Advanced Accounting - Final Exam
A nongovernmental not-for-profit animal shelter receives contributed services from the following individuals valued at their normal billing rate: Veterinarian provides volunteer animal care $8,000 Board members volunteer to prepare books for audit 4,500 Registered nurse volunteers as receptionist 3,000 Teacher provides volunteer dog walking 2,000 What amount should the shelter record as contribution revenue? (AICPA 2010) A. $8,000 B. $11,000 C. $12,500 D. $14,500
C. $12,500
A nongovernmental, not-for-profit organization received the following donations of corporate stock during the year: Donation 1 Donation 2 Number of shares 2,000 3,000 Adjusted basis $8,000 $5,500 Fair market value at time of donation $8,500 $6,000 Fair market value at year end $10,000 $4,000 What net value of investments will the organization report at the end of the year? (AICPA 2010) A. $12,000 B. $13,500 C. $14,000 D. $14,500
C. $14,000
Azim Services, a nongovernmental, not-for-profit organization, received dues of $100 from its members. Azim provided its members with a newsletter that had a $25 value. All other services were valued at $10 per member. What is the amount of contribution made to Azim by each member? (AICPA 2020) A. $10 B. $25 C. $65 D. $100
C. $65
In the current year a nongovernmental, not-for-profit entity incurred $630,000 in expenditures exclusive of in-kind and other nonmonetary activity during the year. It also received donated legal services, which otherwise would have cost $40,000, and consumed donated supplies with a value of $15,000. What should the entity report as total expenses in its statement of activities for the current year? (AICPA 2022) A. $630,000 B. $645,000 C. $685,000 D. $670,000
C. $685,000
Changes to existing authoritative GAAP for nonissuer, nongovernmental entities are communicated by the Financial Accounting Standards Board through the issuance of: (AICPA 2020) A. Exposure Drafts. B. Concept Statements. C. Accounting Standards Updates. D. Statements of Financial Accounting Standards.
C. Accounting Standards Updates.
Gridiron University is a private university. A successful alumnus has recently donated $1,000,000 to Gridiron for the purpose of funding a "center for the study of sports ethics." This donation is conditional upon the university raising matching funds within the next 12 months. The university administrators estimate that they have a 50% chance of raising the additional money. How should this donation be accounted for? (AICPA 2009) A. As a temporarily restricted support. B. As unrestricted support. C. As a refundable advance. D. As a memorandum entry reported in the footnotes.
C. As a refundable advance.
Which of the following financial categories are used in a nongovernmental not-for-profit organization's statement of financial position? (AICPA 2012) A. Net assets, income, and expenses. B. Income, expenses, and unrestricted net assets. C. Assets, liabilities, and net assets. D. Changes in unrestricted, temporarily restricted, and permanently restricted net assets.
C. Assets, liabilities, and net assets.
In Year 1, a donor promised to give $100,000 to a nongovernmental, not-for-profit kitchen if it provides 20,000 meals by March 31, Year 2. At the end of Year 1, the kitchen had provided 20,000 meals. In which line item, if any, should the contribution be reported in the kitchen's statement of financial position at the end of Year 1? (AICPA 2022) A. Cash. B. Deferred revenue. C. Contributions receivable. D. The contribution should not be reported in the statement of financial position.
C. Contributions receivable.
Sokro, a nongovernmental not-for-profit organization, uses the indirect method to prepare its statement of cash flows. In determining its net cash provided (used) by operating activities, Sokro must add back which of the following to the change in net assets? (AICPA 2019) A. Purchase of equipment. B. Payment on long-term debt. C. Depreciation. D. Decrease in accounts payable.
C. Depreciation.
How should a nongovernmental, not-for-profit organization report donor-restricted cash contributions for long-term-purposes in its statement of cash flows? (AICPA 2008) A. Operating activity inflow. B. Investing activity inflow. C. Financing activity inflow. D. As a noncash transaction.
C. Financing activity inflow.
At which of the following amounts should a nongovernmental not-for-profit organization report investments in debt securities? (AICPA 2013) A. Potential proceeds from liquidation sale. B. Discounted expected future cash flows. C. Quoted market prices. D. Historical cost.
C. Quoted market prices.
Whitestone, a nongovernmental not-for-profit organization, received a contribution in December, Year 1. The donor restricted use of the contribution until March, Year 2. How should Whitestone record the contribution? (AICPA 2010) A. Footnote the contribution in Year 1 and record as revenue when it becomes available in Year 2. B. No entry required in Year 1 and record as revenue in Year 2 when it becomes available. C. Report as revenue in Year 1. D. Report as deferred revenue in Year 1.
