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

Question 1

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

Answer 1

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

Question 2

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

Answer 2

False
Explanation: The FASB has standard-setting authority over business organizations and private not-for-profit organizations. The GASB has standard-setting authority over state and local governments, including governmentally related not-for-profit organizations.

Question 3

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

Answer 3

True
Explanation: Many private not-for-profit organizations use funds for internal purposes. The financial statements for a not for profit do not include the reporting of separate funds.

Question 4

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 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

Currently, FASB standards assure that not-for-profit financial statements are relatively standardized across industries.

Question 12

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

Question 13

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

Question 14

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

Question 15

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 16

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

Question 17

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 18

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

Question 19

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

Question 20

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 21

Donated services should be considered revenue if the service creates or enhances a nonfinancial asset or requires a specialized skill which would have had to be purchased if not donated.

Question 22

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

Question 23

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 24

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 25

All contributed services are recognized as revenue.

Question 26

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 27

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

Question 28

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

Question 29

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

Question 30

Net Assets must be presented separately in the Statement of Activities for the three classes unrestricted, restricted, and net investment in capital assets).

Question 31

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

Question 32

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 33

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 34

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

Question 35

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

Question 36

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

Question 37

Private not-for-profit organizations record depreciation expense.

Question 38

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

Question 39

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

Question 40

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

Question 41

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

Question 42

Private not-for-profits must follow all applicable FASB standards in recording transactions plus specific standards set forth by the FASAB.

Question 43

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 44

FASB Statement 124, Accounting for Certain Investments of Not-for-Profit Organizations, require that investments in equity securities with readily determinable values be reported at fair value.

Question 45

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

Question 46

FASB standards require conditional promises to give to be recorded as revenue at the time the condition is satisfied.

Question 47

FASB standards require contributions to be recorded as revenue when the contributed money is actually received.

Question 48

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 49

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

Question 50

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

Question 51

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

Question 52

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

Question 53

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 54

The AICPA has published two audit and accounting guides: Not-for-Profit Organizations Not-for-Profit Guide) and Health Care Entities Health Care Guide).

Question 55

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

Question 56

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

Question 57

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

Question 58

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

Question 59

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

Question 60

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 61

All not-for-profits must follow FASB standards so not-for-profit ?financial statements are similar across industries.

Question 62

FASB Statement 164 Not-for-Profit Entities: Mergers and Acquisitions requires mergers and acquisitions to be recorded using the carryover method.

Question 63

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 & Modified Accrual.
D) FASB & Accrual.

Question 64

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 65

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 66

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

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

Question 67

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) Public School District.

Question 68

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

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

Question 69

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 the pledge is made.
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 70

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) Unrestricted, temporarily restricted and Permanently restricted.
C) Net investment in capital assets, Restricted, and Unrestricted.
D) Partially Restricted, Temporarily Restricted, Unrestricted.

Question 71

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 72

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 73

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 74

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.

Question 75

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 76

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

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

Question 77

The financial reporting system for private not-for-profits must address the fact that donors often impose restrictions on the use of contributed resources.

Question 78

The AICPA has primary standard-setting authority over private not-for-profit organizations.

Question 79

The activities of private not-for-profits are commonly financed through voluntary contributions.

Question 80

The program expense ratio is a measure of the efficiency of a not-for-profit in utilizing resources to fulfill its mission, rather than for fund-raising and administration.