Question 1

Cash flows must be presented separately in the Statement of Cash Flows for the three classes (unrestricted, temporarily restricted and permanently restricted).

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 2

The AICPA Not-for-Profit Guide applies to both governmental and nongovernmental not-for-profit organizations.

Accepted Answer

False

Question 3

While many not-for-profit organizations use funds for internal purposes, the financial statements do not report separate funds.

Accepted Answer

Not-for-profit organizations do not report separate funds in their financial statements because they use funds for internal purposes.

Question 4

Expenditures, encumbrances and budgetary accounts are not used by not-for-profit organizations.

Accepted Answer

Expenditures, encumbrances, and budgetary accounts are used by not-for-profit organizations to track their financial activities.

Question 5

The FASB requires not-for-profit organizations to report individual assets and liabilities separated by unrestricted, temporarily restricted and permanently restricted.

Accepted Answer

The FASB requires not-for-profit organizations to report net assets in two categories: net assets with donor restrictions and net assets without donor restrictions, not individual assets and liabilities.

Question 6

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

Accepted Answer

The financial statements of not-for-profits are designed to provide information to donors and potential donors to help them assess the organization's financial health and how effectively it uses its resources.

Question 7

Revenues must be presented separately in the Statement of Activities for the three classes (unrestricted, temporarily restricted and permanently restricted).

Accepted Answer

This is a requirement of generally accepted accounting principles (GAAP) to show the restrictions on revenue and how they can be used.

Question 8

Voluntary health and welfare organizations promote the general health and well-being of the public.

Accepted Answer

Voluntary health and welfare organizations work towards promoting the general health and well-being of the public, through various programs, awareness campaigns, and initiatives. Examples of such organizations include American Heart Association, American Cancer Society, and United Way.

Question 9

Donated fixed assets that have not yet been depreciated may be recorded as either unrestricted or temporarily restricted.

Accepted Answer

Donated fixed assets that have not yet been depreciated may be recorded as either unrestricted or temporarily restricted, depending on the donor's instructions or intent. If the donor specifies restrictions on the use of the asset, it should be recorded as temporarily restricted. Otherwise, it may be recorded as unrestricted.

Question 10

The GASB has the authority to establish accounting and financial reporting standards for state and local governments and private sector not-for-profit organizations.

Accepted Answer

The answer of The GASB has the authority to establish...

Question 11

Net Assets must be presented separately in the Statement of Financial Position for the three classes (unrestricted, temporarily restricted and permanently restricted).

Accepted Answer

This is in accordance with Generally Accepted Accounting Principles (GAAP) and provides transparency about the restrictions placed on the organization's resources.

Question 12

Accounting practices of private sector not-for-profit organizations are influenced by two AICPA audit and accounting guides: Not-for-Profit Organizations and Health Card Organizations.

Accepted Answer

The two AICPA audit and accounting guides that influence accounting practices of private sector not-for-profit organizations are Not-for-Profit Organizations and Health Card Organizations.

Question 13

Not-for-profit organizations are required to present a Statement of Functional Expenses instead of a Statement of Cash Flows, as required of businesses.

Accepted Answer

Not-for-profit organizations are required to present both a Statement of Functional Expenses and a Statement of Cash Flows, not one instead of the other.

Question 14

Assets that are restricted by an organization's board can be reported as either temporarily restricted or permanently restricted, according to the board's intentions.

Accepted Answer

To be restricted, resources must be restricted by donors or grantors. Internally Board) designated resources are considered unrestricted.

Question 15

Country clubs and labor unions are not included in the category "other not-for-profit" organizations because they provide benefit to their members only and not to the general public.

Accepted Answer

Other not-for-profit organizations include cemetery associations, civic and fraternal organizations, labor unions, libraries, museums, other cultural institutions, performing arts organizations, political parties, private schools, professional and trade associations, social and country clubs, research and scientific organizations and religious organizations.

Question 16

Not-for-profit organizations are not required to record depreciation expense.

Accepted Answer

Not-for-profit organizations are required to record depreciation expense in their financial statements for their long-lived assets just like for-profit organizations.

Question 17

Expenses must be presented separately in the Statement of Activities for the three classes (unrestricted, temporarily restricted and permanently restricted).

Accepted Answer

The answer of Expenses must be presented separately in the...

Question 18

Conditional pledges should not be recognized as revenue until the conditions have been met.

Accepted Answer

Conditional pledges are promises of future donations that are contingent upon certain conditions being met, such as the completion of a project or the achievement of a certain goal. Because the fulfillment of these conditions is uncertain, conditional pledges should not be recognized as revenue until the conditions have been met or there is substantial evidence that they will be met in the future. This is in accordance with generally accepted accounting principles (GAAP).

Question 19

Contributions to be paid in future periods should be recorded at present value.

Accepted Answer

This is in accordance with the accrual accounting concept of recognizing revenues and expenses at the time they are incurred, regardless of when cash is actually received or paid. Present value is used to reflect the time value of money and to ensure that the financial statements provide a more accurate picture of the company's financial position.

Question 20

Examples of voluntary health and welfare organizations would include the Girl Scouts and the American Heart Association.

Accepted Answer

This is true. Voluntary health and welfare organizations are non-profit organizations that provide services to the community or specific groups of people, often through community service or educational programs. Examples of these types of organizations include the Girl Scouts, the American Heart Association, and the American Cancer Society.

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