Deck 12: Financial Management

Question 1

This can be compared to a video that shows the flow of revenues and expenses of an organization, and the resulting changes in net assets over a period of time, generally a fiscal year.

A) Statement of activities
B) Statement of financial position
C) Statement of cash flows
D) Statement of functional expenses

Answer 1

A

Question 2

One fundamental principle of requires that duties of individuals be separated so that no one person handles an entire transaction from beginning to end.

A) internal control
B) external control
C) data integrity policies
D) accounting

Answer 2

A

Question 3

This concept usually involves the analysis of various financial ratios that may provide indicators of trends and the organization's financial health.

A) Financial management
B) Financial accounting
C) Managerial accounting
D) Financial analysis

Answer 3

A

Question 4

The goal of the is to provide enough payout each year to meet the needs of current programs, while also allowing the value of the endowment principal to grow to keep pace with inflation and provide more income to sustain programs in future years.

A) capital budget
B) cash budget
C) spending limit
D) operating budget

Question 5

This term considers whether the organization had an operating surplus, broke even, or operated at a loss.

A) Solvency
B) Liquidity
C) Profitability
D) Integrity

Question 6

Often equivalent to six months or one year of the operating budget, are generally invested in very secure, short-term instruments such as bank certificates of deposit or money market funds.

A) operating budgets
B) cash flows
C) operating reserves
D) unrestricted funds

Question 7

This concept reflects investing in a portfolio that includes stocks, cash, bonds, real estate, and other classes of assets, providing for the long-term growth of the principal.

A) Term endowments
B) Total return
C) Spending limits
D) Asset management

Question 8

involve(s) privacy, confidentiality, records retention, separation of duties, data backup, and other such concerns.

A) Managerial accounting
B) The Uniform Management of Institutional Funds Act
C) Data integrity policies
D) Accountability and regulatory compliance policies

Question 9

These types of policies limit or place boundaries on the actions that may be taken under certain circumstances.

A) Restrictive policies
B) Nonprescriptive policies
C) Financial policies
D) External policies

Question 10

Accounting on a(n) takes into account the money that a nonprofit has earned and is entitled to receive, as well as obligations for expenditures that it has not yet incurred.

A) cash basis
B) accrual basis
C) credit basis
D) multilevel basis

Question 11

This provides a snapshot of the organization at a point in time, usually the end of a fiscal year.

A) Statement of activities
B) Statement of cash flows
C) Statement of functional expenses
D) Statement of financial position

Question 12

In this process, all programs and departments start at zero at the beginning of each year's budget process and need to justify their budgets from the ground up.

A) Incremental approach
B) Cost center approach
C) Use-it-or-lose-it approach
D) Zero-based approach

Question 13

This encompasses the rules by which financial transactions are classified and reported.

A) Bookkeeping
B) Financial management
C) Data integrity policies
D) Accounting

Question 14

The principal of how an asset's value declines over time is called:

A) amortization.
B) depreciation.
C) inflation.
D) deflation.

Question 15

refers to the methods and systems by which financial transactions are recorded, either by hand or on a computer.

A) Financial management
B) Accounting
C) Bookkeeping
D) Record keeping

Question 16

Assessing requires evaluating whether the organization is financially strong or in jeopardy and looking at the liabilities as well as the revenue and expenses shown on the statement of activities.

A) profitability
B) asset management
C) liquidity
D) long-term solvency

Question 17

An organization that is possesses sufficient cash at the right times to meet its obligations as they come due.

A) liquid
B) solvent
C) profitable
D) unrestricted

Question 18

With , funds given by donors specify that the principal be retained and be invested in perpetuity, and the board has limited or no flexibility in using these funds.

A) quasi-endowment
B) liquid assets
C) pure endowment
D) unrestricted funds

Question 19

The shows how every category of expense is allocated by a nonprofit.

A) statement of activities
B) statement of financial position
C) statement of cash flows
D) statement of functional expenses

Question 20

These are established by the governing board, and they may identify allowable ranges for specific financial indicators or ratios, for example, liquidity, debt, or assets held in the endowment fund.