C. Report as revenue in Year 1.
When should a conditional pledge to a nongovernmental not-for-profit organization be recognized as revenue? (AICPA 2017) A. Immediately. B. When the cash is received. C. When the pledge conditions are met. D. At the beginning of the next fiscal period.
C. When the pledge conditions are met.
Box, a nongovernmental not-for-profit organization, had the following transactions during the year: •Proceeds from sale of investments $80,000 •Purchase of property, plant and equipment $10,000 •Proceeds from long-term debt $100,000 •Loss on sale of investment $5,000 What amount should be reported as net cash provided by financing activities in Box's statement of cash flows? (AICPA 2019) A. $70,000 B. $75,000 C. $80,000 D. $100,000
D. $100,000
Chris donated securities with a cost of $20,000 and a fair market value of $50,000 to a local civic theater. Chris's tax deduction was limited to $35,000. At what amount should the theater record the securities at the date of donation? (AICPA 2018) A. $0 B. $20,000 C. $35,000 D. $50,000
D. $50,000
During the current fiscal year, Foxx, a nongovernmental not-for-profit organization, received unrestricted pledges of $300,000. Of the pledged amount, $200,000 was designated by donors for use during the current year, and $100,000 was designated for next year. Five percent of the pledges are expected to be uncollectible. What amount should Foxx report as restricted support (contributions) in the statement of activities for the current year? (AICPA 2009) A. $200,000 B. $190,000 C. $100,000 D. $95,000
D. $95,000
A not-for-profit organization is exempt from reporting which of the following contributed services as revenue? (AICPA 2018) A. A CPA prepares the organization's tax return. B. A special education teacher tutors children with learning disabilities. C. A carpenter builds shelves for the office. D. An attorney solicits contributions on behalf of the organization.
D. An attorney solicits contributions on behalf of the organization.
At what value should a nongovernmental not-for-profit organization record shares of stock when received? (AICPA 2019) A. Donor's basis. B. Average of donor's basis and fair value on date of donation. C. Fair value at end-of-year. D. Fair value on the date of donation.
D. Fair value on the date of donation.
Kind Nurses Assoc. is a voluntary health and welfare organization. Nurses are paid to visit homes of elderly people and are reimbursed for mileage and supplies. Which of the following items should Kind record as a support activity expense in its statement of functional expense? (AICPA 2017) A. Nurses' mileage expense. B. Payment for nurses' employee benefits. C. Payment for nurses' supplies. D. Fundraising costs.
D. Fundraising costs.
A nongovernmental not-for-profit organization's statement of activities is similar to which of the following for-profit financial statements? (AICPA 2009) A. Balance sheet. B. Statement of cash flows. C. Statement of retained earnings. D. Income statement.
D. Income statement.
AB is a private not-for-profit entity. It acquires YZ, another private not-for-profit entity. The acquisition value is $1 million. YZ has net assets with a book value of $600,000 but a fair value of $700,000. Officials for AB expect that YZ will be predominantly supported by contributions in the future. After the acquisition, what amount of goodwill will be reported on the combined balance sheet? a) $0 b) $100,000 c) $300,000 d) $400,000
a) $0
BC and OP are both private not-for-profit entities. They are combined to create LM, a private not-for-profit with an entirely new board of directors. BC has land with a book value of $300,000 and a fair value of $400,000. OP has land with a book value of $500,000 and a fair value of $550,000. After LM has been formed, what is reported for land? a) $800,000 b) $850,000 c) $900,000 d) $950,000
a) $800,000
Belwood College is a private not-for-profit institution that has tax-exempt status. Which of the following is most likely to be the specific tax-exempt status that Belwood College holds? a) 501(c)(3) b) 501(c)(4) c) 501(c)(5) d 501(c)(6)
a) 501(c)(3)
Which of these forms must most tax-exempt organizations file annually with the IRS? a) 990 b) 1203 c) 501 d) 501(c)(3)
a) 990
The Stanton Company conveys $23,000 in cash to a private not-for-profit entity. The money must be used for a designated purpose. This conveyance is viewed as a conditional contribution. Which of the following is recorded by the private not-for-profit entity? a) A liability b) No journal entry is made c) Contributed revenue reported within net assets with donor restrictions d) Contributed revenue reported within net assets without donor restrictions
a) A liability
Which of the following statements about the reporting of functional expenses is not true? a) A statement of functional expenses is now required of all private not-for-profit entities b) Functional expenses are divided between program services and supporting Services c) Functional expenses can be reported as a footnote rather than as a separate statement of functional expenses d) Functional expenses can be reported within the statement of activities rather than as a separate statement of functional expenses
a) A statement of functional expenses is now required of all private not-for-profit entities
George H. Ruth takes a leave of absence from his job to work full-time for a voluntary health and welfare entity for six months. Ruth fills the position of finance director, a position that normally pays $88,000 per year. Ruth accepts no remuneration for his work. How should this donated services be recorded? a) As contribution revenue of $44,000 and salary expense of $44,000 b) No entries should be made because no cash was paid or received c) As a contribution revenue of $44,000 only d) As a deferred revenue of $44,000
a) As contribution revenue of $44,000 and salary expense of $44,000
The Financial reporting for private not-for-profit entities primarily focuses on: a) Basic information for the organization as a whole b) Standardization of the fund information that is reported c) Inherent differences of various not-for-profit entities that impact reporting presentations d) Distinctions between current fund and non-current fund Presentations
