Question 1

Golden Path, a labor union, had the following receipts and expenses for the year ended
December 31, 20X8:
The union's constitution provides that 12 percent of the per capita dues be designated for the strike insurance fund to be distributed for strike relief at the discretion of the union's executive board.
 
-Based on the information provided,in Golden Path's statement of activities for the year ended December 31,20X8,what amount should be reported under the classification of revenue from unrestricted funds?

Accepted Answer

The correct amount of $1,100,000 should be reported under the classification of revenue from unrestricted funds based on the information provided.

Question 2

The statement of cash flows for a private not-for-profit performing arts center should report cash flows according to which of the following classifications?

Accepted Answer

The statement of cash flows for a private not-for-profit performing arts center should report cash flows according to three main classifications: operating activities, investing activities, and financing activities. Operating activities include the cash inflows and outflows related to the center's main revenue-generating activities, such as ticket sales and concessions. Investing activities include the cash inflows and outflows related to the purchase and sale of long-term assets, such as buildings and equipment. Financing activities include the cash inflows and outflows related to borrowing, repayments of loans, and fundraising activities.

Question 3

Golden Path, a labor union, had the following receipts and expenses for the year ended
December 31, 20X8:
The union's constitution provides that 12 percent of the per capita dues be designated for the strike insurance fund to be distributed for strike relief at the discretion of the union's executive board.
 
-Based on the information provided,in Golden Path's statement of activities for the year ended December 31,20X8,what amount should be reported under the classification of supporting services?

Accepted Answer

The receipts of $1,600,000 consist of $1,200,000 in membership dues and $400,000 in investment income. 
The expenses of $1,720,000 consist of $1,200,000 in program services, $230,400 in management and general expenses, and $289,600 in supporting services. 
From the per capita dues of $1,200,000 x 12% = $144,000 is designated for the strike insurance fund, which is a supporting service. Therefore, the correct amount to be reported under the classification of supporting services is $289,600 - $144,000 = $145,600. 
Therefore, the best choice is C.

Question 4

Local Services, a voluntary health and welfare organization had the following classes of net assets on July 1, 20X8, the beginning of its fiscal year:
During the year ended June 30, 20X9, the following events occurred:
(1) It purchased equipment, costing $100,000, with contributions restricted for this purpose. The contributions had been received from donors during June of 20X8.
(2) It received $130,000 of cash donations which were restricted for research activities. During the year ended June 30, 20X9, $90,000 of the contributions were expended on research.
(3) It sold investments classified in the permanently restricted class for a loss of $40,000. Dividends and interest income earned on the investments amounted to $70,000. There were no restrictions on how investment income was to be used.
(4) It received cash contributions of $200,000 from donors who did not place either time or use restrictions upon their donations.
(5) Expenses, excluding depreciation expense, for program services and supporting services incurred during the year ended June 30, 20X9, amounted to $260,000.
(6) Depreciation expense for the year ended June 30, 20X9, was $80,000.
 
-Refer to the above information.At June 30,20X9,the amount of permanently restricted net assets reported on the statement of financial position would be:

Accepted Answer

The answer of Local Services, a voluntary health and welfare...

Question 5

A voluntary health and welfare organization received $200,000 of pledges from donors on February 15,20X9.The donors did not place either time or use restrictions on the amount pledged.The governing board estimated that 10 percent of the pledges would be uncollectible.During the remainder of fiscal 20X9,cash received from pledges amounted to $184,000.For the year ended June 30,20X9,what amount should the voluntary health and welfare organization report as Contributions-Unrestricted?

Accepted Answer

The organization received $200,000 of pledges, but 10% is estimated to be uncollectible, so the total amount of recognized pledges is $180,000 ($200,000 x 0.9 = $180,000). Cash received from pledges during the year was $184,000, but not all of it may have been for pledges made in February 2019, so it cannot all be recognized as contributions. Therefore, the organization should report $180,000 as Contributions-Unrestricted for the year ended June 30, 20X9.

Question 6

ASC 958 requires that an "other not-for-profit entity" (ONPO)provide three financial statements.Which of the following is NOT one among them?

Accepted Answer

A statement of functional expenses is not required by ASC 958 for ONPOs.

Question 7

In accordance with ASC 958,pledges,which are temporarily restricted by donors,are reported as increases in temporarily restricted net assets on the statement of activities of a voluntary health and welfare organization when the

Accepted Answer

Under ASC 958, pledges that are temporarily restricted by donors are recognized as increases in temporarily restricted net assets when the pledges are made by the donors, as this is when the organization has a right to the resources.

