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

Question 1

The FASB requires private not-for-profit organizations to report individual assets and liabilities separated by unrestricted,temporarily restricted and permanently restricted.

Answer 1

False

Question 2

A Statement of Functional Expenses is required for all not-for-profit organizations.

Answer 2

False

Question 3

Examples of voluntary health and welfare organizations would include the Girl Scouts and the American Heart Association.

Answer 3

True

Question 4

After the issuing of Statement 117,not-for-profit financial statements are relatively standardized across industries.

Question 5

Contributions to a private not-for-profit are recorded at fair market value at the date of receipt.

Question 6

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.

Question 7

While many private not-for-profit organizations use funds for internal purposes,the financial statements do not report separate funds.

Question 8

If a private not-for-profit fails to comply with donor restriction on contributions received,the organization must accrue and disclose a contingent liability.

Question 9

The financial statements of private not-for-profits are intended primarily for use by present and potential donors.

Question 10

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

Question 11

Voluntary health and welfare organizations promote the general health and well-being of the public.

Question 12

Performing arts organizations are an example of other private not-for-profit organizations.

Question 13

The FASB requires private not-for-profit organizations to report revenues separated by unrestricted,temporarily restricted and permanently restricted.

Question 14

Private not-for-profits use the accrual basis and record both fixed assets and long-term debt..

Question 15

Contributions of assets other than cash to a private not-for-profit are recorded at the donor's basis

Question 16

The GASB has the authority to establish accounting and financial reporting standards for both government-owned and private not-for-profit organizations.

Question 17

The AICPA Not-for-Profit Guide applies to both governmental and nongovernmental not-for-profit organizations.

Question 18

Accounting practices of private sector not-for-profit organizations are influenced by two AICPA audit and accounting guides:
Not-for-Profit Organizations and Health Care Organizations.

Question 19

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.

Question 20

Contributions to a private not-for-profit may be restricted as to time,purpose or for plant acquisition.

Question 21

A private not-for-profit reports expenses in either the unrestricted net asset class or restricted net asset class,depending which program the expense was supporting.

Question 22

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

Question 23

The FASB requires private not-for-profit organizations to report net assets (the excess of assets over liabilities)separated by unrestricted,temporarily restricted and permanently restricted.

Question 24

Under FASB Statement No.116,multiyear pledges are to be recorded as a pledge receivable for the total amount and contribution revenue will be recorded proportionally each year of the pledge.

Question 25

Cash flows must be presented separately in the Statement of Cash Flows for the three classes (unrestricted,temporarily restricted,and permanently restricted).

Question 26

According to FASB Statement 124,Accounting for Certain Investments of Not-for-Profit Organizations,requires investments by a not-for-profit in debt securities but not equity securities to be carried at fair value.

Question 27

A Statement of Functional Expenses presents a matrix of expenses classified by function and by object or natural classification.

Question 28

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.

Question 29

Assets that are restricted by an organization's board can be reported as either temporarily restricted or permanently restricted,according to the board's intentions.

Question 30

Net Assets must be presented separately in the Statement of Financial Position for the three classes (unrestricted,temporarily restricted,and permanently restricted).

Question 31

The FASB requires private not-for-profit organizations to report expenses separated by unrestricted,temporarily restricted and permanently restricted.

Question 32

A private not-for-profit's expenses are reported by function,program or supporting,in the Statement of Activities or in the notes.

Question 33

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

Question 34

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.

Question 35

Fixed assets may be recorded by a private not-for-profit as temporarily restricted or unrestricted,depending on the policy of the organization.

Question 36

A not-for-profit organization receiving donated fixed assets may record those assets as either unrestricted or temporarily restricted.

Question 37

Private not-for-profit organizations record depreciation expense.

Question 38

Conditional pledges should not be recognized as revenue until the conditions have been met.

Question 39

Contributions to be paid in future periods should be recorded at present value.

Question 40

All donated services are recognized as revenue.

Question 41

FASB statement 124 requires that investments in equity securities with readily determinable values be reported at fair market value.

Question 42

Private not-for-profits must follow all applicable ____ standards in recording transactions.

A) AICPA.
B) FASB.
C) GASB.
D) SEC.

Question 43

The Statement of Cash Flows for a private not-for-profit organization has four different classifications of cash flows.

Question 44

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

Question 45

Identify the standard setting body for private not-for-profit organizations and the basis of accounting that should be used.

A) GASB & Accrual.
B) GASB & Modified Accrual.
C) FASB & Accrual.
D) FASB & Modified Accrual.

Question 46

Unconditional promises to give are recognized as revenue or support when the promise is made net of estimated uncollectible receivables.

Question 47

An intention to give (such as being named in a will)is the same as an unconditional promise to give and can be recorded as revenue when the intention is made known.

Question 48

Which organization has standard setting authority over governmentally related not-for-profit organizations,such as hospitals colleges and universities.

A) GASB.
B) FASB.
C) AICPA.
D) SEC.

Question 49

A Statement of Functional Expenses is required for government-owned hospitals.

Question 50

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.

Question 51

The Statement of Cash Flows for a private not-for-profit organization has three different classifications of cash flows.

Question 52

FASB statement 116 requires contributions to be recorded as revenue when the contributed money is actually received.

Question 53

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

Question 54

Present and potential donors are the primary users of private not-for-profit
financial statements.

Question 55

With respect to the Statement of Cash Flows for a private not-for-profit organization,the purchase of equipment would be considered a capital related financing activity.

Question 56

When preparing the Statement of Cash Flows for a private not-for-profit organization,the direct method of must be used.