a) Basic information for the organization as a whole
In Year 6, a donor gives $112,000 to a private not-for-profit entity to enable it to buy a new bus for transportation purposes. Near the end of Year 7, this money is used for the stipulated purpose. The donor made no provisions about the accounting for this acquisition. Which of the following is true about the statement of activities for Year 7? a) Net assets without donor restrictions increased by $112,000 b) Net assets with donor restrictions did not change c) Net assets without donor restrictions did not change d) Net assets with donor restrictions goes up by $112,000 and also down by $112,000
a) Net assets without donor restrictions increased by $112,000
A private not-for-profit entity has the following expenses for the current year. Research to cure disease $60,000 Fundraising costs $70,000 Work to help individuals with disabilities $40,000 Administrative salaries $ 90,000 How should the not-for-profit entity report these costs? a) Program services expenses of $100,000 and supporting services expenses of $160,000 b) Program service expenses of $160,000 and supporting service expenses of $100,000 c) Program service expense of $170,000 and supporting service expenses of $90,000 d) Program service expenses of $190,000 and supporting service expenses of $70,000
a) Program service expense of $100,000 and supporting service expense of $160,000
Southwest is a private not-for-profit entity. It acquires Northeast, another private not-for-profit. The acquisition value is $980,000. Northeast has two assets (and no liabilities): equipment with a net book value of $120,000 but a fair value of $150,000 and a building with a net book value of $500,000 but a fair value of $800,000. Northeast expects to receive some support through donations and contributions. However, it is not expected to be predominantly supported by contributions and investment income. After the combination, what should be reported for goodwill? a) $0 b) $30,000 c) $60,000 d) $360,000
b) $30,000
Pel Museum is a private not-for-profit entity. If it receives a contribution of historical artifacts, it need not report the contribution if the artifacts are to be sold and it will use the proceeds to a) Support general museum activities b) Acquire other items for the museum's collections c) Increase the size of the museum d) Pay for the salaries of museum officials
b) Acquire other items for the museum's collections
Why is a private not-for-profit entity more likely to use the direct method of reporting operating activity cash flows than a for-profit business would be? a) The direct method is the traditional approach for private not-for-profit entities b) An indirect method reconciliation does not have to be included as it does with for-profit entities c) The indirect method does not conform as easily with a private not-for-profit entity and its operations d) The direct method is likely to show a more positive amount of operating activity cash inflows
b) An indirect method reconciliation does not have to be included as it does with for-profit entities
Which of the following is not true about the application of new revenue recognition rules to private not-for-profit health care entities? a) Revenues are likely to be much lower than under previous rules b) Bad debts will be recorded as direct reductions to revenue rather than as a separate expense c) A portfolio approach can be used rather than having to record on a contract-by-contract basis d) Variable consideration can be reported by either the expected amount method or the most likely outcome method
b) Bad debts will be recorded as direct reductions to revenue rather than as a separate expense
A private not-for-profit university charges student tuition of $1 million for the current year. Financial aid grants total $220,000. The school also receives a $100,000 grant restricted for faculty salaries. Of that amount, $30,000 is spent appropriately this year. In preparing a statement of activities, which of the following is not true? a) Net assets without donor restrictions should show an increase of $30,000 for net assets reclassified b) Net assets without donor restrictions should report revenue of $1 million c) Net assets without donor restrictions should report expenses of $30,000 d) Net assets without donor restrictions should report a direct reduction of $220,000 in reporting the tuition revenue
b) Net assets without donor restrictions should report revenue of $1 million
The Houston Corporation signs a formal pledge to give $100,000 in cash to a private not-for-profit entity within the next year. The money must be spent to upgrade important equipment used by the charity. The pledge is judged to be a conditional contribution. Which of the following is recorded by the private not-for-profit entity for this pledge? a) A liability b) No Journal entry is made c) Contributed Revenue reported within net assets with donor restrictions d) Contributed revenue reported within net assets without donor restrictions
b) No journal entry is made
A private not-for-profit entity sends a mailing to all of its current and former members regardless of whether they have ever donated money or not. The mailing has a total cost of $22,000. It asks for monetary contributions to help achieve the charity's stated mission. In addition, 80% of the mailed material is educational in nature, providing information about the entity's goals. Which of the following is true? a) Some part of the $22,000 should be reported as a program service cost because of the educational materials included b) No part of the $22,000 should be reported as a program service cost because there is no specific call to action c) No part of the $22,000 should be reported as a program service cost because the mailing was sent to both current and former members regardless of their donation history d) Some part of the $22,000 should be reported as a program service cost because more than 50% of the material was educational in nature.