Question 8

Local Services, a voluntary health and welfare organization had the following classes of net assets on July 1, 20X8, the beginning of its fiscal year:
During the year ended June 30, 20X9, the following events occurred:
(1) It purchased equipment, costing $100,000, with contributions restricted for this purpose. The contributions had been received from donors during June of 20X8.
(2) It received $130,000 of cash donations which were restricted for research activities. During the year ended June 30, 20X9, $90,000 of the contributions were expended on research.
(3) It sold investments classified in the permanently restricted class for a loss of $40,000. Dividends and interest income earned on the investments amounted to $70,000. There were no restrictions on how investment income was to be used.
(4) It received cash contributions of $200,000 from donors who did not place either time or use restrictions upon their donations.
(5) Expenses, excluding depreciation expense, for program services and supporting services incurred during the year ended June 30, 20X9, amounted to $260,000.
(6) Depreciation expense for the year ended June 30, 20X9, was $80,000.
 
-Refer to the above information.On the statement of activities for the year ended June 30,20X9,reclassifications would be reported at

Accepted Answer

The answer of Local Services, a voluntary health and welfare...

Question 9

Local Services, a voluntary health and welfare organization had the following classes of net assets on July 1, 20X8, the beginning of its fiscal year:
During the year ended June 30, 20X9, the following events occurred:
(1) It purchased equipment, costing $100,000, with contributions restricted for this purpose. The contributions had been received from donors during June of 20X8.
(2) It received $130,000 of cash donations which were restricted for research activities. During the year ended June 30, 20X9, $90,000 of the contributions were expended on research.
(3) It sold investments classified in the permanently restricted class for a loss of $40,000. Dividends and interest income earned on the investments amounted to $70,000. There were no restrictions on how investment income was to be used.
(4) It received cash contributions of $200,000 from donors who did not place either time or use restrictions upon their donations.
(5) Expenses, excluding depreciation expense, for program services and supporting services incurred during the year ended June 30, 20X9, amounted to $260,000.
(6) Depreciation expense for the year ended June 30, 20X9, was $80,000.
 
-Refer to the above information.On the statement of activities for the year ended June 30,20X9,temporarily restricted net assets:

Accepted Answer

The answer of Local Services, a voluntary health and welfare...

Question 10

Golden Path, a labor union, had the following receipts and expenses for the year ended
December 31, 20X8:
The union's constitution provides that 12 percent of the per capita dues be designated for the strike insurance fund to be distributed for strike relief at the discretion of the union's executive board.
 
-Based on the information provided,in Golden Path's statement of activities for the year ended December 31,20X8,what amounts should be reported under the classifications of temporarily and permanently restricted net assets?

Accepted Answer

The answer of Golden Path, a labor union, had the...

Question 11

On the statement of functional expenses prepared for a voluntary health and welfare organization,depreciation expense is allocated to
I.expenses for program services.
II.expenses for supporting services.

Accepted Answer

Depreciation expense is allocated to both program services and supporting services in a voluntary health and welfare organization's statement of functional expenses. This allocation reflects the use of assets in both direct program activities and activities that support these programs, such as management and fundraising.

Question 12

A voluntary health and welfare organization developed and printed informational materials which were intended to both educate the public about how its resources are used to help people in need and to also appeal to the public for much needed support.In this situation,the cost of the informational materials should be

Accepted Answer

The cost of the informational materials should be allocated between expenses for program services and fundraising expense as it serves both purposes, educating the public about the organization's services and appealing for much-needed support. Allocating it to only fundraising expense would not accurately reflect the purpose of the materials, while allocating it solely to program services would not accurately reflect the cost of fundraising. Accounting for it as management and general expense would also not be appropriate as the materials directly relate to the organization's mission and fundraising efforts.

Question 13

A voluntary health and welfare organization reports pledges receivable on its statement of financial position at the present value of the future cash collections.How is the increase in the present value of the pledges receivable,which is due to the passage of time,reported on the voluntary health and welfare organization's statement of activities?

Accepted Answer

The answer of A voluntary health and welfare organization reports...

Question 14

Which of the following transactions of a private voluntary health and welfare organization would increase temporarily restricted net assets in the statement of activities for the current year?

Accepted Answer

The answer of Which of the following transactions of a...