Question 57

FASB statement 116 requires unconditional pledges of support to be recorded as revenue when the contribution is promised.

Question 58

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.).

Question 59

FASB statement 116 requires contributions to be recorded as revenue when the contribution is likely to be received.

Question 60

A Statement of Functional Expenses is required for public colleges and universities.

Question 61

Which of the following is not true regarding the treatment of multiyear pledges,according to FASB Statement 116?

A) They are recorded at the present value of future collections.
B) They should be reported net of an allowance for estimated uncollectibles.
C) They should be recorded as temporarily restricted.
D) At the end of each accounting period, the difference between the new and previously recorded present value is recorded as interest revenue.

Question 62

Contributed services are recognized as revenue for a private not-for-profit when the service:

A) Is related to administration and fund raising activities.
B) Requires specialized skills, is provided by someone possessing those skills, and typically would be purchased if not provided by donation.
C) A and B are both required for the service to be recorded as revenue
D) None of the above, contributed services are not recorded as revenue

Question 63

Which of the following would be a contribution increasing permanently restricted net assets?

A) A contribution by a donor in the amount of $1,000,000, set aside by the governing board as funds not to be expended.
B) A contribution by a donor in the amount of $1,000,000 to be used to acquire land.
C) Both A & B above.
D) Neither A nor B above

Question 64

Which of the following organizations would be subject to the accounting and reporting requirements of FASB Statements 116 (Accounting for Contributions)and 117 (Financial Reporting for Not-for-Profit Organizations)?

A) The City of Hannibal Missouri.
B) St. Jude Children's Hospital.
C) Both of the above.
D) Neither (a) or (b) above.

Question 65

Which of the following organizations would be subject to the (level b)accounting and reporting requirements of the AICPA's Audit and Accounting Guide: Not-for-Profit Organizations?

A) The International Brotherhood of Electrical Workers.
B) St. Jude Children's Hospital.
C) Both of the above.
D) Neither (a) or (b) above.

Question 66

FASB Statement 124,Accounting for Certain Investments of Not-for-Profit Organizations:

A) Requires that investments in equity securities be carried at book value.
B) Requires that investments in debt securities be carried at fair value.
C) Requires that investments accounted for under the equity method be adjusted to fair value at the end of the accounting period.
D) Requires that investments in consolidated subsidiaries be reported as permanently restricted.

Question 67

If a donor selects a scholarship recipient,and then donates cash to a ballet school to fund that scholarship,the ballet school would:

A) Record a liability, as it is merely acting as an agent for the donation.
B) Record the donated cash as a contribution.
C) Record the scholarship awarded as a reduction of revenue.
D) Both B & C.

Question 68

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

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 69

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

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 70

Which of the following is not a distinguishing characteristic of a private not-for-profit organization according to FASB Statement No.116?

A) Operating purposes other than to provide goods or services at a profit.
B) Absence of ownership interests like those of business enterprises.
C) Contributions of significant amounts of resources from resources providers who do not expect commensurate or proportionate pecuniary return.
D) Upon dissolution of the organization, remaining assets are to be distributed to the original contributors.

Question 71

Which of the following contributed services would probably not be recognized as contribution revenue?

A) An attorney donates her services to defend the Girl Scouts in a lawsuit.
B) A nurse donates her time to collect blood at an American Red Cross blood drive
C) An electrician donates his services to upgrade the electrical service at a mental health clinic.
D) State CPA society members hand out informational booklets at a shopping mall.

Question 72

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

A) The Statement must display assets and liabilities separated between the categories of unrestricted, temporarily restricted, and permanently restricted.
B) The Statement must display totals for net assets separated between the categories of unrestricted, temporarily restricted, and permanently restricted.
C) Both A & B above.
D) Neither A nor B above.

Question 73

What are the financial statements required for all nongovernmental,not-for-profit organizations?

A) Statement of Financial Position, Statement of Activities, Statement of Cash Flows, Statement of Functional Expenses.
B) Statement of Financial Position, Statement of Activities, Statement of Functional Expenses.
C) Statement of Financial Position, Statement of Net Assets, Statement of Functional Expenses.
D) Statement of Financial Position, Statement of Activities, Statement of Cash Flows.

Question 74

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

A) Expenses can be reported in the unrestricted net asset class or restricted net asset class, as appropriate.
B) Expenses are reported by function in the Statement of Activities or in the notes.
C) The FASB describes functions as either program or supporting.
D) Major program classifications should be shown in the Statement of Activities or in the notes.

Question 75

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

A) Expenses are classified as unrestricted or temporarily restricted.
B) Expenses must be reported by function, either in the statements or in the notes.
C) Both A & B above.
D) Neither A nor B above.

Question 76

Which of the following are the net asset classes required by the FASB for private not-for-profit organizations?

A) Reserved and Unreserved.
B) Invested in Capital Assets, Net of Related Debt, Restricted, and Unrestricted.
C) Permanently Restricted, Temporarily Restricted, Unrestricted.
D) None of the above.

Question 77

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

A) Either the direct or indirect method may be used.
B) If a not-for-profit organization received a cash contribution for permanently restricted purposes, that cash contribution would be shown as a cash flow from financing activities.
C) Both of the above.
D) Neither of the above.

Question 78

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

A) FASB requires that the change in net assets be reported for each of the net asset classes and in total.
B) Expenses are reported as unrestricted, temporarily restricted or permanently restricted.
C) Both A & B above.
D) Neither A nor B above. .

Question 79

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:

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 80

With the exception of collections,fixed assets may be recorded by a private not-for-profit as:

A) Temporarily restricted
B) Unrestricted
C) Both A & B above.
D) Neither A nor B above.