ACC 461 Homework

A not-for-profit organization that is exempt from federal income taxes under IRC Sec. 501(c)(3), exists to make grants to public charities, and receives its support from a small number of individuals or corporations and investment income rather than from the public at large is called a: A. Private foundation. B. Public charity. C. Nongovernmental organization. D. Public foundation

A

A particular organization functions as an intermediary between donors and other beneficiary organizations. The intermediary organization must report contribution revenue from donors if A. The organization has variance power. B. The organization elects to consistently report such donor gifts as contribution revenue. C. The beneficiary organization requests a delay in receiving the contribution from the intermediary organization. D. All these answer choices is correct.

A

Gresham College is a local private college. When reviewing the college's financial reports, you would expect to see which of the following categories on its statement of assets and liabilities? A. Net assets with donor restrictions, and net assets without donor restrictions. B. Unrestricted net position, temporarily restricted net position, and permanently restricted net position. C. Unrestricted net position, restricted net position, and net investment in capital assets. D. Unrestricted net assets, restricted net assets, and net investment in capital assets

A

In a local NFP elementary school's statement of cash flows, a contribution restricted for use on a new building project would be reported as A. A financing activity. B. A capital and related financing activity. C. An investing activity. D. An operating activity.

A

Many endowment management policies establish a spending rate for the college or university's endowment funds. A spending rate is best defined as A. The portion of the total return that can currently be used to carry out the endowment purpose. B. The average rate of return earned on the endowment investments for the current fiscal year. C. The moving average rate of return earned on endowment investments over a set period of time, such as a five-year moving average. D. The percentage of the endowment corpus that can be used to carry out the endowment purpose.

A

The controller for Bloomingfield Regional Hospital estimated that the uncollectible patient accounts have increased by $152,000. The controller's journal entry included a debit to bad debt expense and a credit to allowance for uncollectible receivables. Based on this, Bloomingfield Regional Hospital is A. An investor-owned health care organization. B. A nongovernmental not-for-profit health care organization. C. A governmental not-for-profit health care organization. D. Properly recording the estimate for uncollectible accounts under the FASB and GASB standards

A

When organizers and directors apply for not-for-profit status from a state, they are subject to which of the following? A. Oversight, transparency, and accountability for performance. B. Supervision, transparency, and profitability. C. Oversight, reliability, and transparency of performance. D. Responsibility for performance, accountability, and liability

A

Which of the following entities would consider portions of the AICPA Audit and Accounting Guide Health Care Entities category b authoritative guidance? A. A business-type government hospital. B. A not-for-profit hospital. C. A for-profit hospital. D. All these answer choices.

A

A not-for-profit hospital would present all of the following financial statements except a A. Balance sheet or statement of financial position. B. Statement of revenues, expenses, and changes in net position. C. Statement of operations. D. Statement of cash flows

B

According to GAAP, all not-for-profit organizations are required to prepare only the following statements: A. A statement of activities, a statement of cash flows, and a statement of functional expenses using accrual accounting. B. A statement of activities, a balance sheet, and a statement of cash flows using accrual accounting. C. A statement of financial position and a statement of activities using accrual accounting. D. A statement of cash flows, a statement of activities, and a statement of financial position using either cash basis or accrual basis accounting.

B

Approval from the IRS of 501(c)(3) status exempts an organization from which of the following? A. All taxes. B. Federal income taxes. C. Federal and state income taxes. D. Income taxes and sales taxes.

B

Jane's Planes is an organization that provides air transportation for critically ill children. A friend of Jane's Planes, Richard Bucks, donated a plane to be used for whatever purpose the organization chooses. In addition, he donated a substantial amount of investments that were to be used strictly to generate income to help fund the organization's expenses. These donations would be included in the organization's net assets as Plane Investments a. With donor restrictions With donor restrictions b. Without donor restrictions With donor restrictions c. With donor restrictions Without donor restrictions d. Without donor restrictions Without donor restrictions A. Option A B. Option B C. Option C D. Option D

B

Many not-for-profit organizations attempt to classify fund-raising expenses as program services expenses by making the activities look educational in nature or advocating for the mission of the organization. For such expenses to be reported as program services expenses, they must meet which of the following three criteria: A. Purpose, mission-related, and benefit to the public. B. Purpose, audience, and content. C. Purpose, expand donor base, and content. D. Reasonable, improve financial condition, and benefit to the public.

