302084

Question 1

Costs of joint activities like mailings and telethons are required to be reported as fundraising activities unless certain criteria are satisfied. Which of the following is not one of those criteria?

The audience for the activity was chosen based on some criteria other than the ability to make contributions.

One or more of the purposes of the activity is to accomplish some program function or management and general responsibility of the entity.

The content of the activity motivates the audience to take specific actions other than making contributions, and these actions support the program goals or fulfill a management and general responsibility of the entity.

All of the answer choices are conditions under which joint activities are not required to be reported as fundraising activities.

Answer 1

All of the answer choices are conditions under which joint activities are not required to be reported as fundraising activities.

There are three conditions that must be met to allow a nongovernmental not-for-profit to report costs of joint activities in a category other than fundraising activities. Those three conditions are:

one or more of the purposes of the activity is to accomplish some program function or management and general responsibility of the entity;
the audience for the activity was chosen based on some criteria other than the ability to make contributions; and
the content of the activity motivates the audience to take specific actions other than making contributions, and these actions support the program goals or fulfill a management and general responsibility of the entity.
Therefore, all of the answer choices are conditions under which joint activities are not required to be reported as fundraising activities.

Question 2

Criteria

Answer 2

Criteria are the benchmarks used to measure or evaluate the subject matter.

Question 3

Not-for-Profit Entity

Answer 3

According to the FASB ASC Glossary, a not-for-profit entity is distinguished from a business entity by three characteristics: contribution of significant resources from providers who do not expect proportionate return, operating purposes other than to provide goods or services for profit, and absence of ownership interests like business enterprises. In addition, the IRS stipulates that no part of the organization’s net earnings can inure for the benefit of any specific person or persons.

FASB ASC Glossary

IRS Form 1023

AICPA Audit and Accounting Guide Not-for-Profit Entities, Section 15.09

Question 4

Statement of Activities

Answer 4

The complete set of financial statements for a not-for-profit entity includes a statement of activities, which is analogous to the income statement of a business entity. In governmental accounting, a statement of activities is required for government-wide financial reporting. The formats of the not-for-profit and the governmental statement of activities differ.

FASB ASC 958-205-45-4

GASB 2200.126

Question 5

2122.22

Answer 5

Costs of such joint activities as fundraising telethons and mailings are required to be reported as fundraising activities unless three conditions are met:

• One or more of the purposes of the activity is to accomplish some program function or management and general responsibility of the organization.
• The audience for the activity was chosen based on some criteria other than the ability to make contributions.
• The content of the activity motivates the audience to take specific actions other than making contributions, and these actions support the program goals or fulfill a management and general responsibility of the organization.

Also, recall that direct costs of special fundraising events are permitted to be reported as direct deductions to the special-event revenues.