NFP FINAL EXAM GUIDE QUESTION
WITH CORRECT ANSWERS
D - ANSWER-In accordance with FASB standards, securities donated to a nonprofit
organization should be recorded at the:
A) donors recorded amount
B) fair value at the date of the gift, or the donors recorded amount, which ever is
lower
C) Fair value at the date of the gift, or the donors recorded amount, whichever is
higher
D) fair value at the gift
B - ANSWER-Which of the following would be reported as an asset with restrictions
on use?
A) a cash contribution from a program activity, such as diabetes research
B) a cash contribution for a new building
C) cash restricted by debt covenants with lenders
D) cash restricted by the board for purchase of new computer equipment
B - ANSWER-A contribution is considered conditional if the donor agreement
includes a barrier that the not-for-profit must overcome before being entitled to the
contribution. Which of the following would not indicate that a barrier exists?
A) a stipulation limiting the discretion a not for profit has to conduct an activity
B) a stimulation that the not for profit must use the contribution to support the
mission of the organization
C) a stipulation that not-for-profit must achieve a specified level of service or a
specified outcome
D) a stipulation that not for profit must report a summary of the results from a
research grant
D - ANSWER-Which of the following statements is true regarding generally accepted
accounting principles for colleges and universities?
A) the FAS has standards for private and public colleges and universities from the
time of its inception in 1974.
B) the national Association of colleges and university business officers provides
category B accounting principles under the FASB GAAP hierarchy.
C) public and private colleges and universities are subject to the requirements in the
AICPA audit and accounting guide for not for profit entities
D) GASB is responsible for establishing GAAP for public colleges and universities.
B - ANSWER-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 to
be recorded as a contribution and as an expense?
, A) the service creates or enhances non-financial assets, such as a carpenter
renovating a building
B) the service requires a specialized skill and is provided by somebody who
possesses the specialized skill, such as a lawyer preparing contracts
C) the service supplements the management function, such as an auditor preparing
a program audit, which is not normally done
D) All of the given conditions must be met for contributed services to be recognized
as a contribution and an expense
C - ANSWER-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 nonprofit organization on its statement of cash flows?
A) operating activity
B) investing activity
C) financing activity
D) and related financing activity
B - ANSWER-According to the FASB, net assets with donor restrictions are released
from restrictions:
A) at the end of the fiscal year
B) as assets are spent for the purposes intended by the donor
C) when funds are returned to the donor
D) when all donor conditions have been met
D - ANSWER-A Not-for-profit organization incurred $10,000 in management and
general expenses in the current fiscal year. When reporting the expenses function,
the $10,000 would be reported as:
A) a deduction from program revenue
B) fundraising expense
C) program service expenses
D) supporting services expenses
D - ANSWER-Which of the following is not a step in the tuition and the revenue
recognition process for private colleges and universities?
A) identify the contract with the customer
B) Determine the transaction price
C) identify the performance applications in the contract
D) allocate the performance obligations to the appropriate period
B - ANSWER-A private college would report which of the following assets differently
than a public college?
A) land
B) intangible assets
C) collections
D) equipment
WITH CORRECT ANSWERS
D - ANSWER-In accordance with FASB standards, securities donated to a nonprofit
organization should be recorded at the:
A) donors recorded amount
B) fair value at the date of the gift, or the donors recorded amount, which ever is
lower
C) Fair value at the date of the gift, or the donors recorded amount, whichever is
higher
D) fair value at the gift
B - ANSWER-Which of the following would be reported as an asset with restrictions
on use?
A) a cash contribution from a program activity, such as diabetes research
B) a cash contribution for a new building
C) cash restricted by debt covenants with lenders
D) cash restricted by the board for purchase of new computer equipment
B - ANSWER-A contribution is considered conditional if the donor agreement
includes a barrier that the not-for-profit must overcome before being entitled to the
contribution. Which of the following would not indicate that a barrier exists?
A) a stipulation limiting the discretion a not for profit has to conduct an activity
B) a stimulation that the not for profit must use the contribution to support the
mission of the organization
C) a stipulation that not-for-profit must achieve a specified level of service or a
specified outcome
D) a stipulation that not for profit must report a summary of the results from a
research grant
D - ANSWER-Which of the following statements is true regarding generally accepted
accounting principles for colleges and universities?
A) the FAS has standards for private and public colleges and universities from the
time of its inception in 1974.
B) the national Association of colleges and university business officers provides
category B accounting principles under the FASB GAAP hierarchy.
C) public and private colleges and universities are subject to the requirements in the
AICPA audit and accounting guide for not for profit entities
D) GASB is responsible for establishing GAAP for public colleges and universities.
B - ANSWER-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 to
be recorded as a contribution and as an expense?
, A) the service creates or enhances non-financial assets, such as a carpenter
renovating a building
B) the service requires a specialized skill and is provided by somebody who
possesses the specialized skill, such as a lawyer preparing contracts
C) the service supplements the management function, such as an auditor preparing
a program audit, which is not normally done
D) All of the given conditions must be met for contributed services to be recognized
as a contribution and an expense
C - ANSWER-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 nonprofit organization on its statement of cash flows?
A) operating activity
B) investing activity
C) financing activity
D) and related financing activity
B - ANSWER-According to the FASB, net assets with donor restrictions are released
from restrictions:
A) at the end of the fiscal year
B) as assets are spent for the purposes intended by the donor
C) when funds are returned to the donor
D) when all donor conditions have been met
D - ANSWER-A Not-for-profit organization incurred $10,000 in management and
general expenses in the current fiscal year. When reporting the expenses function,
the $10,000 would be reported as:
A) a deduction from program revenue
B) fundraising expense
C) program service expenses
D) supporting services expenses
D - ANSWER-Which of the following is not a step in the tuition and the revenue
recognition process for private colleges and universities?
A) identify the contract with the customer
B) Determine the transaction price
C) identify the performance applications in the contract
D) allocate the performance obligations to the appropriate period
B - ANSWER-A private college would report which of the following assets differently
than a public college?
A) land
B) intangible assets
C) collections
D) equipment
