Question 1

Not-for-profit organizations should have little to no profit.

Accepted Answer

Not-for-profit organizations can generate profit, but the profit must be reinvested into the organization's mission rather than distributed to owners or shareholders.

Question 2

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

Accepted Answer

According to the Generally Accepted Accounting Principles (GAAP), a Statement of Functional Expenses is required for Voluntary health and welfare organizations. This statement provides information about the organization's expenses by function, such as program expenses, management and general expenses, and fundraising expenses. It helps stakeholders understand how the organization is allocating its resources and carrying out its mission.

Question 3

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

Accepted Answer

FASB statement 116 requires contributions to be recorded as revenue when they are received, not when they are likely to be received.

Question 4

A Statement of Functional Expenses is required for tax agencies.

Accepted Answer

The answer of A Statement of Functional Expenses is required...

Question 5

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

Accepted Answer

FASB statement 116 requires contributions to be recorded as revenue when they are made, whether or not the money is actually received yet. This is known as the "conditional promise to give" concept.

Question 6

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

Accepted Answer

Performing arts organizations, such as theaters, orchestras, and dance companies, are typically not-for-profit organizations. They often rely on donations, grants, and fundraising to sustain their operations and fulfill their artistic mission.

Question 7

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

Accepted Answer

The Statement of Cash Flows for a not-for-profit organization typically has three classifications: operating activities, investing activities, and financing activities.

Question 8

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

Accepted Answer

FASB statement 116 requires that contributions be recognized as revenue when the contribution is promised, as long as it meets certain criteria. The criteria include that the contribution is unconditional, and that the organization has the ability to identify and access the contributed assets.

Question 9

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.).

Accepted Answer

The statement of functional expenses does indeed present a matrix of expenses classified by function and object/natural classification.

Question 10

A Statement of Functional Expenses which is required for voluntary health and welfare organizations, presents a matrix of expenses classified by function and by object or natural classification.

Accepted Answer

This statement is required for voluntary health and welfare organizations as per the Financial Accounting Standards Board (FASB). It presents a matrix of expenses classified by function (such as program expenses, management and general expenses, and fundraising expenses) and by object or natural classification (such as salaries and wages, rent, and supplies).

Question 11

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

Accepted Answer

The purchase of equipment for a not-for-profit organization would be considered an investing activity in the Statement of Cash Flows because it involves the acquisition of long-term assets that will be used in the organization's operations for several years. Cash inflows and outflows related to investing activities are reported separately from those related to operating and financing activities in the Statement of Cash Flows.

Question 12

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.

Accepted Answer

According to accounting standards, donated services should be recognized as revenue if they meet specific criteria, which include creating or enhancing a nonfinancial asset and requiring expertise that the organization would have otherwise had to purchase.

Question 13

With respect to the Statement of Cash Flows for a not-for-profit organization, donor restricted cash that must be used for long term purposes is classified as cash flows from financing activities.

Accepted Answer

Donor-restricted cash intended for long-term purposes is considered a financing activity because it involves funds that are restricted for specific uses, similar to how financing activities involve obtaining resources for long-term use.

Question 14

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

Accepted Answer

Private not-for-profit financial statements are primarily used by present and potential donors to evaluate the financial health and stability of an organization before making a donation. Other users may include board members, staff, and regulatory bodies.

Question 15

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

Accepted Answer

The three classifications of cash flows for a not-for-profit organization are operating activities, investing activities, and financing activities, just like for a for-profit organization. Therefore, the statement of cash flows for a not-for-profit organization does have three different classifications of cash flows.

Question 16

All donated services are recognized as revenue.

Accepted Answer

Donated services are not recognized as revenue as they do not have a direct monetary value. However, they may be disclosed in the notes to the financial statements.

Question 17

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

Accepted Answer

The Statement of Functional Expenses is a required financial statement for voluntary health and welfare organizations, as defined by the Financial Accounting Standards Board (FASB). This statement provides a detailed breakdown of an organization's expenses by function (such as program services or fundraising) and by nature (such as salaries or rent). It is intended to improve transparency and accountability in the reporting of nonprofit financial information.

Question 18

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

Accepted Answer

Voluntary health and welfare organizations are required to report a Statement of Functional Expenses that shows expenses by both function and natural classification.

Question 19

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

Accepted Answer

Both the direct and indirect methods are allowed for preparing the statement of cash flows for not-for-profit organizations, as per the Generally Accepted Accounting Principles (GAAP). However, the indirect method is more commonly used as it is simpler and less time-consuming.

Question 20

A Statement of Functional Expenses is required for state governments.

Accepted Answer