b) No part of the $22,000 should be reported as a program service cost because there is no specific call to action
What are the three types of restricted net assets? a) Current, non-current, structural b) Purpose, time, permanent c) Immediate, longer than one year, longer than five years d) Monetary, non-monetary, leveraged
b) Purpose, time, permanent
A private not-for-profit entity receives a gift of new furniture from a retail department store. The furniture has a fair value of $2,100. The entity holds the furniture for several weeks. After a flood, the entity gives the furniture to several needy families. How should the NFP entity record these conveyances? a) No entries are required b) Record contribution revenue of $2,100 and community assistance expense of $2,100 c) Record only a community assistance expense of $2,100 d) Record only a contributed revenue of $2,100
b) Record contribution revenue of $2,100 and community assistance expense of $2,100
The Peyton Corporation conveys $60,000 in cash to a private not-for-profit entity. It is viewed as a conditional contribution. Which of the following is most likely to be true about this donation? a) It has been restricted for use in a future period of time b) The agreement requires the NFP to overcome a barrier or it must return the money to Peyton c) Peyton requires the money the be held permanently with all subsequent income to be used to feed poor families d) Peyton expects to receive a return from the private NFP fo commensurate value
b) The agreement requires the NFP to overcome a barrier or it must return the money to Peyton
A donor gives charity One $50,000 in cash with the instructions to convey the money to charity two. According to the agreement, the donor can reconsider and revoke the gift at any time prior to its transfer to Charity Two. Which of the following statements is true? a) Charity One should report a contribution revenue b) The donor continues to report an asset even after the money is given to Charity One c) As soon as the money is conveyed to Charity One, Charity Two should recognize contribution revenue d) As soon as the money is conveyed to Charity One, Charity Two should recognize an asset
b) The donor continues to report an asset even after the money is given to Charity One
Which of the following are unique to the reporting of revenue by a health care entity? a) Charity care must be reported even if the entity does not anticipate seeking collection b) The patients pay for little of the services, and significant discounts are common c) Reported bad debt expenses will increase significantly under new rules d) Standard charges are recorded as the revenues and receivables balances
b) The patients pay for little of the services, and significant discounts are common
Mike Jones spends five days in a local private not-for-profit hospital. The hospital charges him $170,000 for the services. His insurance company has contracts with the hospital that will lower the amount that has to be paid. The hospital believes it has a 60% chance that the reduction will be $70,000 and a 40% chance that the reduction will be $100,000. The hospital applies the expected amount method to variable consideration. What amount of revenue should be reported? a) $0 b) $70,000 c) $88,000 d) $100,000
c) $88,000
A private not-for-profit entity has the following activities performed by volunteers who work at no charge. In which case should no contribution be reported? a) A carpenter builds a porch on the back of one building so that patients can sit outside b) An accountant does the organization's financial reporting c) A local librarian comes each day to read the newspaper to the patients d) A computer expert repairs the organization's computer
c) A local librarian comes each day to read the newspaper to the patients
The governing board of a private not-for-profit entity votes to set $400,000 in cash aside in an investment fund so that this money and future interest will be available in five years, when a new building is scheduled for construction. Which of the following is not true? a) The investments are reported on the statement of financial position as net assets without donor restrictions b) The acquisition of the investments is not reported on the statement of activities c) Board-designated funds will appear in the net asset section of the statement of financial position as net assets with donor restrictions d) Income earned by these investments appears on the statement of activities under net assets without donor restrictions
c) Board-designated funds will appear in the net asset section of the statement of financial position as net assets with donor restrictions
A private not-for-profit entity receives $32,000 in cash from solicitations made in the local community. The charity receives an additional $1,500 from members in payment of their annual dues. These members receive benefits of commensurate value to the amount paid as dues. How should these receipts be reported? a) Exchange revenues of $33,500 b) Contribution revenue of $33,500 c) Contribution revenue of $32,000 and exchange revenues of $1,500 d) Contribution revenues of $16,750 and exchange revenues of $16,750