A) Accountability and regulatory compliance policies
B) Financial and financial management policies
C) Spending limits
D) Statements of financial positions

Question 21

Accrual basis accounting records financial transactions only when money changes hands.

Question 22

A statement of financial position shows a snapshot of the organization's assets and liabilities at a single point in time.

Question 23

A nonprofit organization is sending bills to clients who owe fees for services received. Which accounting term describes this type of transaction?

A) Physical asset
B) Trade benefit
C) Net asset
D) Accrual basis

Question 24

Buildings, vehicles, and equipment are considered fixed assets.

Question 25

Brandy's organization has leased its office space. This type of budget item would be considered a(an):

A) controllable cost.
B) uncontrollable cost
C) endowment cost
D) liquidity.

Question 26

A board of directors may withdraw funds from a quasi-endowment.

Question 27

A nonprofit board of directors is working to establish an endowment investment portfolio that will earn enough income to match higher future costs. This is an example of applying the:

A) least return concept.
B) minimum return concept.
C) total return concept.
D) equity concept.

Question 28

Endowment management is governed by state law.

Question 29

The Brown Foundation gave a local nonprofit organization a $1million endowment. This is an example of what type of revenue source?

A) Earned income
B) Philanthropic gift
C) State grant
D) Fee for service

Question 30

A nonprofit CEO is comparing the amount of money her organization uses to raise funds and the cost of overhead. The CEO is using a(an) __________ to assess organizational performance.

A) audit
B) financial ratio
C) measure of operating reserves
D) depreciation formula

Question 31

How do nonprofit organizations measure their success?

A) Number of clients served
B) Number of endowments established
C) Double bottom line of program and financial results
D) Fundraising results

Question 32

Maxine is preparing a supplemental note explaining extenuating circumstances related to data reported in a statement of activities. Maxine is completing which type of financial statement?

A) Statement of cash flows
B) Notes to the financial statements
C) Statement of financial position
D) Statement of functional expenses

Question 33

An information technology specialist told a CEO that her organization's computer system needs to be upgraded. This is an example of:

A) managing fixed assets.
B) assessing long-term solvency.
C) a signal of financial distress.
D) illiquidity.

Question 34

The CEO of a nonprofit organization and his staff are preparing a flood evacuation plan. This is an example of:

A) budget development.
B) accounting.
C) organizing.
D) risk management.

Question 35

Bookkeeping includes the methods and systems by which financial transactions are recorded.

Question 36

Manny gave a nonprofit organization a $10,000 gift to be used to cover the implementation cost of a new program. This is an example of a(an):

A) permanent restriction.
B) trade benefit.
C) temporary restriction.
D) checking account.

Question 37

Physical assets serve the same purpose as operating reserves.

Question 38

Endowment funds are not intended to be spent-ever.

Question 39

Diverse sources of revenue such as earned income and philanthropic giving minimize risk and maximize autonomy for a nonprofit.

Question 40

The key in bookkeeping is making judgments and establishing policies to guide the organization's financial life.

Question 41

Distinguish the differences between operating reserves, quasi endowment funds, and permanently restricted endowment funds.

Question 42

Explain the distinction between physical assets and financial assets.

Question 43

Compare and contrast statements of financial position, statements of activities, statements of cash flows, and statements of functional expenses.

Question 44

Distinguish between the two types of accounting.

Question 45

Identify how the use-it-or-lose-it approach to annual budgets can contribute to needless spending?

Question 46

Three budgets a nonprofit should have include an operating budget, a capital budget, and a cash budget.

Question 47

Explore two types of endowments.

Question 48

Explain the Uniform Prudent Management of Institutional Funds Acts of 2006 and 2012.

Question 49

Depreciation refers to the difference between assets and liabilities.

Question 50

Explain the distinction between cost centers and profit centers.

Question 51

Examine the three separate budgets that most nonprofit organizations have, and determine what each budget tracks?