NFP MIDTERM EXAM SET QUESTIONS
AND ANSWERS
Which of the following types of health care entities follow FASB Accounting
Standards Codification for preparing financial statements?
Investor Owned Health Care Enterprises
NFP Organizations
Governmental Health Care Organizations
a) Yes, Yes, No
b) Yes, Yes, Yes
c) No, No, Yes
d) Yes, No, Yes
e) Yes, No, No - ANSWER-a) Yes, Yes, No
Not-for-profit entities that are eligible to obtain tax-exempt status under Internal
Revenue Code section 501(c)(4) are
a) Those promoting literacy.
b) Those promoting scientific research.
c) Chambers of Commerce
d) Professional sports leagues
e) Those functioning exclusively to promote social welfare. - ANSWER-e) Those
functioning exclusively to promote social welfare.
At the end of the year, an organization had assets of $15,000,000 and liabilities of
$9,000,000. What is the organization's net asset balance? - ANSWER-$6,000,000
During the current year, Mill Foundation, a nongovernmental not-for-profit
organization, received $100,000 in contributions without donor restrictions from the
general public. Mill's board of directors stipulated that $75,000 of these contributions
would be used to create an endowment. At the end of the current year, how should
Mill report the $75,000 in the net assets section of the statement of financial
position? - ANSWER-Net assets without donor restriction
A non-profit organization reported $150,000 in fundraising costs, $75,000 in
management and general costs, and $25,000 in program costs. How much should
the organization report in support services? - ANSWER-$225,000
n Year 6, a donor gives $112,000 to a private not-for-profit entity with the stipulation
that the funds be used to buy a new bus for transportation purposes. Near the end of
Year 7, this money is used for the stipulated purpose. Which of the following is true
about the statement of activities for Year 7? - ANSWER-Net assets without donor
restrictions increased by $112,000 and decreased by $112,000.
What is the basis of accounting used in reporting the Statement of Activities? -
ANSWER-Accrual Basis
The following gifts are received in 2019 by a not-for-profit entity:
1.$3,000 specified by the donor to be used to pay salaries.
, 2.$12,000 specified by the donor for new conference room furniture.
3.$6,000 specified by the donor to be held for one year before being expended.
The salaries are paid in 2020 and the conference room furniture is purchased in
2019. The donor did not specify any time restriction on holding the conference room
furniture.
With respect to the donations received in 2019, what amount should be reported in
the Statement of Activities as net increase to Net Assets with Donor Restrictions for
the year 2019? - ANSWER-$9,000
On a statement of functional expenses for a non-profit entity, how are expenses
classified? - ANSWER-Program services expenses and supporting services
expenses.
How would proceeds/ disbursements from the sale of works of art be classified in the
statement of cash flows for a not-for-profit organizaiton? - ANSWER-Investing
Which of the following topics are not included in the Form 990 which tax-exempt
entities file to maintain their tax-exempt status?
a) Compensation of Officers, Directors, Trustees, Key Employees, Highest
Compensated Employees and Independent Contractors.
b) Donor Disclosure: Identification of Every Donor by Name, Contribution Value &
Contribution Type.
c) Statement of Revenue
d) Balance Sheet
e) Statement of Functional Expenses - ANSWER-b) Donor Disclosure: Identification
of Every Donor by Name, Contribution Value & Contribution Type.
Which of the following types of information would be included in total net assets in
the statement of financial position for a non-profit organization?
a) Total current assets and unrestricted assets
b) Net assets without donor restrictions and current assets with restriction
c) Temporarily restricted net assets and total restricted net assets
d) Net assets without donor restrictions and net assets with donor restrictions -
ANSWER-d) Net assets without donor restrictions and net assets with donor
restrictions
Which of the following is not a benefit of Internal Revenue Code Section 501(c)(3)
status?
a) Exemption from paying federal taxes on most income.
b) Likely exemption form paying state taxes on most income.
c) Charitable donations to 50l(c)(3) entities can reduce the donor's taxable income.
d) Can engage in political election campaign activity. - ANSWER-d) Can engage in
political election campaign activity.
Not-for-profit entities are required to present information about the nature and
function of expenses and this information can be reported in which of the following? -
ANSWER-Statement of Activities, Statement of Functional Expenses, or notes to
financial statements.