c) Contribution revenue of $32,000 and exchange revenue of $1,500
In year 6, a donor gives $112,000 to a private not-for-profit entity to enable it to pay the salary of a new doctor to be hired by the organization. Near the end of Year 7, this money is used for the stipulated purpose. Which of the following is true about the statement of activities for Year 7? a) Net assets with donor restrictions increased by $112,000 b) Net assets with donor restrictions did not change c) Net assets without donor restrictions goes up by $112,000 and also down by $112,000 d) Net assets with donor restrictions goes up by $112,000 and also down by $112,000
c) Net assets without donor restrictions goes up by $112,000 and also down by $112,000
A local private not-for-profit entity receives a large monetary pledge. Accountants are attempting to determine if the contribution is conditional. They are assessing the possible existence of a barrier that has to be overcome. Which of the following is not an indication of a barrier of this type? a) Measurable performance related barrier b) Stipulation limiting discretion by the recipient on the conduct of an activity c) Requirement preventing the money from being spent until a specific date in the future d) Stipulation that ties into the agreement
c) Requirement preventing the money from being spent until a specific date in the future
A statement of activities shows account balances in two separate columns. How are these columns labeled? a) Current and non-current b) Temporary and permanent c) Without donor restrictions and with donor restrictions d) Monetary, non-monetary, leveraged
c) Without donor restrictions and with donor restrictions
A group of high school seniors perform volunteer services for patents at a nearby assisted-living facility, a private not-for-profit entity. The assisted living facility would not otherwise provide these services such as wheeling patients in the park or calling games of bingo. At a minimum-wage rate, these student would be paid $21,320, but the actual value is estimated to be $27,400. In the assisted-living facility's statement of activities, what amount should be reported as contribution revenue? a) $27,400 b) $21,320 c) $6,080 d) $0
d) $0
Shirley Ngo spends four days in a local private not-for-profit hospital. The hospital charges her $140,000 for the services. Her insurance company contracts with the hospital that will lower the amount that has to be paid. The hospital believes it has a 70% chance that the reduction will be $40,000 and a 30% chance that the reduction will be $80,000. The hospital applies the most likely outcome method to variable consideration. What amount of revenue should be reported? a) $0 b) $60,000 c) $88,000 d) $100,000
d) $100,000
A private not-for-profit entity receives three large cash donations: - One gift of $70,000 is restricted by the donor so that it cannot be spent for four years - One gifts of $90,000 is restricted to pay the salaries of the entity's workers - One gift of $120,000 must be held forever with the income to be used to provide food for needy families. In the current year, income of $10,000 was earned by not spent. What is the increase in the current year in net assets with donor restrictions? a) $190,000 b) $210,000 c) $280,000 d) $290,000
d) $290,000
Charity A and Charity B are affiliated entities. An accountant for Charity B is paid $10,000 per month, which is equal to the fair value of the services rendered. The accountant for Charity A quits. The accountant from Charity B is sent to work with Charity A for two months. Charity A pays nothing for this service. What journals entry is recorded for this work? a) No Journal entry is made b) An asset is debited for $20,000 and contribution revenue (within net assets without donor restrictions) is credited c) An asset is debited for $20,000 and contribution revenue (within net assets with donor restrictions) is credited d) An expense is debited for $20,000 and contribution revenue (within net assets without donor restrictions) is credited
d) An expense is debited for $20,000 and contribution revenue (within net assets without donor restrictions) is credited
The Jones family lost its home in a fire during December 2020. On December 25, 2020, a philanthropist sent money to the Amer Benevolent Society, a private not-for-profit entity, specifically to be conveyed to the Jones family to help them recover. The money was conveyed in January 2021. How should Amer report the receipt of this money in its 2020 financial statements? a) As net assets without donor restrictions b) As net assets with donor restrictions c) As board-designated funds d) As a liability
d) As a liability
A health care entity provides services to a patient. Those services have a standard charge of $76,000. The insurance company that represents the patient has a contract with the entity that leads to a $20,000 reduction in that charge. That reduction is referred to by which of the following labels? a) Standard legal hospital abatement amount b) Implicit price concession c) Discounted health care monitoring fee d) Explicit price concession
