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| 1.
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For which of the following nonprofit organizations would FASB pronouncements be the primary source of generally accepted accounting principles? |
| | A) | St. Peter's Seminary |
| | B) | Lincoln County Hospital |
| | C) | Indiana State University |
| | D) | all of the above |
| | E) | none of the above |
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| 2.
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What FASB standards apply to a private not-for-profit organization? |
| | A) | The standards that FASB has written that apply specifically to not-for-profit entities |
| | B) | None — GAAP for private not-for-profit organizations come from various AICPA publications and audit guides |
| | C) | None — GAAP for private not-for-profit organizations come from GASB |
| | D) | All applicable FASB standards, including but not limited to those that were written specifically for not-for-profit entities |
| | E) | None of the above |
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| 3.
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Which of the following FASB standards apply to private not-for-profit organizations? |
| | A) | Standards about contingencies |
| | B) | Requirements for capital leases |
| | C) | Standards for pensions |
| | D) | Guidelines for compensated absences |
| | E) | All of the above |
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| 4.
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Which of the following is NOT one of the features that distinguishes a not-for-profit organization from a business: |
| | A) | A not-for-profit organization's purpose is not to provide goods and services at a profit |
| | B) | Significant resources are provided to not-for-profit organizations by those who do not expect a direct return |
| | C) | Financial reporting and management of resources are relatively unimportant in a not-for-profit organization |
| | D) | A not-for-profit organization does not have ownership interests |
| | E) | all of the above distinguish a not-for-profit from a business organization |
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| 5.
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Which of the following is NOT a voluntary health and welfare organization? |
| | A) | the American Cancer Society |
| | B) | Girl Scouts |
| | C) | a private high school |
| | D) | a senior citizen center |
| | E) | All of the above are voluntary health and welfare organizations. |
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| 6.
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Which of the following nongovernmental organizations would be considered an Other Not-for-Profit Organization? |
| | A) | a mental health care facility |
| | B) | the Democratic Party |
| | C) | the Girl Scouts |
| | D) | the American Cancer Society |
| | E) | all of the above |
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| 7.
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Which of the following is NOT an other not-for-profit organization? |
| | A) | A country club |
| | B) | a national scientific research fraternity |
| | C) | a church |
| | D) | an agricultural cooperative |
| | E) | all of the above are classified as other not-for-profit organizations |
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| 8.
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Which of the following would create a temporarily restricted net asset for a fraternity? |
| | A) | The officers designated $10,000 to be spent on new furniture in the following year |
| | B) | An alumnus donated $15,000 to be used for any purpose at any time the current members deemed appropriate |
| | C) | An alumnus donated $15,000 to be used for any purpose in the following year |
| | D) | both a and c create a temporarily restricted net asset |
| | E) | all of the above create temporarily restricted net assets |
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| 9.
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Which of the following is not one of the net assets classes for a not-for-profit organization? |
| | A) | Reserved |
| | B) | Permanently restricted |
| | C) | Unrestricted |
| | D) | Temporarily restricted |
| | E) | Both A and D |
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| 10.
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In March 2006, a local not-for-profit organization received a pledge from a donor for $10,000; the donor promised to pay the money to the organization in September 2006, to be used in providing reading programs for underprivileged children. The donor gave money to the organization in September 2006, and it was spent for reading programs in the first half of 2007. When should the revenue associated with this contribution be recognized? |
| | A) | In March 2006, when the pledge was received |
| | B) | In September 2006, when the cash was received |
| | C) | In the first half of 2007, when the money was spent for the appropriate purpose |
| | D) | Either A or B, depending on the policies of the organization's board of directors |
| | E) | None of the above; this transaction does not involve revenue. |
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| 11.
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In March 2006, a local not-for-profit organization received a pledge from a donor for $10,000; the donor promised to pay the money to the organization in September 2006, to be used in providing reading programs for underprivileged children. The donor gave money to the organization in September 2006, and it was spent for reading programs in the first half of 2007. When should the reclassification from temporarily restricted to unrestricted net assets be recorded? |
| | A) | In March 2006, when the pledge was received |
| | B) | In September 2006, when the cash was received |
| | C) | In the first half of 2007, when the money was spent for the appropriate purpose |
| | D) | Either B or C, depending on the policies of the organization's board of directors |
| | E) | None of the above; this transaction does not involve revenue. |
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| 12.
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In March 2006, a local not-for-profit organization received a pledge from a donor for $10,000; the donor promised to pay the money to the organization in September 2006, to be used for any organizational purpose. The donor gave money to the organization in September 2006, and it was spent for reading programs in the first half of 2007. When should the reclassification from temporarily restricted to unrestricted net assets be recorded? |
| | A) | In March 2006, when the pledge was received |
| | B) | In September 2006, when the cash was received |
| | C) | In the first half of 2007, when the money was spent for the appropriate purpose |
| | D) | Either B or C, depending on the policies of the organization's board of directors |
| | E) | None of the above; this transaction does not involve revenue. |
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| 13.
