Accounting 405 Exam Test A+ Questions
and Answers Verified Solutions Latest
Update 2026/2027
Answer:
A. By the FASB Codification.
●● Under FASB standards how would a not-for-profit organization recognize a conditional
pledge?
Answer:
D. It would not recognize the conditional pledge until pledge
conditions are substantially met.
●● 35. The FASB Codification requires the following financial statements for all not-for-profit
organizations:
Answer:
C. Statement of financial position, statement of activities, and
statement of cash flows.
●● Which of the following statements is true regarding fund accounting for not-for-profit
organizations (NFPs)?
Answer:
B. Fund accounting can provide a good mechanism for
facilitating reporting to donors.
●● According to the FASB Codification, which of the following is a condition that must be met
for contributed services to a not-for-profit organization (NFP) to be recorded as both a contribution
and as an expense?
Answer:
B. The service requires a specialized skill and is provided by
someone who possesses the specialized skill, such as a lawyer preparing contracts.
●● An example of an increase in net assets for a not-for-profit organization that would be labeled
revenue rather than support is:
, Answer:
B. Investment income.
●● A donor provides a large cash contribution that is to be used for acquisition of a new building.
Under FASB standards, how would this contribution be reported by a not-for-profit organization on
its statement of cash flows?
Answer:
C. Financing activity.
●● The FASB states that depreciation expense in a not-for-profit organization should be:
Answer:
A. Assigned to or allocated to the functions to which it relates.
●● A not-for-profit (NFP) organization acting as a financial intermediary receives a contribution.
Under the FASB Codification the NFP would be most likely to recognize the contribution as a
liability under which of the following situations?
Answer:
B. The NFP is acting as an agent, receiving the contribution on
behalf of another organization
●● According to the FASB, temporarily restricted net assets are released from restrictions:
Answer:
B. As assets are spent for the purposes intended by the donor.
●● A local philanthropist made an unconditional pledge to donate $100,000 to a not-for-profit
organization to be paid in five equal installments of $20,000 beginning in two years. Under FASB
standards the pledge would be recognized as:
Answer:
D. A contribution of $100,000 in the year the pledge was made,
discounted for the difference between the pledge and its present value.
●● Which of the following statements is correct regarding reporting of special events and related
direct costs under current FASB standards?
and Answers Verified Solutions Latest
Update 2026/2027
Answer:
A. By the FASB Codification.
●● Under FASB standards how would a not-for-profit organization recognize a conditional
pledge?
Answer:
D. It would not recognize the conditional pledge until pledge
conditions are substantially met.
●● 35. The FASB Codification requires the following financial statements for all not-for-profit
organizations:
Answer:
C. Statement of financial position, statement of activities, and
statement of cash flows.
●● Which of the following statements is true regarding fund accounting for not-for-profit
organizations (NFPs)?
Answer:
B. Fund accounting can provide a good mechanism for
facilitating reporting to donors.
●● According to the FASB Codification, which of the following is a condition that must be met
for contributed services to a not-for-profit organization (NFP) to be recorded as both a contribution
and as an expense?
Answer:
B. The service requires a specialized skill and is provided by
someone who possesses the specialized skill, such as a lawyer preparing contracts.
●● An example of an increase in net assets for a not-for-profit organization that would be labeled
revenue rather than support is:
, Answer:
B. Investment income.
●● A donor provides a large cash contribution that is to be used for acquisition of a new building.
Under FASB standards, how would this contribution be reported by a not-for-profit organization on
its statement of cash flows?
Answer:
C. Financing activity.
●● The FASB states that depreciation expense in a not-for-profit organization should be:
Answer:
A. Assigned to or allocated to the functions to which it relates.
●● A not-for-profit (NFP) organization acting as a financial intermediary receives a contribution.
Under the FASB Codification the NFP would be most likely to recognize the contribution as a
liability under which of the following situations?
Answer:
B. The NFP is acting as an agent, receiving the contribution on
behalf of another organization
●● According to the FASB, temporarily restricted net assets are released from restrictions:
Answer:
B. As assets are spent for the purposes intended by the donor.
●● A local philanthropist made an unconditional pledge to donate $100,000 to a not-for-profit
organization to be paid in five equal installments of $20,000 beginning in two years. Under FASB
standards the pledge would be recognized as:
Answer:
D. A contribution of $100,000 in the year the pledge was made,
discounted for the difference between the pledge and its present value.
●● Which of the following statements is correct regarding reporting of special events and related
direct costs under current FASB standards?
