ACC 410 Week 9 Quiz – Strayer NEW
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Quiz 7 Chapter 12 and 13
Not-for-Profit Organizations
TRUE/FALSE (CHAPTER 12)
1. The FASB has standard-setting jurisdiction
over all private not-for-profits and all government-owned not-for-profits.
2. Private not-for-profit accounting is closer
to business than to government accounting.
3. FASB Statement No. 117 directs that
revenues and expenses be reported in a statement of financial position.
4. 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.
5. Restricted contributions may be reported as
unrestricted if the restriction has been met in the same period as the
contribution is made.
6. FASB Statement No. 95 requires
not-for-profits use the direct method in the preparation of the statement of
cash flows.
7. 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.
8. Absent explicit donor or legal
stipulations, a not-for-profit’s endowment principal (permanently restricted
net assets) would not be affected by either gains or losses on investments.
9. Not-for-profits cannot own or be integrally
affiliated with either businesses or other not-for-profits.
10. FASB Statement No. 93 makes the recognition
of depreciation on long-lived assets optional at the discretion of the
not-for-profit.
MULTIPLE CHOICE (CHAPTER 12)
1. Financial statements for Smith College, a
church-supported college, should be prepared according to standards set by
a)
AICPA.
b)
FASB.
c)
GASB.
d)
Smith may choose any of the above.
2. The basis of accounting used by
not-for-profit organizations in their external financial reports is
a)
Industry-specific basis of accounting.
b)
Cash basis of accounting.
c)
Modified accrual basis of accounting.
d)
Accrual basis of accounting.
3. FASB requires the focus of external
financial reporting be on
a)
The donor-imposed restrictions on resources.
b)
All restrictions on resources.
c)
Funds of the entity.
d)
The entity taken as a whole.
4. Expenses incurred by not-for-profit
organizations should be reported as
a)
Decreases in one of the three categories of net assets.
b)
Decreases in unrestricted net assets.
c)
Decreases in temporarily restricted net assets.
d)
Decreases in permanently restricted net assets.
5. Revenues of a not-for-profit organization
should be reported as
a)
Increases in one of the three
categories of net assets.
b)
Increases in unrestricted net assets.
c)
Increases in temporarily restricted net assets.
d)
Increases in permanently restricted net assets.
6. Restricted gifts to not-for-profit
organizations
a)
Must always be shown as an increase in restricted net assets.
b)
Must always be shown as an increase in unrestricted net assets.
c)
May be shown as an increase in unrestricted net assets if the
restriction is met in the same period.
d)
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
a)
Revenue account.
b)
Contra-revenue account.
c)
Expense account.
d)
Contra-expense account.
8. The account title “Resources Released from
Restriction” is reported by an ‘unrestricted fund’ as a
a)
Revenue account.
b)
Contra-revenue account.
c)
Expense account.
d)
Contra-expense account.
9. FASB requires that all not-for-profit
organizations report expenses
a)
By object.
b)
By function.
c)
By natural classification.
d)
By budget code.
10. Voluntary
health and welfare organizations must also report expenses by
a)
Object.
b)
Function.
c)
Natural classification.
d)
Budget code.
11. 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
a)
In the period received.
b)
In the period spent.
c)
Never, because it is not earned.
d)
In the period it becomes susceptible to accrual.
12. Not-for-profit organizations report their
cash flows in which of the following categories?
a)
Operating, noncapital financing, capital financing, investing.
b)
Operating, noncapital financing, investing.
c)
Operating capital financing, investing.
d)
Operating, financing, investing.
13. Not-for-profit organization should report
contributions restricted for long-term purposes in which of the following
categories?
a)
Operating.
b)
Financing.
c)
Capital financing.
d)
Investing.
14. Not-for-profit organizations should report
interest and dividends earned and restricted for long-term purposes in which of
the following categories?
a)
Operating.
b)
Financing.
c)
Capital financing.
d)
Investing.
15. Revenue from an exchange transaction may be
classified as an increase in which class of net assets?
a)
Unrestricted net assets.
b)
Temporarily restricted net assets.
c)
Permanently restricted net assets.
d)
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
a)
$900,000.
b)
$870,000.
c)
$810,000.
d)
$600,000.
Use the following information to
answer #17 - #19.
United
Charities’ annual fund raising drive in 2001 raised pledges of $600,000 of
which $400,000 were collected in 2001 and $100,000 were collected in 2002. United Charities estimates $75,000 of the
remaining pledges will never be collected.
17. The increase in unrestricted net assets in
2001 as a result of the fund raising drive is
a)
$600,000.
b)
$525,000.
c)
$400,000.
d)
$125,000.
18. The increase in temporarily restricted net
assets in 2001 as a result of the fundraising drive is
a) $600,000.
b)
$525,000.
c)
$400,000.
d)
$125,000.
a)
$0
b)
$100,000 increase.
c)
$100,000 decrease.
d)
$500,000 increase.
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