Question 1

For a permanent endowment created by a cash donation received this year, $2,000 of this year's $7,000 investment loss could be reported as decreasing TR net assets if $2,000 of the investment dividend income has not yet been spent in the donor's designated manner.

Accepted Answer

Investment losses can decrease temporarily restricted net assets if the losses are covered by unspent investment income that was temporarily restricted by the donor.

Question 2

_____ On 5/5/05, a donor contributed an equity security having a $500,000 fair value. The donor stipulated that (a) the NPO may sell the equity security at any time and make other suitable investments, (b) the $500,000 endowment must remain intact in perpetuity, and (c) the income and gains may be spent only on diabetes research (no mention is made regarding the treatment of losses). The equity security had a fair value of $530,000 at 12/31/05. (No dividends were received in 2005.) Which of the following categories of net assets is impacted at 12/31/05?

Accepted Answer

The increase in fair value of the equity security from $500,000 to $530,000 represents an unrealized gain of $30,000. Since the donor stipulated that the original endowment of $500,000 must remain intact in perpetuity and only the income and gains may be spent on diabetes research, this gain increases temporarily restricted (TR) net assets. Temporarily restricted net assets are those that are subject to donor-imposed stipulations that will be met by the actions of the nonprofit organization and/or the passage of time. In this case, the gain is restricted for diabetes research until it is spent for that purpose.

Question 3

_____ On 5/5/05, a donor contributed an equity security having a $500,000 fair value. The donor stipulated that (a) the NPO may sell the equity security at any time and make other suitable investments, (b) the $500,000 endowment must remain intact in perpetuity, and (c) the income and gains may be spent only on diabetes research (no mention is made regarding the treatment of losses). The equity security had a fair value of $530,000 at 12/31/05 and $480,000 at 12/31/06. (No dividends were received in either year.) In early 2006, a portion of the equity security was sold for $30,000 cash. The NPO spent $22,000 cash on diabetes research in 2006. What is the change in the various categories of net assets for 2006 as a result of the decline in the equity security's market value in 2006?

Accepted Answer

The decline in the equity security's market value in 2006 results in a decrease in TR net assets by $50,000 (the amount of the decline) and a decrease in UR net assets by $8,000 (the amount of the decline that is not offset by the sale of a portion of the equity security).

Question 4

_____ On 5/5/05, a donor contributed an equity security having a $500,000 fair value. The donor stipulated that (a) the NPO may sell the equity security at any time and make other suitable investments, (b) the $500,000 endowment must remain intact in perpetuity, and (c) the income and gains may be spent only on diabetes research (no mention is made regarding the treatment of losses). (No dividends were received in any year.) In early 2006, a portion of the equity security was sold for $30,000 cash. The NPO spent $22,000 cash on diabetes research in 2006. The equity security had a fair value of $530,000 at 12/31/05, $480,000 at 12/31/06, and $555,000 at 12/31/07. What is the change in the various categories of net assets for 2007 as a result of the increase in the equity security's market value in 2007?

Accepted Answer

The increase in fair value from $480,000 to $555,000 is $75,000. Since the endowment must remain intact, the increase is split between the unrestricted (UR) and temporarily restricted (TR) net assets. The UR net assets increase by $12,000 (the amount spent on research), and the remaining $63,000 increase is in TR net assets.

Question 5

In general, public HCOs are reported as either a(n) ______________________ of a primary governmental unit or a(n) ____________________________ of the primary governmental unit.

Accepted Answer

The answer of In general, public HCOs are reported as...

Question 6

When a public HCO is a component unit of the primary governmental unit, its financial statements are included in the general-purpose financial statements prepared by the primary governmental unit in a(n) ___________________________ manner (shown in separate, identified columns) or a(n) _________________________ manner (not shown in separate, identified columns).

Accepted Answer

The answer of When a public HCO is a component...

Question 7

The operating statement of a public HCO is called a statement of _____________________. (The operating statement of a private, for-profit HCO is called a statement of ____________________.)

Accepted Answer

The answer of The operating statement of a public HCO...

Question 8

For public HCOs, the two categories of financing presented in a statement of cash flows are (a) cash flows from ________________________________ financing activities and (b) cash flows from ___________________________ financing activities.

Accepted Answer

The answer of For public HCOs, the two categories of...

Question 9

Public C&Us must follow the guidance in GAS 34 that pertains to _________________________________________.

Accepted Answer

The answer of Public C&Us must follow the guidance in...

Question 10

Under GAS 34, the two sets of guidance that exist for public C&Us to follow are public C&Us engaged in (1) ____________________________________ and (2) __________________________________________.

