ACCT 420-Ch 14

Which of the following apply to contributions with donor-imposed conditions?

A refundable advance liability should be recognized when assets are received before satisfying conditions. They cannot be recognized as revenue until all conditions have been met.

Which of the following statements regarding the statement of cash flows are correct?

Acquisition of a building using restricted net assets is reported as an investing activity Restricted net assets given for long-term purposes are included in the financing activities section.

Identify the true statement regarding accounting for investments for NFPs.

Debt securities that are contributed are initially measured at fair value. Debt securities that are purchased are valued at acquisition price. Equity securities that are contributed are valued at fair value.

Identify the correct statement regarding the notes to financial statements for NFPs.

Disclosures include principles applicable to for-profit entities unless there is a specific exemption for not-for-profit organizations.

Select the true statement regarding donated materials.

FASB ASC 958-605-30-11 requires that all unconditional gifts, including material amounts of donated materials, be reported at fair value.

Select the true statement regarding gifts from donors.

FASB requires that both unrestricted and restricted gifts be recognized as support at fair value at the time the gift is given.

True or False: FASB ASC 958-805 provides that NFPs can only recognize combinations as mergers if it is a combination of four or more NFP organizations.

False

True or false: Similar to for-profit entities, NFPs are subject to variable interest entity standards.

False

True or false: The FASB states that capitalized historical treasures must be depreciated.

False

Which of the following is responsible for governmental not-for-profit organizations?

GASB

Identify the true statement regarding special events.

Revenues from special events are reported at gross with the direct expenses of providing the benefit reported separately.

Which of the following statements is correct?

The FASB assumed primary responsibility for providing guidance on GAAP for not-for-profit entities. Hospitals and social service organizations may be governmental or nongovernmental. If an organization has the power to enact and enforce a tax levy, it is a governmental organization.

Select the accurate statement regarding unconditional pledges.

The FASB indicates that if unconditional pledges will be received in less than a year, they can be recognized at net realizable value.

Which of the following are types of gifts a donor may give?

Time restriction Purpose restriction Without restriction

True or false: If an NFP receives the use of a building at a reduced rate, the difference between the rent paid and the fair market rental value should be reported as a contribution that is unrestricted.

True

A donor-imposed condition exists if which of the following are present?

a right of return or release a barrier that must be overcome by the NFP

When an NFP obtains control of one or more NFP activities or businesses., a(n) ______ occurs.

acquisition

The statement of ______ is an operating statement that presents all changes in net assets without donor restrictions, net assets with donor restrictions, and total net assets for the reporting period.

activities

When a merger occurs, the new NFP recognizes the assets and liabilities of the merging NFP organization at the ______.

amounts reported on the GAAP-prepared financial statements of the merging NFPs

Identify the following donated services that would require a journal entry for contribution revenue and a related expense or asset.

an architect volunteers his services for the remodeling of a local library a psychiatrist volunteers 10 hours a week at a not-for-profit counseling center to assist those battling drugs and alcohol addiction

Which of the following describes an underwater endowment?

an endowment in which the fair value has fallen below its original value

According to FASB ASC 958-20-20, entities _______ if one of the entities has the ability to influence the operating and financial decisions of the other entity and one of the entities has an ongoing economic interest in the net assets of the other.

are financially interrelated

The FASB's objectives of financial reporting for not-for-profit organizations are to provide information useful in which of the following?

assessing economic resources, obligations, net resources and changes in them making resource allocation decisions assessing services and ability to provide services

The statement of financial position is also known as a(n) ______.

balance sheet

An NFP should consolidate another NFP in which it has which of the following?

both a controlling financial interest and an economic interest

The FASB requires NFPs to report expenses by which of the following?

both functional and natural classification

Management and general expenses include which of the following?

budgeting, accounting, reporting and legal services publicity and public relations activities

If a special event is peripheral or incidental to the NFP, the direct expenses ______.

can be netted against the revenues

Donation of land, buildings, and equipment are ______.

classified as contributions with or without donor restrictions reported at their fair value as contributions or support on the statement of activities

Institutionally related foundations must generally be reported as ______ of the government entity.

component units

An example of a(n) ______ to give is a pledge to make matching gifts.

conditional promise

If an NFP organization has a controlling financial interest through directly or indirectly owning a voting majority in a for-profit entity, the NFP organization should do which of the following?

consolidate the for-profit entity's financial information with its own

Examples of required disclosures for NFPs include those relating to which of the following?

contingencies commitments financial instruments

A VHWO sponsored an event for a special outreach project that yielded cash contributions of $8,000. Direct expenses of $2,500, not considered peripheral or incidental in nature, were incurred. The journal entry to record this event would include a ______.

debit to Special Event Direct Costs for $2,500

Stakeholders of NFPs that use not-for-profit financial statements include which of the following?

donors members grantors lenders

Expenses that relate to either the program or mission of the organization or the management and general and fund-raising expenses required to support the programs are called ______.