AND ANSWERS
Which of the following types of health care entities follow FASB Accounting
Standards Codification for preparing financial statements?
Investor Owned Health Care Enterprises
NFP Organizations
Governmental Health Care Organizations
a) Yes, Yes, No
b) Yes, Yes, Yes
c) No, No, Yes
d) Yes, No, Yes
e) Yes, No, No - ANSWER-a) Yes, Yes, No
Not-for-profit entities that are eligible to obtain tax-exempt status under Internal
Revenue Code section 501(c)(4) are
a) Those promoting literacy.
b) Those promoting scientific research.
c) Chambers of Commerce
d) Professional sports leagues
e) Those functioning exclusively to promote social welfare. - ANSWER-e) Those
functioning exclusively to promote social welfare.
At the end of the year, an organization had assets of $15,000,000 and liabilities of
$9,000,000. What is the organization's net asset balance? - ANSWER-$6,000,000
During the current year, Mill Foundation, a nongovernmental not-for-profit
organization, received $100,000 in contributions without donor restrictions from the
general public. Mill's board of directors stipulated that $75,000 of these contributions
would be used to create an endowment. At the end of the current year, how should
Mill report the $75,000 in the net assets section of the statement of financial
position? - ANSWER-Net assets without donor restriction
A non-profit organization reported $150,000 in fundraising costs, $75,000 in
management and general costs, and $25,000 in program costs. How much should
the organization report in support services? - ANSWER-$225,000
n Year 6, a donor gives $112,000 to a private not-for-profit entity with the stipulation
that the funds be used to buy a new bus for transportation purposes. Near the end of
Year 7, this money is used for the stipulated purpose. Which of the following is true
about the statement of activities for Year 7? - ANSWER-Net assets without donor
restrictions increased by $112,000 and decreased by $112,000.
What is the basis of accounting used in reporting the Statement of Activities? -
ANSWER-Accrual Basis
The following gifts are received in 2019 by a not-for-profit entity:
1.$3,000 specified by the donor to be used to pay salaries.
, 2.$12,000 specified by the donor for new conference room furniture.
3.$6,000 specified by the donor to be held for one year before being expended.
The salaries are paid in 2020 and the conference room furniture is purchased in
2019. The donor did not specify any time restriction on holding the conference room
furniture.
With respect to the donations received in 2019, what amount should be reported in
the Statement of Activities as net increase to Net Assets with Donor Restrictions for
the year 2019? - ANSWER-$9,000
On a statement of functional expenses for a non-profit entity, how are expenses
classified? - ANSWER-Program services expenses and supporting services
expenses.
How would proceeds/ disbursements from the sale of works of art be classified in the
statement of cash flows for a not-for-profit organizaiton? - ANSWER-Investing
Which of the following topics are not included in the Form 990 which tax-exempt
entities file to maintain their tax-exempt status?
a) Compensation of Officers, Directors, Trustees, Key Employees, Highest
Compensated Employees and Independent Contractors.
b) Donor Disclosure: Identification of Every Donor by Name, Contribution Value &
Contribution Type.
c) Statement of Revenue
d) Balance Sheet
e) Statement of Functional Expenses - ANSWER-b) Donor Disclosure: Identification
of Every Donor by Name, Contribution Value & Contribution Type.
Which of the following types of information would be included in total net assets in
the statement of financial position for a non-profit organization?
a) Total current assets and unrestricted assets
b) Net assets without donor restrictions and current assets with restriction
c) Temporarily restricted net assets and total restricted net assets
d) Net assets without donor restrictions and net assets with donor restrictions -
ANSWER-d) Net assets without donor restrictions and net assets with donor
restrictions
Which of the following is not a benefit of Internal Revenue Code Section 501(c)(3)
status?
a) Exemption from paying federal taxes on most income.
b) Likely exemption form paying state taxes on most income.
c) Charitable donations to 50l(c)(3) entities can reduce the donor's taxable income.
d) Can engage in political election campaign activity. - ANSWER-d) Can engage in
political election campaign activity.
Not-for-profit entities are required to present information about the nature and
function of expenses and this information can be reported in which of the following? -
ANSWER-Statement of Activities, Statement of Functional Expenses, or notes to
financial statements.