Accepted Answer

The answer of Under GAS 34, the two sets of...

Question 11

For public C&Us engaged only in business-type activities, its operating statement consists of the following four categories: (1) _____________________________, (2) ___________________________, (3) _____________________________. and (4) ___________________________.

Accepted Answer

The answer of For public C&Us engaged only in business-type...

Question 12

For public C&Us, the two kinds of appropriations that exist are ________________________ and ___________________________.

Accepted Answer

The answer of For public C&Us, the two kinds of...

Question 13

For public C&Us engaged only in business-type activities, the net assets section of the statement of net assets consists of the following three categories: (1) ____________________________________, (2) ___________________________________, and (3) __________________________________.

Accepted Answer

The answer of For public C&Us engaged only in business-type...

Question 14

For public C&Us engaged only in business-type activities, the restricted net assets section of the statement of net assets is broken down as to __________________________ and _____________________________.

Accepted Answer

The answer of For public C&Us engaged only in business-type...

Question 15

For public C&Us engaged only in business-type activities, the three items that are reported as separate line items following the nonoperating revenues (expenses) section of the operating statement are (1) _______________________, (2) _________________________, and (3) ______________________________.

Accepted Answer

The answer of For public C&Us engaged only in business-type...

Question 16

For public C&Us engaged only in business-type activities, the statement of cash flows consists of the following four categories (1) ________________________activities, (2) ____________________________ activities, (3), ____________________________ activities, and (4) ___________________________ activities.

Accepted Answer

The answer of For public C&Us engaged only in business-type...

Question 17

Public NPOs may elect to follow either solely FASB guidance or solely GASB guidance.

Accepted Answer

Public NPOs (Non-Profit Organizations) must follow FASB (Financial Accounting Standards Board) guidance, while GASB (Governmental Accounting Standards Board) guidance is for governmental entities. They cannot choose solely between the two but must adhere to the standards applicable to their organization type.

Question 18

Public NPOs are required to follow all private-sector standards issued on or before 11/30/89.

Accepted Answer

The answer of Public NPOs are required to follow all...

Question 19

Public NPOs are required to follow all private-sector standards issued after 11/30/89.

Accepted Answer

Public NPOs are not required to follow all private-sector standards issued after November 30, 1989. They may follow guidance applicable to similar entities or issues or authoritative guidance issued by the AICPA.

Question 20

Public NPOs may elect to follow all private-sector standards issued after 11/30/89.

Accepted Answer

Public Non-Profit Organizations (NPOs) have the option to adopt all private-sector standards issued after November 30, 1989, as an alternative to following the public sector standards, allowing them flexibility in their accounting practices.

Quiz 26: Not-For-Profit Organizations: Introduction and Private Npos

For a permanent endowment created by a cash donation received this year, $2,000 of this year's $7,000 investment loss could be reported as decreasing TR net assets if $2,000 of the investment dividend income has not yet been spent in the donor's designated manner.

In general, public HCOs are reported as either a(n) of a primary governmental unit or a(n) ______ of the primary governmental unit.

The operating statement of a public HCO is called a statement of _. (The operating statement of a private, for-profit HCO is called a statement of .)

For public HCOs, the two categories of financing presented in a statement of cash flows are (a) cash flows from ______ financing activities and (b) cash flows from _ financing activities.

Public C&Us must follow the guidance in GAS 34 that pertains to _________________________________________.

Under GAS 34, the two sets of guidance that exist for public C&Us to follow are public C&Us engaged in (1) and (2) ______.

For public C&Us engaged only in business-type activities, its operating statement consists of the following four categories: (1) _______________, (2) _, (3) _. and (4) ___________.

For public C&Us, the two kinds of appropriations that exist are and ___.

For public C&Us engaged only in business-type activities, the net assets section of the statement of net assets consists of the following three categories: (1) __________________, (2) _, and (3) __________________.

For public C&Us engaged only in business-type activities, the restricted net assets section of the statement of net assets is broken down as to and ___.

For public C&Us engaged only in business-type activities, the three items that are reported as separate line items following the nonoperating revenues (expenses) section of the operating statement are (1) ___________, (2) _, and (3) __________________.

For public C&Us engaged only in business-type activities, the statement of cash flows consists of the following four categories (1) activities, (2) activities, (3), activities, and (4) ___ activities.

Public NPOs may elect to follow either solely FASB guidance or solely GASB guidance.

Public NPOs are required to follow all private-sector standards issued on or before 11/30/89.

Public NPOs are required to follow all private-sector standards issued after 11/30/89.

Public NPOs may elect to follow all private-sector standards issued after 11/30/89.