NFP CERTIFICATION SCRIPT 2026 QUESTIONS WITH
SOLUTIONS GRADED A+
● True. Answer: True or False: Not-for-profit entities are defined by the FASB as entities that
have the following characteristics: 1) Their revenue come from contributions 2) Their
operating purpose does not include profit although there is nothing to preclude the generation
of profit. 3) Their ownership interest are unlike business enterprises.
● Health Care Organization, Education Institutions, Voluntary Health and Welfare
Organizations, Other Private (Non Governmental) Not-For-Profit Organizations. Answer:
What four industries are NFP entities generally categorized into?
● True. Answer: True or False: Users of NFP financial statements include donors, members,
creditors, and others who provide resources to the not-for-profit entity (i.e. the government via
grants, etc.)
● FASB. Answer: What accounting board oversees NFP?
● Statement of Financial Position. Answer: The amount and nature of an organization's
assets, liabilities, and net assets would be found in which financial statement for a NFP?
● Statement of Activities. Answer: The effects of events and circumstances that change the
amount and nature of net assets would be found in which financial statement for a NFP?
● Statement of Activities. Answer: The relationship between the inflows and outflows would
be found in which financial statement for a NFP?
● Statement of Cash Flows. Answer: How an organization obtains and spends cash would
be found in which financial statement for a NFP?
● Statement of Functional Expenses. Answer: The service efforts of an organization would
be found in which financial statement for a NFP?
● Statement of Activities. Answer: The amount and kinds of inflows and outflows of
economic resources occurring within a period would be found in which financial statement for
a NFP?
● Full accrual basis of accounting. Answer: Which basis of accounting do NFP
organizations report on?
, ● True. Answer: True or False: The primary reporting emphasis, for NFP organizations, is
placed on disclosing the sources of the institution's resources and how they were expended,
rather than on the periodic determination of net income.
● True. Answer: True or False: External financial statements must focus on the basic
information for the organization as a whole.
● GASB, governmental not-for-profits are not affected by FASB ASC 958. Answer:
Would a Governmental NFP (i.e. a state university) conform to GASB or FASB?
● Voluntary health and welfare organizations (i.e. United Way, Red Cross, March of
Dimes). Answer: Which NFP organization is required to include a Statement of Functional
Expenses as a part of its required financial statements?
● Statement of Financial Position. Answer: What is the name of the financial statement that
serves as the balance sheet for NFP organizations?
● Statement of Activities. Answer: What is the name of the financial statement that serves
as the income statement and statement of retained earnings for NFP organizations?
● *Note, this is not called funds, fund balances, or retained earnings. Answer: The NFP
Statement of Financial Position is divided into which three major components?
● Unrestricted, Temporarily Restricted, and Permanently Restricted. Answer: What are
the three types of restrictions that net assets can be classified as?
● True. Answer: True or False: The statement of financial position must include total assets,
total liabilities, unrestricted net assets, temporarily restricted net assets, permanently
restricted net assets, and total net assets.
● Unrestricted net assets. Answer: __________ ________ _______ are available to finance
general operations of the particular organization, and may be expanded at the discretion of
the governing board.
● False; Internal board-designated funds are considered unrestricted.. Answer: True or
False: Internal board-designated funds are not considered unrestricted.
● Temporarily Restricted Net Assets. Answer: ________ _______ _____ ______ are
similar to permanently restricted net assets, except the donor-imposed stipulations either
expire by passage of time or can be fulfilled and removed by actions of the organization.
● False; Temporarily restricted net assets should not be displayed as a deficit.. Answer:
True or False: Temporarily restricted net assets should be displayed as a deficit.
SOLUTIONS GRADED A+
● True. Answer: True or False: Not-for-profit entities are defined by the FASB as entities that
have the following characteristics: 1) Their revenue come from contributions 2) Their
operating purpose does not include profit although there is nothing to preclude the generation
of profit. 3) Their ownership interest are unlike business enterprises.
● Health Care Organization, Education Institutions, Voluntary Health and Welfare
Organizations, Other Private (Non Governmental) Not-For-Profit Organizations. Answer:
What four industries are NFP entities generally categorized into?
● True. Answer: True or False: Users of NFP financial statements include donors, members,
creditors, and others who provide resources to the not-for-profit entity (i.e. the government via
grants, etc.)
● FASB. Answer: What accounting board oversees NFP?
● Statement of Financial Position. Answer: The amount and nature of an organization's
assets, liabilities, and net assets would be found in which financial statement for a NFP?
● Statement of Activities. Answer: The effects of events and circumstances that change the
amount and nature of net assets would be found in which financial statement for a NFP?
● Statement of Activities. Answer: The relationship between the inflows and outflows would
be found in which financial statement for a NFP?
● Statement of Cash Flows. Answer: How an organization obtains and spends cash would
be found in which financial statement for a NFP?
● Statement of Functional Expenses. Answer: The service efforts of an organization would
be found in which financial statement for a NFP?
● Statement of Activities. Answer: The amount and kinds of inflows and outflows of
economic resources occurring within a period would be found in which financial statement for
a NFP?
● Full accrual basis of accounting. Answer: Which basis of accounting do NFP
organizations report on?
, ● True. Answer: True or False: The primary reporting emphasis, for NFP organizations, is
placed on disclosing the sources of the institution's resources and how they were expended,
rather than on the periodic determination of net income.
● True. Answer: True or False: External financial statements must focus on the basic
information for the organization as a whole.
● GASB, governmental not-for-profits are not affected by FASB ASC 958. Answer:
Would a Governmental NFP (i.e. a state university) conform to GASB or FASB?
● Voluntary health and welfare organizations (i.e. United Way, Red Cross, March of
Dimes). Answer: Which NFP organization is required to include a Statement of Functional
Expenses as a part of its required financial statements?
● Statement of Financial Position. Answer: What is the name of the financial statement that
serves as the balance sheet for NFP organizations?
● Statement of Activities. Answer: What is the name of the financial statement that serves
as the income statement and statement of retained earnings for NFP organizations?
● *Note, this is not called funds, fund balances, or retained earnings. Answer: The NFP
Statement of Financial Position is divided into which three major components?
● Unrestricted, Temporarily Restricted, and Permanently Restricted. Answer: What are
the three types of restrictions that net assets can be classified as?
● True. Answer: True or False: The statement of financial position must include total assets,
total liabilities, unrestricted net assets, temporarily restricted net assets, permanently
restricted net assets, and total net assets.
● Unrestricted net assets. Answer: __________ ________ _______ are available to finance
general operations of the particular organization, and may be expanded at the discretion of
the governing board.
● False; Internal board-designated funds are considered unrestricted.. Answer: True or
False: Internal board-designated funds are not considered unrestricted.
● Temporarily Restricted Net Assets. Answer: ________ _______ _____ ______ are
similar to permanently restricted net assets, except the donor-imposed stipulations either
expire by passage of time or can be fulfilled and removed by actions of the organization.
● False; Temporarily restricted net assets should not be displayed as a deficit.. Answer:
True or False: Temporarily restricted net assets should be displayed as a deficit.
