FAR 9

Question 1

What amount of revenue is recognized for non profit?

Answer 1

Generally, the difference between the fair value of the purchases and the amount transferred is classified as contribution.

Question 2

Cash contributions and unconditional pledges are recognized as contribution revenue in the year in which?

Answer 2

The cash or pledge is received.

Question 3

How do you record a pledge receivable?

Answer 3

Dr. Pledge Receivable
Cr. Allowance for doubtful accounts
Cr. Contribution revenue

Question 4

Losses on investments of a donor-restricted endowment fund (permanently restricted net assets for external reporting purposes) serve to

Answer 4

reduce temporarily restricted net assets to the extent that donor-imposed temporary restrictions on net appreciation (cumulative losses minus gains) of the fund have not been met before the loss occurs. Any remaining loss reduces unrestricted net assets.

Question 5

Not-for-profit corporations are required to produce the following statements:

Answer 5

Statement of financial position
Statement of activities
Statement of cash flows

Question 6

Board discrectionary funds and contributed services are?

Answer 6

Unrestricted.

Question 7

A promise to contribute is?

Answer 7

Restricted until conditions (collection) or eligibility requirements (date, etc.) have been satisfied.

Question 8

Not for profit organizations are considered financially interrelated organizations in the e vent that one of the organizations:

Answer 8

Is both able to influence the operating and financial decisions of the other AND has an ongoing economic interest in the net assets of others.

Question 9

When resources have been provided in exchange for research results, what type of transaction is this and what assets does it increase?

Answer 9

Unrestricted net assets. It is not considered a contribution when resources have been provided in exchange for research.

Question 10

What are the two expense categories of NFP?

Answer 10

Program services and support services.

Question 11

What are program service expense?

Answer 11

Functional expenses directly related to the mission of the organization.

Question 12

What are support services

Answer 12

Support expenses related to 1) G&A 2) Cost of membership development 3) fundraising.

Question 13

A contribution is defined as?

Answer 13

An unconditional transfer of cash or assets (collection is certain) to a new owner (title passes) in a manner which is voluntary (the donor is under no obligation to donate) and is non-reciprocal (donor gets nothing in exchange)

Question 14

What is required for reporting of expenses by all not-for-profit organizations?

Answer 14

Functional classification in the statement of activities or notes to the financial statements.

Question 15

How are restricted cash contributions to acquire a property reported in the cash flow?

Answer 15

Financing activities because the restriction is to acquire a property, not general operations.

Question 16

What is the j/e to record the satisfaction of temporary donor restrictions and issuance of scholarships?

Answer 16

Dr. Satisfaction of programs,temp restricted

Cr. Satisfaction of program restrictions, unrestricted

Question 17

How do you record satisfaction of donor restricted contributions used for scholarships?

Answer 17

Dr. Scholarship expense

Cr. Tuition revenues

Question 18

Donated services are reported as an increase in expense and contributions when?

Answer 18

1) if the services create or enhance non financial assets

2) they require specialized skills, which would otherwise be paid for.

Question 19

A NFP prepares a Statement of Activities that presents changes in?

Answer 19

1) Unrestricted net assets
2) temporary restricted net assets
3) permanently restricted net assets

Question 20

The three functional classifications for expenses incurred by a non profit org are?

Answer 20

1) Program services
2) Management and general costs
3) Fund raising and other supporting services

Question 21

What would normally be included in other operating revenues of a hospital?

Answer 21

Revenue from educational programs.

Question 22

How are unrestricted gifts classified?

Answer 22

Non-operating revenues.

Question 23

In a statement of activities, depreciation expense should?

Answer 23

be included as an element of expense.

Question 24

NFP reporting guidance in FASB ASC 958 primariliy focuses on?

Answer 24

Basic information for the organization as a whole.

Question 25

Which fund may account for a university’s internally designated fund, the income from which will be used for a specified purpose?

Answer 25

Quasi-endowment fund.

Question 26

The value of donated services should be recorded as both a ?

Answer 26

Contribution and an expense if the services performed are a normal part of the program or supporting services and would otherwise be performed by salaried personnel.

Question 27

How do you record scholarships and tuition remissions?

Answer 27

Dr. Cash
DR. Expenses-Scholarship
Dr. Expenses-tuition remission
Cr. Revenues-Tuition and Fees

Question 28

Non profit organizations may?

Answer 28

Pool all investments of various internal accounting funds, but must equitably allocated realized and unrealized gains and losses to net asset classifications as appropriate.

Question 29

An unrestricted cash contribution should be reported in a nongovernmental not for profit organizations statement of cash flows as an inflow from?

Answer 29

Operating Activities.

Question 30

The amount reported as unrestricted revenues, gains and other support on the statement of activities of a not for profit hospital would include?

Answer 30

All income earned by the hospital and any amounts released from restriction. (Charity care is not recognized on the face of the financial statements but is disclosed.)

Question 31

A nongovernmental not for profit borrowed $5k, which it used to purchase a truck. In which section of the organizations statement of cash flows should the transaction be reported?

Answer 31

In cash inflow from FINANCING activities and cash outflow from INVESTING activities.

Question 32

All expenses are reported as decreases in which of the following net asset classes?

Answer 32

Unrestricted net assets.

Question 33

In NFP organization, what should be included in total expenses?

Answer 33

Grants to other organizations and depreciation.

Question 34

What type of NFP entity is required to prepare a statement of functional expenses?

Answer 34

Voluntary health and welfare organization. (Shelter for the homeless)

Question 35

What happens when a temporary restriction is satisfied?

Answer 35

A reclassification is shown on the statement of activities by decreasing temporarily restricted net assets and increasing unrestricted net assets.

Question 36

What type of expenses are functional expenses?

Answer 36

Program services, management and general, fund raising.

Question 37

Unconditional pledges that will be collected over more than one year should be reported as?

Answer 37

Pledges receivable, valued at their present value.

Question 38

If a NFP is financially interrelated with its beneficiary organization, how would receipts be displayed/disclosed in the financial statements?

Answer 38

An equity transaction on the statement of activities
Dr. Interest in net assets
Cr. Equity Transaction.

Question 39

Donor imposed restrictions that are met in the same period they are received may be recorded as?

Answer 39

Unrestricted support (contribution revenue) provided that the organization discloses and consistently applies this accounting policy.

Question 40

Proceeds from the sale of works of art or purchases of works of art are included where in the cash flow?

Answer 40

Investing activities.

Question 41

What are the NFP orgs financial categories in the statement of fin position?

Answer 41

Assets
Liabilities
Net Assets

Question 42

What types of information would be included in total net assets in the statement of financial position?

Answer 42

Unrestricted net assets, temporarily restricted net assets and permanently restricted net assets.

Question 43

Unless explicitly restricted by donor or law, gains and losses should be reported in the statement of activiities as

Answer 43

Increases or decrease in UNRESTRICTED NET ASSETS.

Question 44

Teacher salaries are reported as?

Answer 44

Program services.