ACCT 4421 Ch 13-14 SB UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Accountants and auditors play a critical role in assuring stakeholders that all NFS have ______. -
CORRECT ANSWER - - effectively and efficiently used the assets with which they were
entrusted
- complied with applicable laws and regulations
Which of the following statements are true? - CORRECT ANSWER - - The goal of NFP
organizations is generally related to providing a service.
- NFP success is often measured by how the organization contributes to public well-being.
The power to give legal life to an NFP (in the form of a not-for-profit corporation or limited
liability company or as a charitable trust) resides with which of the following? - CORRECT
ANSWER - state
States generally have built into the not-for-profit corporation laws the requirement that
organizers do which of the following? - CORRECT ANSWER - - designate a resident
agent and address
- choose a name that is not misleading or in use by another corporation
- appoint a board of directors
The direct or indirect request for money, credit, property, financial assistance, or other things of
value on the representation that these assets will be used for a charitable purpose is referred to as
______. - CORRECT ANSWER - charitable solicitation
,True or false: All NFPs are accountable to the state government that grants them their legal
existence; the federal government, which grants them tax-exempt status; their own governing
board; individual donors and grantors; consumers of their services; and the public at large. -
CORRECT ANSWER - False
[Reason: Churches, which are NFPs, do not require the state and federal governments to grant
them legal and tax-exempt status because of the historic constitutional separation of church and
state in the United States.]
A widely accepted definition of a not-for-profit organization is one whose goals ______. -
CORRECT ANSWER - - involve something other than earning a profit for owners
- usually involve providing a service
To be relieved from the property tax, the NFP may have to file for specific tax exemption and
document that the property ______. - CORRECT ANSWER - is in use for charitable
purposes
Once an organization is recognized by the state as an NFP, the state's responsibilities include
which of the following? - CORRECT ANSWER - - detecting cases when managers or
directors have defrauded the charity and the public
- detecting cases when managers or directors have mismanaged the charity
- detecting cases when managers or directors have diverted resources
Upon conferring the NFP legal status separate from the incorporators, the entity that bears
oversight responsibility for the NFP is the ______. - CORRECT ANSWER - state
The impact of excessive political activity on NFPs can be significant as a result of which of the
following? - CORRECT ANSWER - - negative publicity that may harm future fund-
raising efforts
, - the potential for revocation of exemption from taxes
- the harsh sanctions for violating these laws
Which of the following is required by most states that grant charitable solicitation licenses? -
CORRECT ANSWER - annual compliance reporting
Required annual filings made by NFPs to the IRS include an annual ______. - CORRECT
ANSWER - - exempt organizations information return (on Form 990, 990-EZ, or 990-N)
- unrelated business income tax (UBIT) (on Form 990-T)
If a state has conferred not-for-profit corporation status on an organization, which of the
following is accurate? - CORRECT ANSWER - The NFP must still apply to the IRS for
exemption from federal income tax.
With regards to taxes levied by state and local governments, NFPs are often ______. -
CORRECT ANSWER - exempted from both state and local taxes
The articles of incorporation must limit an entity's purposes to those described in the
classifications of IRC section 501 under the ______. - CORRECT ANSWER -
organizational test
Once an organization is recognized by the state as an NFP, the responsibility to represent public
beneficiaries of charities and contributors lies with which of the following? - CORRECT
ANSWER - state
The NFP must provide the contributor with written disclosure of the contribution amount for a
single charitable contribution equal to or greater than what amount? - CORRECT
ANSWER - $75
ACTUAL Exam Questions and CORRECT
Answers
Accountants and auditors play a critical role in assuring stakeholders that all NFS have ______. -
CORRECT ANSWER - - effectively and efficiently used the assets with which they were
entrusted
- complied with applicable laws and regulations
Which of the following statements are true? - CORRECT ANSWER - - The goal of NFP
organizations is generally related to providing a service.
- NFP success is often measured by how the organization contributes to public well-being.
The power to give legal life to an NFP (in the form of a not-for-profit corporation or limited
liability company or as a charitable trust) resides with which of the following? - CORRECT
ANSWER - state
States generally have built into the not-for-profit corporation laws the requirement that
organizers do which of the following? - CORRECT ANSWER - - designate a resident
agent and address
- choose a name that is not misleading or in use by another corporation
- appoint a board of directors
The direct or indirect request for money, credit, property, financial assistance, or other things of
value on the representation that these assets will be used for a charitable purpose is referred to as
______. - CORRECT ANSWER - charitable solicitation
,True or false: All NFPs are accountable to the state government that grants them their legal
existence; the federal government, which grants them tax-exempt status; their own governing
board; individual donors and grantors; consumers of their services; and the public at large. -
CORRECT ANSWER - False
[Reason: Churches, which are NFPs, do not require the state and federal governments to grant
them legal and tax-exempt status because of the historic constitutional separation of church and
state in the United States.]
A widely accepted definition of a not-for-profit organization is one whose goals ______. -
CORRECT ANSWER - - involve something other than earning a profit for owners
- usually involve providing a service
To be relieved from the property tax, the NFP may have to file for specific tax exemption and
document that the property ______. - CORRECT ANSWER - is in use for charitable
purposes
Once an organization is recognized by the state as an NFP, the state's responsibilities include
which of the following? - CORRECT ANSWER - - detecting cases when managers or
directors have defrauded the charity and the public
- detecting cases when managers or directors have mismanaged the charity
- detecting cases when managers or directors have diverted resources
Upon conferring the NFP legal status separate from the incorporators, the entity that bears
oversight responsibility for the NFP is the ______. - CORRECT ANSWER - state
The impact of excessive political activity on NFPs can be significant as a result of which of the
following? - CORRECT ANSWER - - negative publicity that may harm future fund-
raising efforts
, - the potential for revocation of exemption from taxes
- the harsh sanctions for violating these laws
Which of the following is required by most states that grant charitable solicitation licenses? -
CORRECT ANSWER - annual compliance reporting
Required annual filings made by NFPs to the IRS include an annual ______. - CORRECT
ANSWER - - exempt organizations information return (on Form 990, 990-EZ, or 990-N)
- unrelated business income tax (UBIT) (on Form 990-T)
If a state has conferred not-for-profit corporation status on an organization, which of the
following is accurate? - CORRECT ANSWER - The NFP must still apply to the IRS for
exemption from federal income tax.
With regards to taxes levied by state and local governments, NFPs are often ______. -
CORRECT ANSWER - exempted from both state and local taxes
The articles of incorporation must limit an entity's purposes to those described in the
classifications of IRC section 501 under the ______. - CORRECT ANSWER -
organizational test
Once an organization is recognized by the state as an NFP, the responsibility to represent public
beneficiaries of charities and contributors lies with which of the following? - CORRECT
ANSWER - state
The NFP must provide the contributor with written disclosure of the contribution amount for a
single charitable contribution equal to or greater than what amount? - CORRECT
ANSWER - $75