d) Explicit price concession
A private not-for-profit entity spends $100,000 to send a mailing that solicits donations and provides educational and other information about the charity. Which of the following is true? a) No part of the $100,000 can be reported as a program service expense b) Some part of the $100,000 must be reported as a program service expense c) No authoritative guidance exists, so the entity can allocate the cost as it believes best d) Under certain circumstances, the entity should allocate a portion of the $100,000 to program service expenses
d) Under certain circumstances, the entity should allocate a portion of the $100,000 to program service expenses
A nongovernmental not-for-profit college has a portfolio of bond investments that had an original cost of $2,000,000. The college's board of trustees voted to hold the principal of this fund intact in perpetuity and designated the earnings to reimburse faculty for travel to academic conferences. During the year, interest of $50,000 was earned in cash. The fair value of the bonds was $1,980,000. What amount should the college report as permanently restricted net assets at year end? (AICPA 2015) A. $0 B. $1,980,000 C. $2,000,000 D. $2,030,000
A. $0
Arc Hospital received an unconditional pledge for $1 million, which will be paid in four installments of $250,000 over four years. What amount of installment pledge revenue should be recognized in the second year? (AICPA 2021) A. $0 B. $250,000 C. $500,000 D. $1,000,000
A. $0
The Turtle Society, a nongovernmental not-for-profit organization, receives numerous contributed hours from volunteers during its busy season. Chris, a clerk at the local tax collector's office, volunteered ten hours per week for 24 weeks transferring turtle food from the port to the turtle shelter. His rate of pay at the tax office is $10 per hour, and the prevailing wage rate for laborers is $6.50 per hour. What amount of contribution revenue should Turtle Society record for this service? (AICPA 2007) A. $0 B. $840 C. $1,560 D. $2,400
A. $0
Ragg Coalition, a nongovernmental not-for-profit organization, received a gift of treasury bills. The cost to the donor was $20,000, with an additional $500 for brokerage fees that were paid by the donor prior to the transfer of the treasury bills. The treasury bills had a fair value of $15,000 at the time of the transfer. At what amount should Ragg report the treasury bills in its statement of financial position? (AICPA 2012) A. $15,000 B. $15,500 C. $20,000 D. $20,500
A. $15,000
On January 1, Read, a nongovernmental not-for-profit organization, received $20,000 and an unconditional pledge of $20,000 for each of the next four calendar years to be paid on the first day of each year. The present value of an ordinary annuity for four years at a constant interest rate of 8% is 3.312. What amount of restricted net assets is reported in the year the pledge was received? (AICPA 2012) A. $66,240 B. $80,000 C. $86,240 D. $100,000
A. $66,240
A storm damaged the roof of a nongovernmental, not-for-profit organization's building. A professional roofer repaired the roof at no charge. How should the roof repairs be recognized in the statement of activities? (AICPA 2015) A. As an increase in expenses and an increase in contributions from donated services. B. As an increase in the building account and an increase in unrestricted net assets. C. As an increase in fixed assets and an increase in contributions from donated services. D. No recognition is required in the financial statements, but a note disclosure is required.
A. As an increase in expenses and an increase in contributions from donated services.
The Cats and Dogs League was organized as a nongovernmental not-for-profit organization. The League received a pledge of $10,000 to be used to build an addition to the kennel. This donation will not be received for three years. How should this pledge be recorded? (AICPA 2016) A. As temporarily restricted support of the present value of $10,000. B. As temporarily restricted support of $10,000. C. As a conditional promise to give of $10,000. D. It should not be accounted for until it is received
A. As temporarily restricted support of the present value of $10,000.
A statement of activities prepared by a nongovernmental not-for-profit organization is most similar to which of the following financial statements prepared by a for-profit entity? (AICPA 2021) A. Income statement B. Balance sheet C. Statement of cash flows D. Statement of changes in stockholders' equity
A. Income statement
Belle, a nongovernmental not-for-profit organization, received funds during its annual campaign that were specifically pledged by the donor to another nongovernmental not-for-profit health organization. How should Belle record these funds? (AICPA 2012) A. Increase in assets and increase in liabilities. B. Increase in assets and increase in revenue. C. Increase in assets and increase in deferred revenue. D. Decrease in assets and decrease in fund balance.
