term pledges receivable, valued at the expected collection amount. B. Pledges receivable, valued at their present values. C. Deferred revenue, valued at present value. D. Pledges receivable, valued at the amount pledged.

Answer 82

B. | Pledges receivable, valued at their present values.

Question 83

Maple Church has cash available for investments in several different accounting funds. Maple's policy is to maximize its financial resources. How may Maple pool its investments? A. Maple may not pool its investments. B. Maple may pool all investments, but must equitably allocate realized and unrealized gains and losses among participating funds. C. Maple may pool only unrestricted investments, but must equitably allocate realized and unrealized gains and losses among participating funds. D. Maple may pool only restricted investments, but must equitably allocate realized and unrealized gains and losses among participating funds.

Answer 83

B. Maple may pool all investments, but must equitably allocate realized and unrealized gains and losses among participating funds.

Question 84

Which of the following classifications is required for reporting of expenses by all not-for-profit organizations? A. Natural classification in the statement of activities or notes to the financial statements. B. Functional classification in the statement of activities or notes to the financial statements. C. Functional classification in the statement of activities and natural classification in a matrix format in a separate statement. D. Functional classification in the statement of activities and natural classification in the notes to the financial statements.

Answer 84

B. Functional classification in the statement of activities or notes to the financial statements.