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Exam 14: Accounting for Not-for-Profit Organizations

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Question 41

Multiple Choice

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A not-for-profit organization incurred $10,000 in management and general expenses in the current fiscal year. In the organization's statement of activities prepared in conformity with FASB standards, the $10,000 would be reported as:

A) A deduction from program revenue.
B) Fund-raising expense.
C) Program services expenses.
D) Supporting services expenses.

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Question 42

Multiple Choice

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In accordance with the FASB Codification, which of the following would not be classified as a support expense by the not-for-profit organization Save Our Lakes?

A) The cost of printing and distributing the annual report.
B) The cost of a mailing to past contributors requesting donations for lakeshore cleanup.
C) The cost of the annual lakeshore cleanup activities.
D) The cost to have an attorney review the organization's by-laws.

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Question 43

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The not-for-profit organization Accountants Rule has a mission to promote the accounting profession in the local community. It is heavily supported by local accounting firms and businesses seeking to increase the number of individuals entering the profession. Following is the pre-closing trial balance for the organization. Prepare a statement of activities for the organization for the year ended December 31, 2020. (Negative amounts should be indicated by a minus sign.)

The FASB generally requires that not-for-profit organizations record unconditional pledges as support (contributions) only when received in cash.

Explain the accounting for contributions received by a financial intermediary under the FASB Codification.

Distinguish not-for-profit organizations from entities in the government and commercial sectors of the U.S. economy.

In the current year, the not-for-profit organization (NFP) How to Read Government Financial Reports received both cash of $1,000 and pledges of $2,000 to be used for teaching citizens how to read government financial reports. During the year the organization spent $1,500 teaching citizens to read financial statements. Assuming the NFP has a policy of spending its restricted resources first, in the current year what amount of contributions can be reclassified as without donor restrictions?

The FASB Codification requires the following financial statements for all not-for-profit organizations:

In the current year, the not-for-profit organization Save the Butterflies Foundation received cash of $500 to be used as the Foundation wishes and $1,000 to be used for butterfly research. Save the Butterflies also received pledges of $700 that it can use as it wishes and $600 for its building fund. All pledges are expected to be received next year. How much would Save the Butterflies report as contributions with donor restrictions in the current year?

The FASB requires that the purchase of equity securities be initially recorded at the acquisition price and the purchase of debt securities be initially recorded at fair value.

During the year a donor pledged $1,000,000 in funds to a not-for-profit private charter school. The school will receive the pledge if it is able to raise $500,000 in funds over the next year. According to the FASB, how would this pledge be recorded?

The FASB requires not-for-profit to prepare a statement of cash flow.

Explain when donated materials should be recognized as a contribution and as an expense by a nongovernmental not-for-profit organization.

A not-for-profit organization that follows FASB standards must display the changes in all classes of net assets on which of the following statements?

According to the FASB Codification, donated materials are generally not recognized as contributions by a not-for-profit organization.

The FASB requires the statement of financial position prepared by a not-for-profit organization to report net assets in three categories: net assets without donor restrictions, net investment in capital assets, and net assets with donor restrictions.

A local philanthropist made an unconditional pledge to donate $100,000 to a not-for-profit organization to be paid in five equal installments of $20,000 beginning in two years. Under FASB standards the pledge would be recognized as: