NONPROFIT ACCOUNTING EXAM| COMPREHENSIVE
CERTIFICATION EXAM - LATEST PRACTICE QUESTIONS AND
100% VERIFIED CORRECT ANSWERS | COMPLETE EXAM PREP
TESTBANK | GUARANTEED PASS | INSTANT DOWNLOAD PDF
Exam Coverage Overview:
This examination comprehensively assesses nonprofit accounting in accordance with current professional
standards including financial reporting under U.S. GAAP (FASB ASC 958), fund accounting principles,
donor restrictions, net asset classifications, revenue recognition (including contributions vs exchange
transactions), grants accounting, functional expense allocation, statement presentation, endowments
(including UPMIFA), internal controls, auditing considerations, ethics, governance, taxation (Form 990,
UBIT), budgeting, governmental interface considerations, consolidations, joint costs, and real-world
scenario-based applications.
1. Which financial statements are required for a nonprofit organization under
U.S. GAAP?
A. Balance Sheet and Income Statement only
B. Statement of Financial Position only
C. Statement of Financial Position and Statement of Activities only
D. Statement of Financial Position, Statement of Activities, Statement of
Cash Flows, and Statement of Functional Expenses (if required)
The required statements include Statement of Financial Position, Statement of
Activities, Statement of Cash Flows, and for voluntary health and welfare entities,
a Statement of Functional Expenses.
2. Net assets without donor restrictions are best described as:
A. Permanently restricted funds
B. Temporarily restricted funds
C. Resources available for general operations at the discretion of the
board
D. Endowment principal
,Net assets without donor restrictions are available for general use unless
internally designated.
3. A donor contributes cash restricted for the purchase of equipment. How is
this classified?
A. Without donor restrictions
B. With donor restrictions
C. Agency liability
D. Deferred revenue
Purpose restrictions result in classification as net assets with donor restrictions.
4. When a donor restriction is satisfied, the nonprofit should:
A. Reverse revenue
B. Record deferred income
C. Reclassify net assets from with donor restrictions to without donor
restrictions
D. Record a liability
Upon satisfaction, a reclassification (release from restriction) occurs.
5. Contributions are recognized as revenue when:
A. Cash is received
B. Earned
C. An unconditional promise to give is received
D. Restrictions are met
Unconditional promises are recognized when made.
, 6. Conditional promises to give are recognized when:
A. Promised
B. Documented
C. Conditions are substantially met
D. Cash is pledged
Conditional contributions are recognized only after conditions are satisfied.
7. Which of the following is an exchange transaction?
A. A general donation
B. A restricted gift
C. A membership fee providing commensurate benefits
D. A bequest
Exchange transactions involve reciprocal value.
8. In-kind donations should be recorded at:
A. Donor’s cost
B. Zero
C. Fair value at date of donation
D. Net realizable value only if sold
GAAP requires recognition at fair value.
9. Volunteer services are recognized if:
A. All volunteer services are recorded
B. They create or enhance nonfinancial assets or require specialized
skills
, C. They exceed 100 hours
D. Board approved
Only qualifying volunteer services are recognized.
10.The Statement of Activities reports:
A. Assets and liabilities
B. Changes in net assets by class
C. Functional expenses only
D. Capital expenditures
It reports revenues, expenses, and changes in net assets.
11.Endowment funds where only income may be spent are classified as:
A. Without donor restrictions
B. With donor restrictions (perpetual in nature)
C. Board-designated
D. Deferred revenue
Donor-restricted endowments are perpetual.
12.Board-designated endowments are classified as:
A. With donor restrictions
B. Permanently restricted
C. Without donor restrictions
D. Agency funds
Board designations do not create donor restrictions.
CERTIFICATION EXAM - LATEST PRACTICE QUESTIONS AND
100% VERIFIED CORRECT ANSWERS | COMPLETE EXAM PREP
TESTBANK | GUARANTEED PASS | INSTANT DOWNLOAD PDF
Exam Coverage Overview:
This examination comprehensively assesses nonprofit accounting in accordance with current professional
standards including financial reporting under U.S. GAAP (FASB ASC 958), fund accounting principles,
donor restrictions, net asset classifications, revenue recognition (including contributions vs exchange
transactions), grants accounting, functional expense allocation, statement presentation, endowments
(including UPMIFA), internal controls, auditing considerations, ethics, governance, taxation (Form 990,
UBIT), budgeting, governmental interface considerations, consolidations, joint costs, and real-world
scenario-based applications.
1. Which financial statements are required for a nonprofit organization under
U.S. GAAP?
A. Balance Sheet and Income Statement only
B. Statement of Financial Position only
C. Statement of Financial Position and Statement of Activities only
D. Statement of Financial Position, Statement of Activities, Statement of
Cash Flows, and Statement of Functional Expenses (if required)
The required statements include Statement of Financial Position, Statement of
Activities, Statement of Cash Flows, and for voluntary health and welfare entities,
a Statement of Functional Expenses.
2. Net assets without donor restrictions are best described as:
A. Permanently restricted funds
B. Temporarily restricted funds
C. Resources available for general operations at the discretion of the
board
D. Endowment principal
,Net assets without donor restrictions are available for general use unless
internally designated.
3. A donor contributes cash restricted for the purchase of equipment. How is
this classified?
A. Without donor restrictions
B. With donor restrictions
C. Agency liability
D. Deferred revenue
Purpose restrictions result in classification as net assets with donor restrictions.
4. When a donor restriction is satisfied, the nonprofit should:
A. Reverse revenue
B. Record deferred income
C. Reclassify net assets from with donor restrictions to without donor
restrictions
D. Record a liability
Upon satisfaction, a reclassification (release from restriction) occurs.
5. Contributions are recognized as revenue when:
A. Cash is received
B. Earned
C. An unconditional promise to give is received
D. Restrictions are met
Unconditional promises are recognized when made.
, 6. Conditional promises to give are recognized when:
A. Promised
B. Documented
C. Conditions are substantially met
D. Cash is pledged
Conditional contributions are recognized only after conditions are satisfied.
7. Which of the following is an exchange transaction?
A. A general donation
B. A restricted gift
C. A membership fee providing commensurate benefits
D. A bequest
Exchange transactions involve reciprocal value.
8. In-kind donations should be recorded at:
A. Donor’s cost
B. Zero
C. Fair value at date of donation
D. Net realizable value only if sold
GAAP requires recognition at fair value.
9. Volunteer services are recognized if:
A. All volunteer services are recorded
B. They create or enhance nonfinancial assets or require specialized
skills
, C. They exceed 100 hours
D. Board approved
Only qualifying volunteer services are recognized.
10.The Statement of Activities reports:
A. Assets and liabilities
B. Changes in net assets by class
C. Functional expenses only
D. Capital expenditures
It reports revenues, expenses, and changes in net assets.
11.Endowment funds where only income may be spent are classified as:
A. Without donor restrictions
B. With donor restrictions (perpetual in nature)
C. Board-designated
D. Deferred revenue
Donor-restricted endowments are perpetual.
12.Board-designated endowments are classified as:
A. With donor restrictions
B. Permanently restricted
C. Without donor restrictions
D. Agency funds
Board designations do not create donor restrictions.