B

Wellness Psychiatric Clinic received a large contribution from the family of a former patient. The contribution came with a request that the funds be used or invested to support any activities that the clinic felt would be best. On this not-for-profit clinic's statement of cash flows, this contribution would be reported in which section? A. Noncapital financing activities. B. Operating activities. C. Financing activities. D. Investing activities.

B

Which of the following is a performance measure of an outcome? A. Farley College students complete an undergraduate degree in an average of 4.3 years. B. A state survey of employers showed that 70 percent of employers ranked Beasley State University's graduates as "very well prepared" to enter the workforce. C. Within six months of graduation, 75 percent of undergraduate students at Gravette College have a job in their field. D. Faculty members at Ballard University published an average of two peer-reviewed papers each year

B

Which of the following statements is prepared by both a private and public college or university? A. Statement of net assets. B. Statement of cash flows. C. Statement of activities. D. Statement of net position.

B

You are considering contributing to a local charity whose primary function is to provide after-school care for underprivileged children. However, you saw in the paper that the president of the organization just bought a house that is located in a very expensive gated community, and you are concerned that more money is going to the president's salary than to the actual after-school care. Before you donate, you want to feel comfortable that this is not the case. Which of the following is a financial measurement that might help you in determining the amount of resources going to after-school care? A. Fund-raising efficiency. B. Program effectiveness. C. Fund-raising ratio. D. Efficiency.

B

A wealthy donor promised $1 million to the local art museum to expand the size of its building, contingent on the museum obtaining a grant from the State Endowment for the Arts of at least $500,000. Upon completing a signed agreement with the donor, the museum should: A. Record a debit to Contributions Receivable—With Donor Restrictions in the amount of $1,000,000. B. Record a debit to Contributions Receivable—With Donor Restrictions in the amount of $500,000. C. Not make a journal entry until the conditions of the agreement have been met. D. Either Record a debit to Contributions Receivable—With Donor Restrictions in the amount of $1,000,000 or Not make a journal entry until the conditions of the agreement have been met

C

Fees received by a hospital for a "healthy heart" workshop offered to patients should be reported as: A. Patient service revenue. B. Administrative service revenue. C. Other revenue. D. Nonoperating gains

C

Jan and Dean decided to form a charitable organization, I Love Rock N Rollers, to provide funding to assist former rock and roll group members who have become homeless. They are planning to hold a "mini-Woodstock" event to raise money, with music by groups from the '60s and '70s. The event will offer food and beverages and the sale of memorabilia related to the event. Before they go any further, Jan and Dean need to A. Prepare articles of incorporation and by-laws, obtain an EIN from the IRS if the organization will have employees, apply for permission to solicit charitable contributions, and apply for 501(c)(3) status from the IRS. B. Prepare articles of incorporation and by-laws and file them with the state, obtain an EIN from the IRS if the organization will have employees, apply for permission to solicit charitable contributions, and apply for 501(a) status from the IRS. C. Prepare articles of incorporation and by-laws and file them with the state, obtain an EIN from the IRS, apply for permission to solicit charitable contributions, and apply for 501(c)(3) status from the IRS. D. Prepare articles of incorporation and by-laws, obtain an EIN from the IRS, apply for permission to solicit charitable contributions, and apply for 501(a) status from the IRS.

C

Lifeworks is a nongovernment not-for-profit organization that recently received a large gift from a donor in the amount of $3,000,000 in cash. The donor wishes to leave a legacy and therefore specified that Lifeworks cannot spend the $3,000,000 but can invest the $3,000,000 and use any earnings from the investments to support the organization. In the first year, $100,000 was earned but has not yet been spent. How would the $3,000,000 gift and the $100,000 in earnings impact the net assets of Lifeworks? A. Both the $3,000,000 and the $100,000 increase the net assets with donor restrictions. B. The $3,000,0000 gift and the $100,000 in earnings would not impact the net assets until the money is spent. C. The $3,000,000 increases the net assets with donor restrictions and the $100,000 increases the net assets without donor restrictions. D. Both the $3,000,000 and the $100,000 increase the net assets without donor restrictions

C

Save Our Beaches, an NFP organization, prepared and distributed a trifold flyer to individuals and families at White Sands Beach, a popular beach for both residents and tourists. The flyer provided information about beach pollution and invited the public to participate in the organization's semiannual beach cleanup. In addition, one segment of the flyer solicited contributions to the organization to help fund its activities. The cost of the flyer and its distribution would most likely be considered A. A fund-raising cost. B. A program cost. C. Both fund-raising and program costs. D. A management and general expense

