©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
NFP Test Exam Questions And Answers
|Latest 2025 | Guaranteed Pass.
Describe the source of accounting standards for nongovernment nonbusiness organizations
(NNOs). - Answer✔in 1979, FASB assumed responsibility for setting accounting standards for all
nonbusiness organizations, except government units. Government units follow the direction of
the GASB.
Identify the three basic statements for NNOs - Answer✔-Statement of financial position
(balance sheet)
-statement of activities
-statement of cash flows
Describe the basic funds used by nongovernment nonbusiness organizations - Answer✔1.
Current Funds (restr. & unrestr.)
2. Plant Funds
3. Endowment Funds
4. Loan Funds
5. Agency (custodial) Funds
6. Annuity (Life income) Funds
Distinguish between a current restricted fund and an unrestricted fund - Answer✔Current
Restricted: Resources that can only be expended in accordance with externally imposed
restrictions.
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, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
Current Unrestricted: Resources that may expended at the discretion of the governing board.
Explain the term "assets whose used is limited" - Answer✔The governing board may designate
resources of the current unrestricted fund for specific purposes, projects, or investments.
Distinguish between a mandatory and a nonmandatory transfer - Answer✔Specifically for
colleges and universities.
Mandatory Transfers: Interfund transfers made because of binding legal agreements or
agreements made in receiving grants.
Nonmandatory Transfers: Includes any other transfer from the current funds to other funds
made at the discretion of the governing board.
Explain how contributions are recorded by NNOs - Answer✔Contributions, including
unconditional promises, are recognized as revenue in the period received.
Understand how donated services are recorded - Answer✔If certain conditions are met,
donated services are recognized as both revenue and expense.
Describe the funds used to account for property, plant, and equipment - Answer✔Plant funds
may include an unexpended plant fund (to account for resources used to purchase plant and
equipment), funds for renewals and replacement, funds for retirement of indebtness, and
investment in plant (to account for the assets and the related debt)
Explain the basic accounting used by endowment funds - Answer✔When the endowment fund
receives interest or dividends on endowment investments, the cash is recorded against a "due
to fund" account. When the appropriate fund receives the cash, it is recognized as income for
that fund. Also, any expenditures paid with the income of the endowment is recognized as an
expense of the fund that incurred that expenditure.
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NFP Test Exam Questions And Answers
|Latest 2025 | Guaranteed Pass.
Describe the source of accounting standards for nongovernment nonbusiness organizations
(NNOs). - Answer✔in 1979, FASB assumed responsibility for setting accounting standards for all
nonbusiness organizations, except government units. Government units follow the direction of
the GASB.
Identify the three basic statements for NNOs - Answer✔-Statement of financial position
(balance sheet)
-statement of activities
-statement of cash flows
Describe the basic funds used by nongovernment nonbusiness organizations - Answer✔1.
Current Funds (restr. & unrestr.)
2. Plant Funds
3. Endowment Funds
4. Loan Funds
5. Agency (custodial) Funds
6. Annuity (Life income) Funds
Distinguish between a current restricted fund and an unrestricted fund - Answer✔Current
Restricted: Resources that can only be expended in accordance with externally imposed
restrictions.
1|P a g e
, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
Current Unrestricted: Resources that may expended at the discretion of the governing board.
Explain the term "assets whose used is limited" - Answer✔The governing board may designate
resources of the current unrestricted fund for specific purposes, projects, or investments.
Distinguish between a mandatory and a nonmandatory transfer - Answer✔Specifically for
colleges and universities.
Mandatory Transfers: Interfund transfers made because of binding legal agreements or
agreements made in receiving grants.
Nonmandatory Transfers: Includes any other transfer from the current funds to other funds
made at the discretion of the governing board.
Explain how contributions are recorded by NNOs - Answer✔Contributions, including
unconditional promises, are recognized as revenue in the period received.
Understand how donated services are recorded - Answer✔If certain conditions are met,
donated services are recognized as both revenue and expense.
Describe the funds used to account for property, plant, and equipment - Answer✔Plant funds
may include an unexpended plant fund (to account for resources used to purchase plant and
equipment), funds for renewals and replacement, funds for retirement of indebtness, and
investment in plant (to account for the assets and the related debt)
Explain the basic accounting used by endowment funds - Answer✔When the endowment fund
receives interest or dividends on endowment investments, the cash is recorded against a "due
to fund" account. When the appropriate fund receives the cash, it is recognized as income for
that fund. Also, any expenditures paid with the income of the endowment is recognized as an
expense of the fund that incurred that expenditure.
2|P a g e