Question 15

A voluntary health and welfare organization received unrestricted cash donations of $20,000 from donors who attended a dinner held for the benefit of the organization.The costs of the dinner,including room rental,and other expenses,amounted to $7,000.On the statement of activities prepared for the voluntary health and welfare organization,the expenses of the dinner should be:

Accepted Answer

The costs of the dinner are considered fund raising costs because the purpose of the dinner was to raise funds for the organization. They should be reported separately from programmatic and management and general expenses and should not be netted against the contribution revenue.

Question 16

Private Not-For-Profit (NFP) Entities.
Select from this list of terms to answer the following questions.
Indicate your choice by entering the letter corresponding to the correct term. A term may be used more than once or not at all.
-"Responsible for establishing accounting standards for private NFP entities" describes which term listed above?

Accepted Answer

The Financial Accounting Standards Board (FASB) is responsible for establishing accounting standards for private NFP entities. The Governmental Accounting Standards Board (GASB) is responsible for establishing accounting standards for state and local governments.

Question 17

Golden Path, a labor union, had the following receipts and expenses for the year ended
December 31, 20X8:
The union's constitution provides that 12 percent of the per capita dues be designated for the strike insurance fund to be distributed for strike relief at the discretion of the union's executive board.
 
-Based on the information provided,in Golden Path's statement of activities for the year ended December 31,20X8,what amount should be reported under the classification of program services?

Accepted Answer

The answer of Golden Path, a labor union, had the...

Question 18

Home Care,Inc.(Home Care),a nongovernmental voluntary health and welfare organization,received two contributions in 20X3.One contribution of $250,000 was restricted for use as general support in 20X4.The other contribution of $200,000 carried no donor restrictions.What amount should Home Care report as temporarily restricted contributions in its 20X3 statement of activities?

Accepted Answer

Home Care should report $250,000 as temporarily restricted contributions in its 20X3 statement of activities because the first contribution of $250,000 is restricted for use in the following year, 20X4. The second contribution of $200,000 carries no donor restrictions and should be reported as unrestricted contributions. Therefore, Home Care has no temporarily restricted contributions related to the $200,000 contribution.

Question 19

Reporting requirements of other not-for-profit entities (ONPOs)are similar to those of which of the following entities?

Accepted Answer

The reporting requirements of ONPOs are similar to those of voluntary health and welfare organizations, as both are considered to be private not-for-profit organizations. Public universities, enterprise funds of state or local governments, and hospitals operated by county governments are all considered to be governmental entities and have different reporting requirements than ONPOs.

Question 20

Local Services, a voluntary health and welfare organization had the following classes of net assets on July 1, 20X8, the beginning of its fiscal year:
During the year ended June 30, 20X9, the following events occurred:
(1) It purchased equipment, costing $100,000, with contributions restricted for this purpose. The contributions had been received from donors during June of 20X8.
(2) It received $130,000 of cash donations which were restricted for research activities. During the year ended June 30, 20X9, $90,000 of the contributions were expended on research.
(3) It sold investments classified in the permanently restricted class for a loss of $40,000. Dividends and interest income earned on the investments amounted to $70,000. There were no restrictions on how investment income was to be used.
(4) It received cash contributions of $200,000 from donors who did not place either time or use restrictions upon their donations.
(5) Expenses, excluding depreciation expense, for program services and supporting services incurred during the year ended June 30, 20X9, amounted to $260,000.
(6) Depreciation expense for the year ended June 30, 20X9, was $80,000.
 
-Refer to the above information.Which of the following statements is (are)correct about the program and supporting expenses that would be reported on the statement of activities for the year ended June 30,20X9?
I.Program and supporting expenses should be reported at $340,000.
II.All of the program and supporting expenses should be reported as a deduction from unrestricted revenues and other support.

Accepted Answer

Program and supporting expenses should be reported at $340,000 and should be deducted from unrestricted revenues and other support on the statement of activities.

Quiz 19: Not-For-Profit Entities

The statement of cash flows for a private not-for-profit performing arts center should report cash flows according to which of the following classifications?

ASC 958 requires that an "other not-for-profit entity" (ONPO) provide three financial statements.Which of the following is NOT one among them?

In accordance with ASC 958,pledges,which are temporarily restricted by donors,are reported as increases in temporarily restricted net assets on the statement of activities of a voluntary health and welfare organization when the

On the statement of functional expenses prepared for a voluntary health and welfare organization,depreciation expense is allocated to I.expenses for program services. II.expenses for supporting services.

Which of the following transactions of a private voluntary health and welfare organization would increase temporarily restricted net assets in the statement of activities for the current year?

Reporting requirements of other not-for-profit entities (ONPOs) are similar to those of which of the following entities?