ACC 410 WEEK 9 QUIZ 7

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ACC 410 WEEK 9 QUIZ 7

Chapter 12

Not-for-Profit Organizations

TRUE/FALSE (CHAPTER 12)

1. FASB Statement No. 117 directs that revenues and expenses be reported in a statement of financial position.

2. In the statement of activities, FASB Statement No. 117 requires revenues to be reported as increases in one of the three categories of net assets, depending on donor-imposed restrictions; however, all expenses should be reported as decreases in unrestricted net assets.

3. Restricted contributions may be reported as unrestricted if the restriction has been met in the same period as the contribution is made.

4. FASB Statement No. 95 requires not-for-profits to use the direct method in their statements of cash flows.

5. In accounting for investments, not-for-profits, like businesses, must report their investments at fair value and classify the investments as either trading, available-for-sale, or held-to-maturity.

6. FASB Statement No. 93 makes the recognition of depreciation on plant and equipment assets optional at the discretion of the not-for-profit.

7. Temporarily restricted funds related to plant and equipment generally account only for resources restricted to their purchase or construction, not for the plant and equipment itself, which are typically reported in the unrestricted fund.

MULTIPLE CHOICE (CHAPTER 12)

1. The basis of accounting used by not-for-profit organizations in their external financial reports is
1. Industry-specific basis of accounting.
2. Cash basis of accounting.
3. Modified accrual basis of accounting.
4. Accrual basis of accounting.

2. FASB require the balance sheets of not-for-profits to display
3. Net assets in four separate categories—unrestricted, temporarily restricted, permanently restricted, and restricted by creditors.
4. Three separate funds—unrestricted, temporarily restricted, and permanently restricted net assets.
5. Six totals—total assets, total liabilities, total net assets, total unrestricted net assets, total temporarily restricted net assets, and total permanently restricted net assets.
6. Unrestricted, temporarily restricted, and permanently restricted retained earnings.

3. FASB requires external financial reports to provide information about
1. Donor-imposed restrictions on resources.
2. All restrictions on resources.
3. Donor and creditor restrictions on resources.
4. None of the above.

4. Expenses incurred by not-for-profit organizations should be reported as
1. Decreases in one of the three categories of net assets.
2. Decreases in unrestricted net assets.
3. Decreases in temporarily restricted net assets.
4. Decreases in permanently restricted net assets.

5. Revenues of a not-for-profit organization should be reported as
1. Increases in one of the three categories of net assets.
2. Increases in unrestricted net assets.
3. Increases in temporarily restricted net assets.
4. Increases in permanently restricted net assets.

6. Restricted gifts to not-for-profit organizations
1. Must always be shown as an increase in restricted net assets.
2. Must always be shown as an increase in unrestricted net assets.
3. May be shown as an increase in unrestricted net assets if the restriction is met in the same period.
4. May be shown as an increase in unrestricted net assets at the discretion of management.

7. The account title “Resources Released from Restriction” is reported by a ‘restricted fund’ as a
8. Revenue account.
9. Contra-revenue account.
10. Expense account.
11. Contra-expense account.

8. The account title “Resources Released from Restriction” is reported by an unrestricted “fund” as a
1. Revenue account.
2. Contra-revenue account.
3. Expense account.
4. Contra-expense account.

9. FASB requires that all not-for-profit organizations report expenses
1. By object.
2. By function.
3. By natural classification.
4. By budget code.

10. The National Association for the Preservation of Wildlife received $10,000 from a benefactor to support the overall objective of the organization. This amount will be recognized as revenue
11. In the period received.
12. In the period spent.
13. Never, because it is not earned.
14. In the period it becomes susceptible to accrual.

11. Not-for-profit organizations report their cash flows in which of the following categories?
1. Operating, noncapital financing, capital financing, investing.
2. Operating, noncapital financing, investing.
3. Operating, capital financing, investing.
4. Operating, financing, investing.

12. Not-for-profit organizations should report contributions restricted for long-term purposes in which of the following cash flows categories?
1. Operating
2.  
3. Capital financing.
4.  

13. Not-for-profit organizations should report interest and dividends earned and restricted for long-term purposes in which of the following cash flows categories?
1. Operating
2.  
3. Capital financing.
4.  

14. The characteristic that most clearly distinguishes a contribution from an exchange transaction is which of the following?
15. Cash is always received.
16. An exchange transaction is a reciprocal transfer of resources.
17. An exchange transaction is a nonreciprocal transfer of assets.
18. There are always restrictions attached to use of the assets received as a result of a contribution.

15. Revenue from an exchange transaction may be classified as an increase in which class of net assets?
16. Unrestricted net assets.
17. Temporarily restricted net assets.
18. Permanently restricted net assets.
19. Any of the above.

16. During the annual fundraising drive, the Cancer Society raised $900,000 in pledges of financial support for their general operations. By the fiscal year-end, the Society had collected $600,000 of the pledges.  The Society estimates that 10% of the remaining pledges will be uncollectible.  The NET amount of revenue the Society should recognize during the current year from this pledge drive is
17. $900,000.
18. $870,000.
19. $810,000.
20. $600,000.