A. Increase in assets and increase in liabilities.
Hann School, a nongovernmental not-for-profit organization, spent $1 million of temporarily restricted cash to acquire land and building. How should this be reported in the statement of activities? (AICPA 2008) A. Increase in unrestricted net assets. B. Increase in temporarily restricted net assets. C. Increase in permanently restricted net assets. D. Decrease in permanently restricted net assets.
A. Increase in unrestricted net assets.
Which of the following comprise functional expense categories for a nongovernmental not-for profit organization? (AICPA 2008) A. Program services, management and general, and fund-raising. B. Membership dues, fund-raising, and management and general. C. Grant expenses, program services, and membership development. D. Membership development, professional fees, and program services.
A. Program services, management and general, and fund-raising.
What is the appropriate characterization of the net assets of a nongovernmental not-for-profit organization? (AICPA 2017) A. Residual interest. B. Ownership interest. C. Donor's interest. D. Equity interest.
A. Residual interest.
The primary purpose of a not-for-profit organization's statement of activities is to provide relevant information to its (AICPA 2019) A. Resource providers. B. Managers. C. Beneficiaries. D. State regulatory body.
A. Resource providers.
Nongovernmental not-for-profit organizations are required to provide which of the following external financial statements? (AICPA 2011) A. Statement of financial position, statement of activities, statement of cash flows B. Statement of financial position, statement of comprehensive income, statement of cash flows C. Statement of comprehensive income, statement of cash flows, statement of gains and losses D. Statement of cash flows, statement of comprehensive income, statement of unrelated business income
A. Statement of financial position, statement of activities, statement of cash flows
Which of the following financial statements would provide information about the ongoing revenues and expenses associated with a voluntary health and welfare organization? (AICPA 2017) A. The statement of activities. B. The statement of cash flows. C. The statement of functional expenses. D. The statement of financial position.
A. The statement of activities.
A $100,000 gift was received by Group Home Projects, a nongovernmental not-for-profit organization. Group's board of directors stipulated that this gift must be invested for a period of four years, with the income to be used for general operations. How should the gift be reported in Group Home's statement of activities? (AICPA 2014) A. Unrestricted contribution. B. Restricted contribution. C. Unrestricted contribution of $25,000 and restricted contribution of $75,000. D. Deferred revenue.
A. Unrestricted contribution.
Financial statements prepared by a voluntary health and welfare nongovernmental not-for-profit organization must report expenses by the following classification(s): (AICPA 2019) Functional Natural A. Yes Yes B. Yes No C. No Yes D.NoNo
A. Yes Yes
A nongovernmental, not-for-profit entity calculated a $4,000 increase in net assets with donor restrictions for the current fiscal year before consideration of the following: A cash donation designated by the donor as an endowment in perpetuity $28,000 Net assets released from restrictions $12,000 A donation received that was designated as a quasi-endowment $21,000 Which of the following should be reported as the increase in net assets with donor restrictions in the current year statement of activities? (AICPA 2022) A. $16,000 B. $20,000 C. $37,000 D. $41,000
B. $20,000
Fenn Museum, a nongovernmental not-for-profit organization, had the following balances in its statement of functional expenses: Education $300,000 Fundraising 250,000 Management and general 200,000 Research 50,000 What amount should Fenn report as expenses for support services? (AICPA 2011) A. $350,000 B. $450,000 C. $500,000 D. $800,000
B. $450,000
Which of the following not-for-profit entities is required to prepare a statement of functional expense? (AICPA 2009) A. An art museum. B. A shelter for the homeless. C. A private foundation. D. A public golf course.
B. A shelter for the homeless.
A nongovernmental not-for-profit organization may report on which of the following basis and remain in compliance with generally accepted accounting principles (GAAP)? (AICPA 2021) A. Cash B. Accrual C. Modified cash D. Modified accrual
B. Accrual
How should operating expenses for a nongovernmental not-for-profit organization be reported? (AICPA 2010) A. Change in temporarily restricted net assets. B. Change in unrestricted net assets. C. Change in permanently restricted net assets. D. Contra-account to associated revenues.
B. Change in unrestricted net assets.
Which of the following costs should a nongovernmental not-for-profit organization report as a supporting service expense? (AICPA 2019) A. Salary paid to a program director. B. Cost for the annual fund-raising dinner. C. Printing cost incurred to create educational fliers on the prevention of illness. D. Cost incurred to advertise the programs of the organization.
