Deck 16: Nonprofit Organizations

Question 1

Contributed services to professional associations generally are recognized as revenues by the associations.

Answer 1

False

Question 2

The accounting period in which pledged revenues are recognized is dependent on donor specifications.

Answer 2

True

Question 3

Fund-raising costs expected to benefit future accounting periods are deferred by nonprofit organizations.

Answer 3

False

Question 4

Collections are a type of nonexhaustible plant assets of nonprofit organizations.

Question 5

The modified accrual basis of accounting used by some funds of a governmental entity is appropriate for some funds of a nonprofit organization.

Question 6

The Designated Fund Balance ledger account of a nonprofit organization's unrestricted fund is similar to a retained earnings appropriation account of a business corporation.

Question 7

A life income fund of a nonprofit organization resembles a sinking fund for the retirement of debt of a business enterprise.

Question 8

A quasi-endowment fund may be expended by a nonprofit organization after either the passage of a period of time or the occurrence of an event specified by the donor of the endowment principal.

Question 9

The provision for doubtful loans of a university's student loan fund is debited to the Doubtful Loans Expense ledger account.

Question 10

Assets of the unrestricted fund of a nonprofit organization may be transferred to a restricted fund by the organization's board of directors.

Question 11

Fund accounting is inappropriate for a nonprofit hospital.

Question 12

Contributed material is recognized as revenues by a nonprofit organization's unrestricted fund.

Question 13

If a university waives tuition charges for children of its faculty and staff, no revenues are recognized.

Question 14

Depreciation expense is recognized by nonprofit organizations.

Question 15

Assets of a nonprofit organization's restricted funds are derived from the operations of the organization.

Question 16

The principal of term endowment funds may be expended by a nonprofit organization after the passage of a period of time or the occurrence of an event.

Question 17

Payments to the beneficiary of a nonprofit organization's life income fund are fixed in amount.

Question 18

The issuance of a statement of activities is appropriate for nonprofit organizations.

Question 19

A gift to a nonprofit hospital that is not restricted by the donor is credited in the hospital's general fund to:

A) Fund Balance
B) Deferred Revenues
C) Contributions Revenues
D) Nonoperating Revenues

Question 20

Which of the following funds of a nonprofit organization makes periodic payments of a fixed amount at equal intervals.

A) Annuity fund
B) Agency fund
C) Endowment fund
D) Restricted fund

Question 21

An annuity fund of a nonprofit organization is most similar to the organization's:

A) Endowment fund
B) Restricted fund
C) Agency fund
D) Life income fund

Question 22

The current fair value of contributed material is recognized in a nonprofit organization's unrestricted fund with a debit to Inventories and a credit to:

A) Undesignated Fund Balance
B) Payable to Restricted Fund
C) Designated Fund Balance-Merchandise
D) Contributions Revenues
E) Some other ledger account

Question 23

Are tuition remissions for which there is no intention of collection from the student recognized by a nonprofit university as:

A)
B)
C)
D)

Question 24

Which of the following is not a source of resources of a nonprofit organization's restricted fund?

A) Operations of the nonprofit organization
B) Contributions of individuals or governmental entities
C) Gains on disposals of investments
D) Revenues from endowments

Question 25

One-half of the tuition of classes taken by spouses of Colby College faculty members is remitted (waived) by Colby. In the journal entry for tuition for a four-unit course for a professor's spouse, with tuition at $210 a unit, Tuition Revenues is credited for:

A) $0 (credit Remission Revenue)
B) $420
C) $840
D) Some other amount

Question 26

The type of endowment fund for which the principal may be expended after the occurrence of an event specified by the donor of the principal is:

A) A pure endowment fund
B) A quasi-endowment fund
C) An expendable endowment fund
D) None of the foregoing

Question 27

Any restrictions on gifts, grants, or bequests received by nonprofit organizations are imposed by:

A) State laws
B) Governing boards
C) Donors
D) "Nonprofit Organizations"

Question 28

Are unpaid amounts of conditional pledges that may be revoked by a nonprofit organization recognized as expense when:

A)
B)
C)
D)

Question 29

The difference between a nonprofit organization's annuity funds and life income funds is:

A) The nature of the Fund Balance ledger account
B) The fixed versus variable amount of payments to recipients
C) The status of each fund in the organization's investment pool
D) Some other difference

Question 30

One characteristic of nonprofit organizations that is comparable with characteristics of governmental entities is:

A) Stewardship of resources
B) Governance by board of directors
C) Measurement of cost expirations
D) None of the foregoing

Question 31

A nonprofit organization's restricted fund typically is established in Rationale to:

A) A resolution of the organization's board of trustees
B) A mandate of a governmental agency
C) Provisions of a contribution to the organization
D) Some other transaction or event

Question 32

Prepare journal entries (omit explanations) for the following transactions or events of the General Fund and Anna Waters Restricted Fund of Modem Hospital (a nonprofit organization) during January, 2006.

Question 33

On July 1, 2006, the Unrestricted Fund, Restricted Fund, and Endowment Fund of Urban Health Organization, a nonprofit organization, pooled their investments, as follows:
During the month of July, 2006, the Urban Health Organization investment pool, managed by the Unrestricted Fund, received interest and dividends revenue totaling $64,000.
Prepare journal entries dated July 31, 2006, in the three funds of Urban Health Organization to record receipt of the interest and dividends revenue. Omit explanations, but identify the fund in which each journal entry is recorded.

Question 34

The Student Loan Fund of Dorris College had the following transactions and events during the month of September, 2006.
(1) Disbursed new loans totaling $400,000.
(2) Received payments of $120,000 on loans receivable, including $4,000 interest.
(3) Wrote off uncollectible loans totaling $30,000.
(4) Estimated a required increase of $40,000 in the Allowance for Doubtful Loans ledger account balance on September 30, 2006.
(5) Computed accrued interest of $8,000 on loans receivable on September 30, 2006.
Prepare journal entries for the Dorris College Student Loan Fund to record the foregoing transactions and events. Omit explanations.

Question 35

Martha Randall, audit manager of the CPA firm Alan West & Company, is conducting a staff training program on accounting and auditing of nonprofit organizations. During the program, staff assistant Milton Rogers questions the feasibility of the Financial Accounting Standards Board's establishing accounting standards for all nonprofit organizations. "Given the wide variety of nonprofit organizations, from cemetery organizations to zoological societies,"
says Rogers, "it seems unfeasible to believe that one set of standards would fit all such organizations."
What should be Martha Randall's (or another training program participant's) Rationale to Milton Rogers? Explain.