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Donor-imposed restrictions on resources may be for |
| | A) | purpose |
| | B) | time |
| | C) | debt reduction |
| | D) | plant acquisition |
| | E) | Answers A, B, and D |
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| 14.
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In March 2006, Mike Winslow promised to give $10,000 to a local not-for-profit organization, provided the organization could raise another $25,000 to be used in caring for abandoned and neglected pets. The organization raised the $25,000 by November 2006, and Winslow gave the $10,000 in December 2006. The $10,000 was used for the indicated purpose in the first half of 2007. When should the organization recognize the revenue for this gift? |
| | A) | In March 2006 |
| | B) | In November 2006 |
| | C) | In the first half of 2007, when the money was spent for the indicated purpose |
| | D) | either A or B, in accordance with organizational policy |
| | E) | None of the above |
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| 15.
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Reclassifications from temporarily restricted to unrestricted net assets are recorded |
| | A) | for satisfaction of program restrictions |
| | B) | for satisfaction of plant acquisition restrictions |
| | C) | for satisfaction of time restrictions |
| | D) | Answers A, B, and C are correct |
| | E) | when an organization satisfies a condition related to a conditional gift |
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| 16.
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Which of the following is NOT true about the Statement of Financial Position? |
| | A) | Assets and liabilities must be listed either in order of liquidity or classified as current and noncurrent. |
| | B) | Assets and liabilities must be classified as temporarily restricted, permanently restricted, and unrestricted. |
| | C) | Net assets must be classified as temporarily restricted, permanently restricted, and unrestricted. |
| | D) | It is required for both voluntary health and welfare organizations and other not-for-profit organizations |
| | E) | all of the above are true |
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| 17.
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Which of the following is true about the Statement of Cash Flows for a not-for-profit organization? |
| | A) | Investment proceeds that are restricted for long-term purposes are classified as investing activities. |
| | B) | The direct method is required. |
| | C) | Contributions that are restricted for long-term purposes are reported as financing activities. |
| | D) | Unlike the FASB model for the private sector, the Statement of Cash Flows for not-for-profit organizations has four major categories rather than three. |
| | E) | none of the above is true |
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| 18.
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Which of the following is NOT true about expense reporting for a not-for-profit organization? |
| | A) | All expenses are reported as decreases in unrestricted net assets |
| | B) | All not-for-profit organizations must present a Statement of Functional Expenses. |
| | C) | A Statement of Functional Expenses shows expenses classified in two ways: by object and by function. |
| | D) | Expenses are reported on the accrual basis |
| | E) | all of the above are true |
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| 19.
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Mr. Cain has promised to donate $1,000,000 to the American Cancer Society if a cure for pancreatic cancer is discovered. The American Cancer Society should consider this contribution: |
| | A) | temporarily restricted and record it at the time the promise is made. |
| | B) | permanently restricted and record it at the time the promise is made. |
| | C) | unrestricted and record it at the time the promise is made. |
| | D) | conditional and record it at the time the promise is made. |
| | E) | conditional and record it only if /when the cure is discovered. |
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| 20.
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A donor has promised to give $10,000 per year for the next ten years to the Boy Scouts of America. The first year's contribution has been received and there is no question about the collectibility of the remainder. Which of the following statements is true? |
| | A) | This gift should be recorded as unrestricted over the ten-year period at the amount of $10,000 per year. |
| | B) | This gift should be recorded at $100,000 when the promise is made; $10,000 should be recorded as unrestricted and $90,000 should be recorded as temporarily restricted. |
| | C) | This gift should be recorded at its present value as an unrestricted contribution. |
| | D) | This gift should be recorded at its present value; the $10,000 received in cash would be reported as unrestricted and the remainder of the present value should be reported as temporarily restricted. |
| | E) | none of the above |
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| 21.
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Which of the following would be a program expense for a private not-for-profit center for the blind? |
| | A) | ophthalmologists' fees |
| | B) | accounting fees |
| | C) | volunteer readers |
| | D) | cost of a mailing that primarily solicits donations |
| | E) | all of the above |
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| 22.
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Stephens Foundation, a private not-for-profit organization, owns a small building that it uses for its office. Which of the following is true with respect to the building? |
| | A) | It must be classified as unrestricted |
| | B) | It must be classified as temporarily restricted. |
| | C) | It should be classified as unrestricted if the Foundation purchased the building; it should be classified as temporarily restricted if the building was donated. |
| | D) | It should be classified as permanently restricted because it is a permanent structure. |
| | E) | none of the above |
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| 23.
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On December 13, 2006, Fox Historical Society (a calendar year not-for-profit organization) received a donation of $6,000 in cash from a member. The member stipulated that the entire amount be spent on a new computer system during the following year. On January 24, 2007, the Society spent $6,000 to purchase a computer system. Which of the following is true about this situation? |
| | A) | No entries should be recorded in 2006. |
| | B) | The donation of cash in 2006 may be recognized as temporarily restricted or unrestricted. |
| | C) | The computer system need not be depreciated unless the Society chooses to record it as temporarily restricted. |
| | D) | If the computer system is recorded as temporarily restricted, an amount equal to annual depreciation should be reclassified to unrestricted each year during the useful life of the computer. |
| | E) | The depreciation on the computer system should be classified as a restricted expense because the asset was purchased with restricted funds. |
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| 24.
