NFP TEST QUESTIONS AND ANSWERS
The current funds group of a not-for-profit private university includes which of the
following subgroups? - ANSWER-Term-Endowment Funds: No
Life-Income Funds: No
Tuition waivers for which there is no intention of collections from the student should
be classified by a not-for-profit university as - ANSWER-Revenue: Yes
Expenditures: Yes
Which of the following is utilized for current expenditures by a not-for-profit
university? - ANSWER-Unrestricted Current Funds: Yes
Restricted Current Funds: Yes
In the loan fund of a college or university, each of the following types of loans would
be found except - ANSWER-Faculty
Which of the following receipts is recorded as unrestricted current funds on the
books of a university? - ANSWER-Research Grants
The current funds group of a not-for-profit private university includes which of the
following? - ANSWER-Annuity Funds: No
Loan Funds: No
On January 2, 2015, John Reynolds established a $500,000 trust, the income from
which is to be paid to Mansfield University for general operating purposes. The
Wyndham National Bank was appointed by Reynolds as trustee of the fund. What
journal entry is required on Manfield's books? - ANSWER-Memo entry only
For the fall semester of 2015, Cherry College assessed its students $2,300,000 for
tuition and fees. The net amount realized was only $2,100,000 because of the
following revenue reductions:
-Refunds occasioned by class cancellations and student withdrawals (50,000)
-Tuition remission granted to faculty members' families (10,000)
-Scholarships and fellowships (140,000)
How much should Cherry College report for the report for the period for unrestricted
current funds revenues from tuition and fees? - ANSWER-2,250,000
During the years ending June 30, 2014 and June 30, 2015, Schafer University
conducted a cancer research project financed by a $2,000,000 gift from an alumnus.
This entire amount was pledged by the donor on July 10, 2013, although he paid
only $500,000 at that date. The gift was restricted to the financing of this particular
research project. During the two-year research project, Schafer's related gift receipts
and research expenditures were as follows:
-Gift Receipts 2014: 700,000 2015: 800,000
-Cancer resear. rest. exp. 2014: 900,000 2015: 1,100,000
, How much gift revenue should Schafer University report in the temporarily restricted
column of its statement of activities for the year ended June 30, 2015? - ANSWER-
1,100,000
Cura Foundation, a voluntary health and welfare organization, supported by
contribution from the general public, included the following costs in its statement of
functional expenses for the year ended December 31, 2016
-Fund Raising : 500,000
-Administrative : 300,000
-Research : 100,00
Cura's functional expenses for 2016 program services included - ANSWER-100,000
Community Service Center is a voluntary welfare organization funded by
contributions from the general public. During 2015 unrestricted pledges of $900,000
were received, half of which were payable in 2015 with the other half payable for use
in 2016. It was estimated that 10% of these pledges would be uncollectible. How
much should Community report as net contribution revenue for 2015 with respect to
the pledges? - ANSWER-810,000
Indicate how equity investments are reported in the financial statements - ANSWER-
Equity investments (less that 20% ownership) and all debt investments are reported
at fair value with any unrealized gains and losses reported on the Statement of
Activities.
Explain the change in accounting for loan funds brought about by new standards -
ANSWER-Loan funds are typically revolving in that repayments of loan balances and
interests are usually loaned to other individuals. Therefore, historically no revenues
and expenses have been recorded.
Understand the use of an annuity or life income fund - ANSWER-Sometimes donors
give institutions money with the condition that either a stated amount (annuity fund)
or a part of the earnings (life income fund) be paid to some beneficiary. The
organization records the investment at market value. A payable is recorded at the
present value of the estimated amount to be paid. Revenues are then recognized for
the difference. As payments are made, that payable is reduced. As income is
earned, no income is recorded but, instead, the Annuity Payable account is
increased. Any adjustments to the actuarial assumptions result in an adjustment to
the Payable account and to the statement of activities.
Discuss the special reporting issues of hospitals - ANSWER-Some of the issues
related to hospitals include accounting for charity care, contractual allowances, and
capitalization revenues. Charity revenues should not be included in net revenues
reported on the income statement.