C

The tool the IRS most likely will use when key officers in a tax-exempt entity receive excess economic benefits from transactions with the not-for-profit organization is: A. Fines and forfeits. B. Revocation of the organization's tax-exempt status. C. Intermediate sanctions. D. Public display of offenders on the IRS's website

C

Volunteers contributed services to the symphony that had a fair value of $50,000. The services provided by the volunteers did not require specialized skills. Under what condition should the symphony recognize the fair value of the contributed services received? A. The contributed services will be recognized if they would have been acquired by the organization if not donated. B. The contributed services will not be recognized under any conditions. C. The contributed services will be recognized if they create or enhance a nonfinancial asset. D. All contributed services should be recognized if the fair value can be determined.

C

Which of the following is a true statement about tuition revenue in a college or university? A. Scholarships should always be reported as expenses. B. Tuition receivables estimated to be uncollectible should be reported as an operating expense. C. Refunds should be reported as deductions from gross revenue. D. All of these statements are true

C

Which of the following is a true statement regarding a performance indicator? A. All health care organizations are required to report a performance indicator. B. Only governmental health care organizations are required to report a performance indicator. C. The purpose of reporting a performance indicator is to make it easier to compare the results of operations of not-for-profit health care organizations to those of for-profit health care organizations. D. The purpose of reporting a performance indicator is to assist in evaluating the efficiency and effectiveness of a health care organization's operating activities.

C

Which of the following organizations would be considered a nongovernmental not-for-profit organization? A. An organization that provides shelter for men who have been victims of domestic violence and has been designated as a not-for-profit organization by the IRS. The board of trustees is composed of county commissioners, but in the case of the dissolution of the organization, any remaining funds would be donated to the United Way. Funding for the organization comes entirely from contributions. B. An organization that provides services to persons who wish to learn English as their second language. The organization is incorporated and is funded by fees charged to the learners. All profits are reinvested in the organization to provide further services. The organization has applied for not-for-profit status with the IRS. C. An organization classified by the IRS as a not-for-profit organization that employs individuals with disabilities in a workshop where the workers make custom stationery out of recycled goods. The organization receives cash and in-kind contributions as well as the proceeds from the sale of the stationery. The organization's board is composed of local businessmen and women. D. An organization that provides fund-raising services for other not-for-profit organizations. The organization is funded by fees for its services and was incorporated by the former chairperson of the local United Way organization. The organization distributes 40 percent of its profits to local charities.

C

Which of the following statements is incorrect concerning the financial reports of colleges and universities? A. The NACUBO account titles are frequently used for reporting revenues and expenses by both private and public entities. B. State appropriations are reported as nonoperating revenues by public entities. C. Intangible assets are reported as a classification within capital assets by private entities. D. Conditional contributions are not recognized by public or private entities

C

Which of the following would be most useful for evaluating the financial profitability of a not-for-profit health care organization? A. Current ratio. B. Debt-to-capitalization. C. Excess margin. D. Debt services coverage.

C

Why are health care organizations motivated to track the actual costs of services? A. Both GASB and FASB require it. B. They must report their actual expenses so that third-party payors will reimburse them. C. Third-party payors contract with the organization to reimburse a set amount, and the organization risks a loss if costs are greater than the amount reimbursed. D. Any amount not reimbursed by a third-party payor or paid by the patient must be included in the amount reported as charity care.

C

A university expended $2,475,000 on a new parking facility. The transaction was reported as an investing activity on its direct method statement of cash flows. What type of university prepared the statement of cash flows? A. A public university. B. A for-profit university. C. A private university. D. Either a for-profit university or a private university

D

An organization was formed solely to support the creation of a high-speed rail system between two major metropolitan areas. The organization will be offering voter education seminars to be sure that the public is educated about the benefits of the rail system before the proposal is presented to the legislature. Under what circumstances would the organization be able to maintain charitable tax-exempt status? A. Information in its brochures is strictly based on confirmable facts. B. The brochures provide information only about the benefits of the system, but do not directly attempt to persuade voters to vote for the system. C. The organization properly elects to make expenditures to influence legislation on Form 5768. D. The organization would not be eligible for charitable tax-exempt status.