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A plumber repaired a broken water line at a homeless shelter; when finished, he told the director of the shelter that he would not charge for the work. After he got off work that day, he returned to help the shelter staff clean up the water in the basement. Impressed by the shelter staff's mission and dedication, the plumber returned on several occasions to help other volunteers build an addition to the shelter. The plumber was not paid for any of these activities. For purposes of recording contributed services, the homeless shelter should record at fair market value: |
| | A) | the repair of the water line |
| | B) | the clean-up |
| | C) | the construction of the shelter |
| | D) | both A and C |
| | E) | all of the above |
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| 25.
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What activities by a not-for-profit organization are considered supporting activities? |
| | A) | Reduction in the organization's liabilities |
| | B) | Management and general |
| | C) | Fund raising |
| | D) | Membership development |
| | E) | B, C, and D are all correct |
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| 26.
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Which of the following is recorded by a voluntary health and welfare organization? |
| | A) | Reclassifications of net assets |
| | B) | Estimated Revenues |
| | C) | Expenditures |
| | D) | Encumbrances |
| | E) | All of the above |
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| 27.
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Which of the following is true about a not-for-profit organization's investments? |
| | A) | Investments in equity securities with determinable fair values should be carried at fair value. |
| | B) | Investments in debt securities should be carried at the lower of cost or market. |
| | C) | Unrealized gains and losses on investments should be reported separately from realized gains and losses. |
| | D) | Investment gains and losses are all considered unrestricted. |
| | E) | all of the above are true |
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| 28.
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Which of the following would appropriately be recorded as a revenue (contribution or otherwise) to a not-for-profit health club in 2006? The club's year end is December 31. |
| | A) | $600 received on December 15, 2006, for an annual membership in 2007 |
| | B) | A promise made by a contributor on December 1 to donate $5,000 in 2006; there will be no other stipulations associated with the donation, and collectibility is not a concern |
| | C) | A cash donation of $1,000 made on December 20; the donor specified that the amount could not be spent until January of 2007 |
| | D) | both B and C |
| | E) | all of the above |
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| 29.
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During 2003, Ms. Rose contributed $20,000 to the United Way campaign for 2003. When she made the contribution, she designated that $15,000 should go to Lighthouse Youth Services, Inc. She did not designate the remaining $5,000. How should this contribution be reflected on the financial statements of United Way in 2003? |
| | A) | $20,000 should be recorded as an unrestricted contribution. |
| | B) | $15,000 should be recorded as a temporarily restricted contribution and $5,000 should be recorded as an unrestricted contribution |
| | C) | $5,000 should be recorded as an unrestricted contribution and $15,000 should be recorded as a liability. |
| | D) | $20,000 should be recorded as a liability |
| | E) | $5,000 should be recorded as a temporarily restricted contribution and $15,000 should be recorded as a permanently restricted contribution |
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| 30.
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A private not-for-profit art museum made an adjusting entry at year end, reclassifying $15,000 from temporarily restricted net assets to unrestricted net assets. Which of the following is a likely explanation for this entry? |
| | A) | to record expiration of plant acquisition restrictions |
| | B) | to record expiration of time restrictions |
| | C) | to record expiration of program restrictions |
| | D) | any of the above |
| | E) | B and C only |
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| 31.
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Which of the following is true about fixed assets for a not-for-profit organization? |
| | A) | All fixed assets should be recorded |
| | B) | All fixed assets except collections and land should be depreciated |
| | C) | Under the modified approach, the organization can choose not to depreciate fixed assets |
| | D) | Both A and B |
| | E) | A, B, and C |
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| 32.
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Which of the following is true about a not-for-profit organization? |
| | A) | It should make every effort to increase net assets each year. |
| | B) | Its Statement of Financial Position should not reflect a surplus as its objective is not to generate profits. |
| | C) | It may need to accumulate a surplus in order to retire debt or expand operations. |
| | D) | Change in net assets is a valuable performance indicator, comparable to net income in a profit-seeking organization. |
| | E) | none of the above is true |
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| 33.
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Which of the following is the financial measure of greatest interest in evaluating a not-for-profit organization? |
| | A) | Change in net assets |
| | B) | Program service expenses divided by total expenses |
| | C) | Current ratio |
| | D) | Program revenues divided by total revenues |
| | E) | Unrestricted net assets divided by total net assets |
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| 34.
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The Humanitarian Society had the following activities in 2007: Fund drive conducted by a company called "We Do Fundraisers," which charged the Society 10% of collections for its services. Collections were $500,000; Aid projects in economically deprived neighborhoods that cost $300,000; An audit of 2006 financial statements, for which the CPA firm charged $1,000 (market value of $2,500). At what amount would supporting services be shown on the statement of functional expenses? |
| | A) | $352,500 |
| | B) | $302,500 |
| | C) | $ 52,500 |
| | D) | $ 51,500 |
| | E) | $ 51,000 |
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