Which of the following should be included in the current funds revenue of a not-for-
profit private university? - ANSWER-Tuition Waivers: Yes
Unrestricted Bequests: Yes
The current funds group of a not-for-profit private university includes which of the
following subgroups? - ANSWER-Term-Endowment Funds: No
Life-Income Funds: No
Tuition waivers for which there is no intention of collections from the student should
be classified by a not-for-profit university as - ANSWER-Revenue: Yes
Expenditures: Yes
Which of the following is utilized for current expenditures by a not-for-profit
university? - ANSWER-Unrestricted Current Funds: Yes
Restricted Current Funds: Yes
In the loan fund of a college or university, each of the following types of loans would
be found except - ANSWER-Faculty
Which of the following receipts is recorded as unrestricted current funds on the
books of a university? - ANSWER-Research Grants
The current funds group of a not-for-profit private university includes which of the
following? - ANSWER-Annuity Funds: No
Loan Funds: No
On January 2, 2015, John Reynolds established a $500,000 trust, the income from
which is to be paid to Mansfield University for general operating purposes. The
Wyndham National Bank was appointed by Reynolds as trustee of the fund. What
journal entry is required on Manfield's books? - ANSWER-Memo entry only
For the fall semester of 2015, Cherry College assessed its students $2,300,000 for
tuition and fees. The net amount realized was only $2,100,000 because of the
following revenue reductions:
-Refunds occasioned by class cancellations and student withdrawals (50,000)
-Tuition remission granted to faculty members' families (10,000)
-Scholarships and fellowships (140,000)
How much should Cherry College report for the report for the period for unrestricted
current funds revenues from tuition and fees? - ANSWER-2,250,000
During the years ending June 30, 2014 and June 30, 2015, Schafer University
conducted a cancer research project financed by a $2,000,000 gift from an alumnus.
This entire amount was pledged by the donor on July 10, 2013, although he paid
only $500,000 at that date. The gift was restricted to the financing of this particular
research project. During the two-year research project, Schafer's related gift receipts
and research expenditures were as follows:
-Gift Receipts 2014: 700,000 2015: 800,000
-Cancer resear. rest. exp. 2014: 900,000 2015: 1,100,000
, How much gift revenue should Schafer University report in the temporarily restricted
column of its statement of activities for the year ended June 30, 2015? - ANSWER-
1,100,000
Cura Foundation, a voluntary health and welfare organization, supported by
contribution from the general public, included the following costs in its statement of
functional expenses for the year ended December 31, 2016
-Fund Raising : 500,000
-Administrative : 300,000
-Research : 100,00
Cura's functional expenses for 2016 program services included - ANSWER-100,000
Community Service Center is a voluntary welfare organization funded by
contributions from the general public. During 2015 unrestricted pledges of $900,000
were received, half of which were payable in 2015 with the other half payable for use
in 2016. It was estimated that 10% of these pledges would be uncollectible. How
much should Community report as net contribution revenue for 2015 with respect to
the pledges? - ANSWER-810,000
Indicate how equity investments are reported in the financial statements - ANSWER-
Equity investments (less that 20% ownership) and all debt investments are reported
at fair value with any unrealized gains and losses reported on the Statement of
Activities.
Explain the change in accounting for loan funds brought about by new standards -
ANSWER-Loan funds are typically revolving in that repayments of loan balances and
interests are usually loaned to other individuals. Therefore, historically no revenues
and expenses have been recorded.
Understand the use of an annuity or life income fund - ANSWER-Sometimes donors
give institutions money with the condition that either a stated amount (annuity fund)
or a part of the earnings (life income fund) be paid to some beneficiary. The
organization records the investment at market value. A payable is recorded at the
present value of the estimated amount to be paid. Revenues are then recognized for
the difference. As payments are made, that payable is reduced. As income is
earned, no income is recorded but, instead, the Annuity Payable account is
increased. Any adjustments to the actuarial assumptions result in an adjustment to
the Payable account and to the statement of activities.
Discuss the special reporting issues of hospitals - ANSWER-Some of the issues
related to hospitals include accounting for charity care, contractual allowances, and
capitalization revenues. Charity revenues should not be included in net revenues
reported on the income statement.
Which of the following should be included in the current funds revenue of a not-for-
profit private university? - ANSWER-Tuition Waivers: Yes
Unrestricted Bequests: Yes