functional expenses

A noncash contribution given to not-for-profit organizations is called a ______.

gift in kind

One notable difference between the acquisition method of a for-profit entity and an NFP entity is the treatment of ______.

goodwill

An NFP has an economic interest in another NFP if one NFP ______.

holds significant assets that must be used for the unrestricted or restricted purposes of another NFP

An intermediary received $4,000 in cash from a donor. The donor indicated that she wanted her donation to go to the local not-for-profit hospital. There is no financial relationship between the intermediary and the hospital. The journal entry made by the intermediary would ______.

include a credit to Contributions Payable for $4,000

An intermediary received $4,000 in cash from a donor. The donor indicated that she wanted her donation to go to the local not-for-profit hospital. The intermediary and hospital are financially interrelated. The journal entry made by the intermediary would ______.

include a credit to Contributions—Without Donor Restrictions for $4,000

Public universities often create NFPs referred to as ______ foundations for fund-raising, managing businesslike activities or endowment assets, or conducting medical or other research.

institutionally related

Similar to an agent and a trustee, a(n) ______ serves in a fiduciary capacity by helping with the transfer of assets between a donor and a beneficiary.

intermediary

The requirement to report investments at fair value does not apply to which investments?

investments with no readily determinable fair value consolidations securities reported under the equity method

Which of the following would be considered contributed services to be recognized at fair market value?

local CPA prepares tax returns for a museum local nurse provides free nursing services at a senior center

An unconditional promise to give is recorded as support in the year ______.

made

The cost of publicity and public relation activities designed to keep the organization's name before prospective contributors are included as part of ___ expenses.

management and general

When two or more NFPs combine to create a new NFP, a(n) ______ occurs.

merger

FASB ASC 958-805 provides that NFPs can recognize a combination of two or more NFP organizations as which of the following?

merger acquisition

The statement of activities for an NFP should show ______.

net assets released from restrictions as a separate section under Revenues, gains and other support

Contributions for which either no donor restrictions exist or the restrictions have expired, revenues for services provided, and investment income can give rise to which of the following?

net assets without donor restrictions

Net assets are classified as which of the following?

net assets without donor restrictions and net assets with donor restrictions

Donor-imposed restrictions are ______.

not separately reported in the statement of cash flowsT

Endowments are net assets with donor restrictions that are ______ in nature.

permanent

When the donor states that assets are to be held in perpetuity but allows the organization to spend any income earned from investing those assets, they are ______ net assets.

permanently restricted

Promises to give assets to an organization are commonly called ______ and can be conditional or unconditional.

pledges

The statement of activities ______.

presents changes in net assets without donor restrictions, net assets with donor restrictions, and total net assets for the reporting period

Functional expenses that relate to either the program or mission of the organization are called ______.

program expenses

Collections are works of art, historical treasures, and other assets that are which of the following?

protected, kept unencumbered, cared for, and preserved held for public exhibition

For a program to qualify as bona fide, it must meet which of the following criteria?

purpose, audience, and content

When an agent or intermediary receives an asset in a transfer between a donor and a beneficiary, which of the following should they do?

recognize an asset and a related liability when it receives a donation on behalf of the beneficiary organization

Assets that are restricted as to their use should be ______.

reported separately from current assets on the statement of financial position

The FASB ______ to report expenses by their functional and natural classification.

requires all NFP organizations

Assets that are not available for current operating purposes because donors have limited their use to a long-term purpose are considered ______.

restricted

Examples of revenues arising from exchange transactions include which of the following?

sales of goods and services program fees membership dues

The statement of cash flows for an NFP ___.

should show a reconciliation of changes in net assets to net cash used for operating activities

A category of revenues arising from contributions of resources or nonexchange transactions that include only amounts for which the donor derives no tangible benefits from the recipient agency is referred to as ______.

support

Expenses in a not-for-profit organization are divided into functional classifications that include which of the following?

support program

NFPs have long been required to support expenses by functional classifications such as which of the following major classifications?

support program

In order for an NFP organization to be considered a governmental organization, it must have one or more of which characteristics?

the power to enact and enforce a tax levy the potential for unilateral dissolution by a government with net assets reverting to a government popular election of officers or appointment of a controlling majority by a government

In order to allocate joint costs of activities that combine a program or administrative activity with fund-raising, ______.

they must meet the criteria of purpose, audience, and content they must be allocated between the bona fide program or management and general function and fund-raising using an equitable allocation method

If an NFP organization has a(n) ______ endowment, it must disclose policy and actions concerning appropriations from the endowment, the fair value of the endowment and the extent by which the endowment has fallen below its original value.

underwater

When the agent or intermediary has the ability to redirect the assets it receives to an entity other than the beneficiary organization, ______.

variance power exists

Board-designated net assets are net assets ______ appropriated or set aside for specific purposes by the governing board rather than an external donor.

without donor restrictions