Question 1

Which of the following statements is TRUE?

Accepted Answer

A) The deferral method of accounting generally results in a higher level of revenue than the restricted fund method. 
B) The deferral method of accounting generally results in a higher level of revenue than the restricted fund method only if capital asset amortization is involved. 
C) The deferral method of accounting generally results in a lower level of revenue than the restricted fund method. 
D) The deferral method of accounting results in the same amount of revenue as the restricted fund method. 
A) The deferral method of accounting generally results in a higher level of revenue than the restricted fund method. 
B) The deferral method of accounting generally results in a higher level of revenue than the restricted fund method only if capital asset amortization is involved. 
C) The deferral method of accounting generally results in a lower level of revenue than the restricted fund method. 
D) The deferral method of accounting results in the same amount of revenue as the restricted fund method.

Question 2

Which of the following reporting objectives for not-for-profit organizations allows the users to determine whether restricted funds were spent in accordance with the intended purpose?

Accepted Answer

A) Stewardship. 
B) Cash flow prediction. 
C) Performance evaluation. 
D) Measuring the cost of services rendered. 
A) Stewardship. 
B) Cash flow prediction. 
C) Performance evaluation. 
D) Measuring the cost of services rendered.

Question 3

Fighting Back, a not-for-profit organization, has a 51% economic interest in Clothing Care, another not-for-profit organization. The organizations operate independently, have no directors in common, and have no transactions with each other. For financial reporting purposes, how should Fighting Back account for its interest in Clothing Care?

Accepted Answer

A) Note disclosure only. 
B) Consolidation. 
C) The equity method. 
D) Either consolidation or note disclosure 
A) Note disclosure only. 
B) Consolidation. 
C) The equity method. 
D) Either consolidation or note disclosure

Question 4

Dieter won a lottery and made a $500,000 endowment contribution to his alma mater to provide scholarships. Under the deferral method, in the year of contribution, the university should recognize the contribution as which of the following?

Accepted Answer

A) Unrestricted revenue. 
B) An increase to net assets. 
C) Restricted revenue. 
D) Deferred revenue. 
A) Unrestricted revenue. 
B) An increase to net assets. 
C) Restricted revenue. 
D) Deferred revenue.

Question 5

A not-for-profit organization is NOT required to capitalize and amortize its capital assets if the organization ________.

Accepted Answer

A) has assets that total less than $500,000. 
B) has an annual change to net assets of less than $500,000. 
C) has less than 50 full-time employees. 
D) has a two-year average annual revenues of less than $500,000. 
A) has assets that total less than $500,000. 
B) has an annual change to net assets of less than $500,000. 
C) has less than 50 full-time employees. 
D) has a two-year average annual revenues of less than $500,000.

Question 6

Which of the following statements related to the accounting for donated goods and services for a not-for-profit organization is TRUE?

Accepted Answer

A) Recording the value of donated goods and services could result in inflated earnings. 
B) Recording the value of donated goods and services enhances stewardship reporting. 
C) Recording the value of donated goods and services could be useful in evaluating management performance. 
D) Recording the value of donated goods and services is required by the CICA Handbook. 
A) Recording the value of donated goods and services could result in inflated earnings. 
B) Recording the value of donated goods and services enhances stewardship reporting. 
C) Recording the value of donated goods and services could be useful in evaluating management performance. 
D) Recording the value of donated goods and services is required by the CICA Handbook.

Question 7

Not for profit organizations cannot be incorporated.

Accepted Answer

A) True 
 B)False

Question 8

When is an obligation recorded under an encumbrance system?

Accepted Answer

A) When a purchase order is issued. 
B) When goods or services are received. 
C) When payment is made. 
D) None of the above. 
A) When a purchase order is issued. 
B) When goods or services are received. 
C) When payment is made. 
D) None of the above.

Question 9

What is a restricted fund?

Accepted Answer

A restricted fund is a segregation of fu

Question 10

Under the deferral method, how should contributions received in the current year but restricted for operating expenses for one or more future periods be reported in the current year?

Accepted Answer

A) As revenue in the statement of operations. 
B) As a direct increase to net assets. 
C) As deferred revenue on the balance sheet. 
D) As a reduction of operating expenses on the statement of operations. 
A) As revenue in the statement of operations. 
B) As a direct increase to net assets. 
C) As deferred revenue on the balance sheet. 
D) As a reduction of operating expenses on the statement of operations.

Question 11

The air ambulance department for a provincial government uses an encumbrance system. On October 15, 2013, the department manager issues a purchase order for $20,000 for propellers. The propellers were delivered on October 31, 2013, with an invoice for $18,700. What should be recorded on October 15, 2013?

Accepted Answer

A) An accounts payable for $18,700. 
B) An encumbrance for $20,000. 
C) An encumbrance for $18,700. 
D) An accounts payable $20,000. 
A) An accounts payable for $18,700. 
B) An encumbrance for $20,000. 
C) An encumbrance for $18,700. 
D) An accounts payable $20,000.

Question 12

The deferral method of accounting generally results in a higher level of revenue than the restricted fund method only if capital asset amortization is involved.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is FALSE?