B. Cost for the annual fund-raising dinner.
How should a nongovernmental not-for-profit organization report depreciation expense in its statement of activities? (AICPA 2009) A. It should not be included. B. It should be included as a decrease in unrestricted net assets. C. It should be included as an increase in temporarily restricted net assets. D. It should be reclassified from unrestricted net assets to temporarily restricted net assets, depending on donor-imposed restrictions on the assets.
B. It should be included as a decrease in unrestricted net assets.
How should state appropriations to a state university choosing to report as engaged only in business-type activities be reported in its statement of revenues, expenses, and changes in net assets? (AICPA 2010) A. Operating revenues. B. Nonoperating revenues. C. Capital contributions. D. Other financing sources
B. Nonoperating revenues.
Pahn, a nongovernmental not-for-profit organization, received an unconditional pledge of $50,000. The donor stipulated that the pledge must be used in the next fiscal year. Pahn received and spent the $50,000 in the next year. For the current fiscal year, what element of Pahn's statement of financial position will increase as a result of the unconditional pledge? (AICPA 2014) A. Cash and cash equivalents. B. Pledge receivables. C. Unrestricted support. D. Deferred contributions.
B. Pledge receivables.
How should unconditional pledges received by a nongovernmental not-for-profit organization that will be collected over more than one year be reported? (AICPA 2008) A. Long-term pledges receivable, valued at the expected collection amount. B. Pledges receivable, valued at their present values. C. Deferred revenue, valued at present value. D. Pledges receivable, valued at the amount pledged.
B. Pledges receivable, valued at their present values.
On a nongovernmental, not-for-profit entity's statements of activities, which of the following amounts should NOT be netted together under any circumstances? (AICPA 2020) A. Revenues and expenditures from the sale of used equipment. B. Revenues and expenditures from an annual fundraising campaign. C. Investment income, custodial fees, and other advisory expenditures. D. Gains and losses from exchange rates or other foreign currency translations.
B. Revenues and expenditures from an annual fundraising campaign.
Arkin Corp. is a nongovernmental not-for-profit organization involved in research. Arkin's statement of functional expenses should classify which of the following as support services? (AICPA 2009) A. Salaries of staff researchers involved in research. B. Salaries of fundraisers for funds used in research. C. Costs of equipment involved in research. D. Costs of laboratory supplies used in research.
B. Salaries of fundraisers for funds used in research.
The net asset reclassifications of a nongovernmental not-for-profit organization would be reported on which of the following? (AICPA 2016) A. Statement of financial position. B. Statement of activities. C. Statement of cash flows. D. Statement of functional expenses
B. Statement of activities.
What is a primary purpose and focus of the statement of activities for a nongovernmental, not-for-profit organization? (AICPA 2018) A. To demonstrate the ability of the organization to meet donor-imposed restrictions on resources. B. To demonstrate how the organization's resources are used in providing various programs and services. C. To provide relevant information about the cash receipts and cash payments of the organization during a period. D. To provide a cost-benefit analysis of the use of the organization's resources.
B. To demonstrate how the organization's resources are used in providing various programs and services.
What is a primary purpose and focus of the statement of activities for a nongovernmental, not-for-profit organization? (AICPA 2018) A. To demonstrate the ability of the organization to meet donor-imposed restrictions on resources. B. To demonstrate how the organization's resources are used in providing various programs and services. C. To provide relevant information about the cash receipts and cash payments of the organization during a period. D. To provide a cost-benefit analysis of the use of the organization's resources.
B. To demonstrate how the organization's resources are used in providing various programs and services.
In the preparation of the statement of activities for a nongovernmental not-for-profit organization, all expenses are reported as decreases in which of the following net asset classes? (AICPA 2007) A. Total net assets. B. Unrestricted net assets. C. Temporarily restricted net assets. D. Permanently restricted net assets.
B. Unrestricted net assets.
In Year 4, a nongovernmental, not-for-profit school began a campaign to raise funds for a proposed capital addition. The following information is available as of June 30, Year 4: Information Amount •Received on February 1, Year 4: cash contributions from parents and alumni $450,000 •Received on February 1, Year 4: unconditional promises to give, of which $300,000 was received as of June 30, Year 4 $600,000 •Received on March 1, Year 4: a promise from a Year 1 alumnus to give $50,000 if other Year 1 alumni give a total of $50,000 before September 30, Year 5 $50,000 •Received on June 30, Year 4: cash contributions from Year 1 alumni in response to March 1, Year 4, alumni challenge $20,000 What amount of contributions for this campaign should the school report in its June 30, Year 4, statement of activities? (AICPA 2022) A. $770,000 B. $1,050,000 C. $1,070,000 D. $1,090,000
C. $1,070,000
