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NFP accounting Questions and Answers
(Expert Solutions)
Q: For external reporting purposes, the not-for-profit reporting model requires
information about, 🗹🗹: The entity as a whole but not about individual funds.
Q: In a statement of financial position, a nongovernmental not-for-profit entity must at a
minimum report amounts for which of the following classes of net assets?, 🗹🗹:
Without donor restrictions
With donor restrictions
1 &2
Q: What is the primary purpose of the statement of activities of a nongovernmental not-
for-profit organization?, 🗹🗹: To report the change in net assets for the period.
Q: The purpose of a statement of financial position for a nongovernmental not-for-profit
entity is to provide relevant information about, 🗹🗹: The assets, liabilities, and net
assets, and about their relationships to one another at a moment in time.
Q: In the preparation of the statement of activities for a nongovernmental NFP, most
expenses are reported as decreases in which of the following minimum required net
asset classes?, 🗹🗹: net assets without donor restrictions
Q: At the beginning of the year, the Baker Fund, a nongovernmental not-for-profit
corporation, received a $125,000 contribution restricted to youth activity programs.
During the year, youth activities generated revenues of $89,000 and had program
expenses of $95,000. What amount should Baker report as net assets released from
restrictions for the current year?, 🗹🗹: 95,000 - Only expenses incurred
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Q: The Pel Museum, a nongovernmental not-for-profit entity (NFP), received a
contribution of historical artifacts. It need not recognize the contribution if the artifacts
are to be sold and the proceeds used to, 🗹🗹: acquire other items for collection
Q: Birdlovers, a nongovernmental not-for-profit entity, incurred $5,000 in management
and general expenses during the year. In Birdlovers' statement of activities for the year
ended December 31, the $5,000 should be reported as, 🗹🗹: part of supporting
activities
Q: A not-for-profit voluntary health and welfare entity should report a contribution for
the construction of a new building as cash flows from which of the following in the
statement of cash flows?, 🗹🗹: financing activities
Q: Fact Pattern:
NFP, a nongovernmental not-for-profit entity, reported a change in net assets of $300,000
for the current year. Changes occurred in several balance sheet accounts as follows:
Equipment
$25,000 increase
Accumulated depreciation
40,000 increase
Note payable
30,000 increase
Additional Information:
During the current year, NFP sold equipment costing $25,000, with accumulated
depreciation of $12,000, for a gain of $5,000.
In December of the current year, NFP purchased equipment costing $50,000 with $20,000
cash and a 12% note payable of $30,000.
Depreciation expense for the year was $52,000.
In NFP's current-year statement of cash flows, net cash used in investing activities
should be?, 🗹🗹: 2,000
Q: A statement of cash flows is to be presented in general-purpose external financial
statements by which of the following?, 🗹🗹: All businesses and nongovernmental
not-for-profit entities.
Q: How should a nongovernmental, not-for-profit entity report donor-restricted cash
contributions for long-term purposes in its statement of cash flows?, 🗹🗹: Financing
activity inflow.
NFP accounting Questions and Answers
(Expert Solutions)
Q: For external reporting purposes, the not-for-profit reporting model requires
information about, 🗹🗹: The entity as a whole but not about individual funds.
Q: In a statement of financial position, a nongovernmental not-for-profit entity must at a
minimum report amounts for which of the following classes of net assets?, 🗹🗹:
Without donor restrictions
With donor restrictions
1 &2
Q: What is the primary purpose of the statement of activities of a nongovernmental not-
for-profit organization?, 🗹🗹: To report the change in net assets for the period.
Q: The purpose of a statement of financial position for a nongovernmental not-for-profit
entity is to provide relevant information about, 🗹🗹: The assets, liabilities, and net
assets, and about their relationships to one another at a moment in time.
Q: In the preparation of the statement of activities for a nongovernmental NFP, most
expenses are reported as decreases in which of the following minimum required net
asset classes?, 🗹🗹: net assets without donor restrictions
Q: At the beginning of the year, the Baker Fund, a nongovernmental not-for-profit
corporation, received a $125,000 contribution restricted to youth activity programs.
During the year, youth activities generated revenues of $89,000 and had program
expenses of $95,000. What amount should Baker report as net assets released from
restrictions for the current year?, 🗹🗹: 95,000 - Only expenses incurred
, Page | 2
Q: The Pel Museum, a nongovernmental not-for-profit entity (NFP), received a
contribution of historical artifacts. It need not recognize the contribution if the artifacts
are to be sold and the proceeds used to, 🗹🗹: acquire other items for collection
Q: Birdlovers, a nongovernmental not-for-profit entity, incurred $5,000 in management
and general expenses during the year. In Birdlovers' statement of activities for the year
ended December 31, the $5,000 should be reported as, 🗹🗹: part of supporting
activities
Q: A not-for-profit voluntary health and welfare entity should report a contribution for
the construction of a new building as cash flows from which of the following in the
statement of cash flows?, 🗹🗹: financing activities
Q: Fact Pattern:
NFP, a nongovernmental not-for-profit entity, reported a change in net assets of $300,000
for the current year. Changes occurred in several balance sheet accounts as follows:
Equipment
$25,000 increase
Accumulated depreciation
40,000 increase
Note payable
30,000 increase
Additional Information:
During the current year, NFP sold equipment costing $25,000, with accumulated
depreciation of $12,000, for a gain of $5,000.
In December of the current year, NFP purchased equipment costing $50,000 with $20,000
cash and a 12% note payable of $30,000.
Depreciation expense for the year was $52,000.
In NFP's current-year statement of cash flows, net cash used in investing activities
should be?, 🗹🗹: 2,000
Q: A statement of cash flows is to be presented in general-purpose external financial
statements by which of the following?, 🗹🗹: All businesses and nongovernmental
not-for-profit entities.
Q: How should a nongovernmental, not-for-profit entity report donor-restricted cash
contributions for long-term purposes in its statement of cash flows?, 🗹🗹: Financing
activity inflow.