D

Artists Unlimited was formed to support the local art community. Which of the following activities would be considered unrelated business income? A. Income from the sale of tee shirts that feature art reproductions by local artists, produced and sold by volunteers. B. Interest and dividend income from investments that were donated by a major retail company. C. Sponsorship of an event by an art supply company, whose name was prominently displayed at the event. D. Monthly rental fees for office space used by two small legal firms. The rental fees are used to make mortgage and interest payments on Artists Unlimited's building.

D

Colleges and universities look to which standard-setting body for GAAP? A. The GASB. B. The FASB. C. The NACUBO. D. It depends on whether the entity is public, private, or for-profit.

D

How would a university account for funds received from an external donor that are to be retained and invested, with the related earnings restricted to the purchase of library books? A. Net position without donor restrictions in a private university. B. Net position with donor restrictions in a private university. C. Unrestricted net assets/position in either a private or public university. D. Restricted—nonexpendable net position in a public university.

D

Last year Zelnick College showed a positive revenue over expenses number for the first time in several years. The college is funded with contributions, grants, two government appropriations (state and local), and tuition and fees. Zelnick College is most likely what type of college? A. A private for-profit college. B. A private not-for-profit college. C. A public university engaged primarily in governmental activities. D. A public university engaged primarily in business-type activities.

D

On December 31, Ecology Center, a nongovernment not-for-profit organization, received an unconditional pledge of $125,000 to be received in three years. The Ecology Center is confident that it will collect the entire $125,000. The Ecology Center uses the present value technique when measuring fair value. How should the Ecology Center record the pledge? A. Both a contribution receivable and a contribution without donor restrictions is recorded in the amount of $125,000. B. Both a contribution receivable and a contribution with donor restrictions is recorded in the amount of $125,000. C. No recording is made. D. Both a net contribution receivable and a contribution with donor restrictions is recorded for the present value of $125,000

D

Orlando Perez, president of a local information systems company, volunteered his time to help develop software for Best Friends, a local no-kill pet shelter. The software will allow the organization to track intake, placement, and statistics of animals in its three locations. Without Mr. Perez's assistance, Best Friends would have needed to hire someone to develop this software. Best Friends should record the value of Mr. Perez's time as A. Program revenue and supporting services expense. B. Contribution revenue and supporting services expense. C. Program revenue and program expense. D. Contribution revenue and a program expense.

D

The Maryville Cultural Center recently conducted a successful talent show in which local talent performed for a nominal prize. The talent show is an ongoing major event and is central to the center's mission. The event raised $4,800 in gross revenue. Expenses related to the event included $1,000 to rent an auditorium, $1,200 to advertise the event, $500 for trophies and other awards for the winner and the runners up, and $100 for printing and mailing tickets. The center believes there was no monetary value received by donors (attendees). To report this event in its statement of activities, the center will report A. Special event revenue of $4,800 and special event expense of $1,500. B. Special event revenue of $4,800 and fund-raising expense of $1,300. C. Special event revenue of $2,300 and fund-raising expense of $1,300. D. Special event revenue of $4,800, special event expense of $1,500 and fund-raising expense of $1,300.

D

The Patient Protection and Affordable Care Act, passed in 2010, A. Resulted in a decrease in the number of insured patients. B. Did not impact Form 990 filings for 501(c)(3) health care organizations. C. Required health care organizations to implement new cost accounting systems where each service related to a medical procedure is tracked and submitted for payment separately. D. Tied physician pay in part to the quality of care provided

D

Under the IRC, public charities are allowed to conduct direct lobbying activity. What, if any, limit is placed on such lobbying? A. There is no limit provided no propaganda is distributed by the charity. B. There is no limit provided no individual or group contributes more than $500 to lobbying activity in any one year. C. There is no limit provided the lobbying activity directly affects the NFP's charitable purpose. D. If a public charity makes a 501(h) election, there is a limit of up to $1,000,000 a year based on the size of the NFP's exempt program costs.

D

When a tax-exempt organization dissolves, the managers must ensure that: A. All assets are appropriately transferred to another tax-exempt organization. B. All creditors get paid. C. All federal, state, and local taxes are paid. D. All these answer choices are correct.

D

Which of the following is an example of an asset limited as to use? A. Real estate donated to build a clinic for the homeless. B. Contributed cash that the board is considering setting aside for self-insurance. C. Investments bequeathed to the health care organization where the income is to be used to fund operating costs for a cancer clinic. D. Funds from a sale of bonds that are required by covenant to be used to build a new hospital.

D