ACCT 4421 Module 7 Quiz UPDATED
ACTUAL Exam Questions and CORRECT
Answers
A term endowment is a gift - CORRECT ANSWER - The principal of which is available
for expenditure after a specified period of time
Harley Safe Place, a not-for-profit organization, received a pledge from a donor without
restrictions of $600,000. The donor promised to make payment within six months (which would
be in the organization's next fiscal year). At the time of the pledge, the organization should
recognize - CORRECT ANSWER - Revenue of $600,000 in a fund restricted by donors
Walden Institute, a not-for-profit, politically oriented association, was promised a $1 million
endowment on condition that it establish a program in entrepreneurial studies and hire a leading
scholar to lead it. Upon receiving the pledge the institute should recognize - CORRECT
ANSWER - Zero revenue
The Senior League, a not-for-profit welfare agency, redeemed a $100,000 bond that it had held
as an investment of resources without donor restrictions. It also received an interest payment of
$6,000. In its statement of cash flows, the league should report - CORRECT ANSWER -
$100,000 as a cash flow from investing activities and $6,000 as a cash flow from operating
activities
Enrex Corporation gave a not-for-profit research foundation $500,000 to conduct research
relating to the development of a new type of battery. Per the terms of the gift, Enrex owned the
rights to any patents issued as a consequence of the research, and controlled when and where the
research results would be published. At the time of receipt of the $500,000, the foundation
should recognize - CORRECT ANSWER - Deferred revenue of $500,000 in a fund not
restricted by donor
The Museum of Contemporary Art received two valuable paintings. The museum has determined
that one, with a market value of $7,000, is inappropriate for display and therefore will be sold
and the proceeds will be used to acquire another painting that can be displayed. The other, with a
market value of $10,000, will be placed on exhibit. The museum has a policy of not capitalizing
ACTUAL Exam Questions and CORRECT
Answers
A term endowment is a gift - CORRECT ANSWER - The principal of which is available
for expenditure after a specified period of time
Harley Safe Place, a not-for-profit organization, received a pledge from a donor without
restrictions of $600,000. The donor promised to make payment within six months (which would
be in the organization's next fiscal year). At the time of the pledge, the organization should
recognize - CORRECT ANSWER - Revenue of $600,000 in a fund restricted by donors
Walden Institute, a not-for-profit, politically oriented association, was promised a $1 million
endowment on condition that it establish a program in entrepreneurial studies and hire a leading
scholar to lead it. Upon receiving the pledge the institute should recognize - CORRECT
ANSWER - Zero revenue
The Senior League, a not-for-profit welfare agency, redeemed a $100,000 bond that it had held
as an investment of resources without donor restrictions. It also received an interest payment of
$6,000. In its statement of cash flows, the league should report - CORRECT ANSWER -
$100,000 as a cash flow from investing activities and $6,000 as a cash flow from operating
activities
Enrex Corporation gave a not-for-profit research foundation $500,000 to conduct research
relating to the development of a new type of battery. Per the terms of the gift, Enrex owned the
rights to any patents issued as a consequence of the research, and controlled when and where the
research results would be published. At the time of receipt of the $500,000, the foundation
should recognize - CORRECT ANSWER - Deferred revenue of $500,000 in a fund not
restricted by donor
The Museum of Contemporary Art received two valuable paintings. The museum has determined
that one, with a market value of $7,000, is inappropriate for display and therefore will be sold
and the proceeds will be used to acquire another painting that can be displayed. The other, with a
market value of $10,000, will be placed on exhibit. The museum has a policy of not capitalizing
