Question 1

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 2

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

Accepted Answer

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

Question 3

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.

Accepted Answer

The Statement of Cash Flows uses the standard FASB categories; operating, investing and financing. Restricted contributions or restricted investment proceeds that will be used for long-term purposes such as endowments or plant, are reported as financing activities.

Question 4

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.

Accepted Answer

FASB Statement 124, Accounting for Certain Investments of Not-for-Profit Organizations, requires that investments in equity securities with determinable fair values and investments in debt securities be carried at fair value.

Question 5

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

Accepted Answer

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 such as hospitals and colleges and universities.

Question 6

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

Accepted Answer

Conditional promises to give are not recognized as revenues until the conditions are met.

Question 7

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

Accepted Answer

Pledges or promises to contribute in the future are recorded as receivables. The contribution revenue is recorded at the time of the pledge, net of allowance for estimated uncollectibles.

Question 8

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.

Accepted Answer

The purchase of equipment would be an investing activity on the Statement of Cash Flows for a not-for-profit organization.

Question 9

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

Accepted Answer

Establishing working capital, retiring debt and expanding or replacing physical facilities and continuing a program beyond the period that the initial funding provided are all reasons why a private not-for-profit would want a surplus increase in net asset.

Question 10

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

Accepted Answer

FSB Statement 116 requires contributions, including unconditional promises to give, to be recorded as revenues when the promise is made.

Question 11

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

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 12

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

Accepted Answer

The Statement of Cash Flows uses the standard FASB categories; operating, investing and financing.

Question 13

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

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

Question 14

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

Accepted Answer

While the FASB has primary standard-setting authority, accounting practices of private sector not-for-profit organizations are influenced by two AICPA audit and accounting guides: Not-for-Profit Organizations Not For Profit Guide) and Health Care Organizations Health Care Guide.

Question 15

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

Accepted Answer

Not-for-profit organizations may use either the direct or indirect method to prepare the Statement of Cash Flows.

Question 16

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

Accepted Answer

Conditional promises to give are not recognized as revenues until the conditions are met.

Question 17

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

Accepted Answer

The Statement of Cash Flows uses the standard FASB categories; operating, investing and financing.

Question 18

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

Accepted Answer

Private 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

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

Accepted Answer

The financial statements of private not-for-profits are intended primarily for use by present and potential donors.

Question 20

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.

Accepted Answer

An intention to give is not the same an unconditional promise to give. No revenue would be recorded when the intention is made known.

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

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

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

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.

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.

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

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

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

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.

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

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

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

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

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..

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

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

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

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

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

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

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.