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

Question 1

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

Answer 1

True

Question 2

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.

Answer 2

False

Question 3

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.

Answer 3

False

Question 4

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

Question 5

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

Question 6

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 7

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 8

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

Question 9

The financial statements of private not-for-profits are intended primarily for those who have a residual claim to the net assets of the organization.

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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 23

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 24

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

Question 25

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

Question 26

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

Question 27

A conditional pledge should be recognized as revenue when the pledge is made.

Question 28

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

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

FASB requires multiyear pledges to be recorded at the present value of the future collections.

Question 31

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

Question 32

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

Question 33

A not-for-profit organization receiving donated fixed assets must record those assets as temporarily restricted.

Question 34

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 35

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 36

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

Question 37

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

Question 38

Private not-for-profit organizations record depreciation expense.

Question 39

All donated services are recognized as revenue.

Question 40

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

Question 41

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 42

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

Question 43

FASB statement 116 requires conditional promises to give to be recorded as revenue when the condition is met.

Question 44

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

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

Question 45

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

Question 46

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

Question 47

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 48

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

Question 49

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 50

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

Question 51

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

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

Question 52

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

Question 53

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

Question 54

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 55

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

Question 56

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

Question 57

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

Question 58

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

Question 59

A Statement of Functional Expenses is not required for private voluntary health and welfare organizations.

Question 60

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

Question 61

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 62

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 63

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) Commonly financed through voluntary contributions.
D) Operate for the direct benefit of members.

Question 64

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 65

Which of the following is not 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 of Activities or in the notes.
C) Net assets are classified according to donor-imposed restrictions.
D) All of the above are true.

Question 66

A civic ballet company sells 100 "Benefactor" status memberships for $1,000 each. The Benefactors each receive a season ticket valued at $350,and a listing in the company's program. How would the ballet company record the sale of these 100 memberships at the beginning of the season?

A) Cash $100,000 Deferred Revenue $100,000
B) Cash - Restricted $ 65,000 Cash - Unrestricted 35,000
Contributions - Restricted $ 65,000
Revenue 35,000
C) Cash $100,000 Revenue $ 35,000
Contributions - Restricted 65,000
D) Cash $100,000 Deferred Revenue $ 35,000
Contributions - Unrestricted 65,000

Question 67

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

A) Assigned, Committed, and Unrestricted.
B) Net investment in capital assets, Restricted, and Unrestricted.
C) Partially Restricted, Temporarily Restricted, Unrestricted.
D) None of the above.

Question 68

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 69

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 70

Which of the following is not 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 restricted cash contribution for long-term purposes, that cash contribution would be reported as a cash flow from financing activities.
C) Restricted contributions used for long-term purposes are reported as financing activities.
D) Four categories of cash flows are used.

Question 71

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 72

Which of the following is not 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.
B) Expenses are reported as unrestricted, temporarily restricted or permanently restricted.
C) Expenses are reported as decreases in unrestricted net assets.
D) Organization-wide totals must be provided.

Question 73

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

Question 74

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 75

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

A) Temporarily restricted
B) Unrestricted
C) Permanently restricted
D) Either A or B.

Question 76

Which of the following organizations would not 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) Live Arts Theater.
D) Girl Scouts.

Question 77

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

A) Discovery Museum (nongovernmental).
B) American Heart Association.
C) Meals on Wheels.
D) Local Farm Cooperative.

Question 78

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 79

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 fixed assets.
C) A contribution of $1,000,000 to fund an endowment.
D) None of the above.

Question 80

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