ACCT 4421 CH 13-14 Quiz UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Which of the following would not be required under not-for-profit incorporation laws?
A. Application for 501(c)(3) status.
B. A clearly stated purpose for the organization.
C. Establishment of by-laws.
D. Appointment of a board of directors. - CORRECT ANSWER - Application for
501(c)(3) status.
Public disclosure rules require that a tax-exempt not-for-profit organization: - CORRECT
ANSWER - Make available a copy of its Form 990 to the public for a period of up to three
years.
According to the FASB, net assets with donor restrictions are released from restrictions: -
CORRECT ANSWER - As assets are spent for the purposes intended by the donor.
How does the FASB require not-for-profit organizations to report expenses? - CORRECT
ANSWER - Both natural classification and functional classification must be reported.
A not-for-profit organization incurred $10,000 in management and general expenses in the
current fiscal year. When reporting the expenses by function, the $10,000 would be reported as: -
CORRECT ANSWER - Supporting services expenses.
According to the FASB, how should unrealized gains on the investment portfolio of a not-for-
profit organization be recognized? - CORRECT ANSWER - Reported on the statement of
activities.
A good measure of whether a not-for-profit organization is "liquid" and can meet its short-term
obligations is: - CORRECT ANSWER - Current assets divided by current liabilities.
ACTUAL Exam Questions and CORRECT
Answers
Which of the following would not be required under not-for-profit incorporation laws?
A. Application for 501(c)(3) status.
B. A clearly stated purpose for the organization.
C. Establishment of by-laws.
D. Appointment of a board of directors. - CORRECT ANSWER - Application for
501(c)(3) status.
Public disclosure rules require that a tax-exempt not-for-profit organization: - CORRECT
ANSWER - Make available a copy of its Form 990 to the public for a period of up to three
years.
According to the FASB, net assets with donor restrictions are released from restrictions: -
CORRECT ANSWER - As assets are spent for the purposes intended by the donor.
How does the FASB require not-for-profit organizations to report expenses? - CORRECT
ANSWER - Both natural classification and functional classification must be reported.
A not-for-profit organization incurred $10,000 in management and general expenses in the
current fiscal year. When reporting the expenses by function, the $10,000 would be reported as: -
CORRECT ANSWER - Supporting services expenses.
According to the FASB, how should unrealized gains on the investment portfolio of a not-for-
profit organization be recognized? - CORRECT ANSWER - Reported on the statement of
activities.
A good measure of whether a not-for-profit organization is "liquid" and can meet its short-term
obligations is: - CORRECT ANSWER - Current assets divided by current liabilities.