Accepted Answer

A) Not-for-profit organizations may follow IFRS (Part I)or Part III of the CICA handbook. 
B) All not-for-profit organizations should apply similar accounting treatments to like transactions when the needs of the users in the private and public sector are aligned. 
C) Not-for-profit revenue recognition criteria mirror those of profit-oriented entities except for contributions. 
D) A not-for-profit organization may not disaggregate its financial statements into funds based on legal, contractual or voluntary actions of the entity. 
A) Not-for-profit organizations may follow IFRS (Part I)or Part III of the CICA handbook. 
B) All not-for-profit organizations should apply similar accounting treatments to like transactions when the needs of the users in the private and public sector are aligned. 
C) Not-for-profit revenue recognition criteria mirror those of profit-oriented entities except for contributions. 
D) A not-for-profit organization may not disaggregate its financial statements into funds based on legal, contractual or voluntary actions of the entity.

Question 14

Eat Hearty (EH)is a non-profit organization that has grown to be quite large in the area. EH operates 30 food banks in multiple locations throughout the province and has moved to a decentralized organizational structure. All of the funding is received by the head office and then each location is allocated a fixed amount of funds that can be used over the year for local expenses. Local expenses are at the discretion of the local managers. The Board has decided to change its method of accounting to keep better track of costs at these various locations and better manage the budget. The Board has decided to implement a new budgeting and encumbrance accounting system.
Required:
In October, 2013, EH issued a purchase order for $70,000 to have printed and delivered 100,000 pamphlets to be distributed to households over the next 6 months. In December, 2013, the pamphlets were received along with an invoice for $67,800. Prepare the journal entries to record the journal entries for October and December, 2013 using encumbrance accounting.

Accepted Answer

The answer of Eat Hearty (EH)is a non-profit organization that...

Question 15

Not-for-profit revenue recognition criteria mirror those of profit oriented entities except for contributions.

Accepted Answer

A) True 
 B)False

Question 16

When consolidated financial statements are prepared for a not-for-profit organization using fund accounting, these statements should show only consolidated statements of operations and consolidated statement of financial position.

Accepted Answer

A) True 
 B)False

Question 17

A(n)________________ fund is a type of restricted fund where, even though funds are collected, the principal is not allowed to be spent.

Accepted Answer

A) Capital. 
B) Endowment. 
C) Restricted. 
D) Unrestricted. 
A) Capital. 
B) Endowment. 
C) Restricted. 
D) Unrestricted.

Which of the following statements is TRUE?

Which of the following reporting objectives for not-for-profit organizations allows the users to determine whether restricted funds were spent in accordance with the intended purpose?

Dieter won a lottery and made a $500,000 endowment contribution to his alma mater to provide scholarships. Under the deferral method, in the year of contribution, the university should recognize the contribution as which of the following?

A not-for-profit organization is NOT required to capitalize and amortize its capital assets if the organization ________.

Which of the following statements related to the accounting for donated goods and services for a not-for-profit organization is TRUE?

Not for profit organizations cannot be incorporated.

When is an obligation recorded under an encumbrance system?

What is a restricted fund?

Under the deferral method, how should contributions received in the current year but restricted for operating expenses for one or more future periods be reported in the current year?

The deferral method of accounting generally results in a higher level of revenue than the restricted fund method only if capital asset amortization is involved.

Which of the following statements is FALSE?

Not-for-profit revenue recognition criteria mirror those of profit oriented entities except for contributions.

When consolidated financial statements are prepared for a not-for-profit organization using fund accounting, these statements should show only consolidated statements of operations and consolidated statement of financial position.

A(n)________________ fund is a type of restricted fund where, even though funds are collected, the principal is not allowed to be spent.

Accounting for Investments

Business Combinations

Consolidation: Wholly Owned Subsidiaries

Consolidations: Intragroup Transactions

Consolidation: Non-Controlling Interest

Accounting for Investments in Associates and Joint Ventures

Accounting for Foreign Currency

Accounting for Foreign Investments

Reporting for Public Sector Entities

Filters

Exam 9: Reporting for Not-For-Profit Organizations

Which of the following statements is TRUE?

Which of the following reporting objectives for not-for-profit organizations allows the users to determine whether restricted funds were spent in accordance with the intended purpose?

Dieter won a lottery and made a $500,000 endowment contribution to his alma mater to provide scholarships. Under the deferral method, in the year of contribution, the university should recognize the contribution as which of the following?

A not-for-profit organization is NOT required to capitalize and amortize its capital assets if the organization ________.

Which of the following statements related to the accounting for donated goods and services for a not-for-profit organization is TRUE?

Not for profit organizations cannot be incorporated.

When is an obligation recorded under an encumbrance system?

What is a restricted fund?

Under the deferral method, how should contributions received in the current year but restricted for operating expenses for one or more future periods be reported in the current year?

The deferral method of accounting generally results in a higher level of revenue than the restricted fund method only if capital asset amortization is involved.

Which of the following statements is FALSE?

Not-for-profit revenue recognition criteria mirror those of profit oriented entities except for contributions.

When consolidated financial statements are prepared for a not-for-profit organization using fund accounting, these statements should show only consolidated statements of operations and consolidated statement of financial position.

A(n)________________ fund is a type of restricted fund where, even though funds are collected, the principal is not allowed to be spent.

Accounting for Investments

Business Combinations

Consolidation: Wholly Owned Subsidiaries

Consolidations: Intragroup Transactions

Consolidation: Non-Controlling Interest

Accounting for Investments in Associates and Joint Ventures

Accounting for Foreign Currency

Accounting for Foreign Investments

Reporting for Public Sector Entities

Filters