Question 1

Supporting expenses are not included in the denominator of the program expense ratio.

Accepted Answer

A) True 
 B)False

Question 2

are required to file Form 990 by the 15th day of the 9th month following the organization's taxable year.

Accepted Answer

A) True 
 B)False

Question 3

If a tax-exempt organization is found by the IRS to have paid unreasonable benefits, the individual must pay a tax penalty of 25% of the excess benefit and the individuals who approved the benefits must pay a 10% penalty.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following may be deducted in computing income from unrelated business activities?

Accepted Answer

A)   $1,000 special deduction.
B)   Charitable contributions.
C)   Ordinary and necessary business expenses.
D)   All of the above.

Question 5

To apply for tax-exempt status, an organization must complete an IRS Form 1023.

Accepted Answer

A) True 
 B)False

Question 6

Government financial audits must comply with the following:

Accepted Answer

A)   Generally Accepted Auditing Standards.
B)   Government Auditing Standards.
C)   Both A and B.
D)   Generally Accepted Accounting Principles.

Question 7

How is the Unrelated Business Income Tax computed?

Accepted Answer

When computing unrelated business income...

Question 8

Which of the following is a governmental audit type that has a primary concern with providing reasonable assurance about whether financial statements are presented fairly?

Accepted Answer

A)   Attestation Engagement.
B)   Performance Audit.
C)   Nonaudit services.
D)   Financial Audit.

Question 9

Which organization promulgates the Government Auditing Standards?

Accepted Answer

A)   The U.S. Government Accountability Office.
B)   The American Institute of Certified Public Accountants.
C)   The U.S. Office of Management and Budget.
D)   The U.S. Congressional Budget Office.

Question 10

In order to compute the operating ratio-enterprise funds, one would look in the CAFR in which of the following sections?

Accepted Answer

A)   In the government-wide Statement of Net Position.
B)   In the proprietary funds Statement of Net Position.
C)   In the proprietary funds Statement of Revenues, Expenses, and Changes in Fund Net Position.
D)   In the proprietary funds Statement of Cash Flows.

Question 11

Beginning in 2012, entities that are tax-exempt under IRS Section 501c3 with gross receipts less than $75,000 may file Form 990-N electronic postcard.

Accepted Answer

A) True 
 B)False

Question 12

A tax-exempt organization must pay income taxes on income generated from trade or business activities unrelated to the entity's tax-exempt purposes.

Accepted Answer

A) True 
 B)False

Question 13

Churches, schools and hospitals are public charities.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true regarding the Single Audit Act and its amendments?

Accepted Answer

A)   A risk-based approach is used.
B)   An opinion is required on compliance of all programs.
C)   Both A and B above.
D)   Neither A nor B above.

Question 15

Which of the following applies to governmental auditing and not private sector auditing?

Accepted Answer

A)   The public availability of audit reports.
B)   Testing of compliance with laws and regulations.
C)   Governmental audits require auditor knowledge of government accounting and auditing.
D)   None of the above; these are all required for governmental auditing and not private sector auditing.

Question 16

Entities that are tax-exempt under IRS Section 501c3 are prohibited from having surpluses revenues exceed expenses.

Accepted Answer

A) True 
 B)False

Question 17

According to GASB, Service Efforts and Accomplishments Reporting is to provide more complete information about a governmental entity's performance.

Accepted Answer

A) True 
 B)False

Question 18

What is the maximum threshold for a tax-exempt organization to file a form 990-N electronic postcard for tax years after 2011?

Accepted Answer

A)   A charity with gross receipts less than $25,000.
B)   A charity with gross receipts less than $50,000.
C)   A charity with gross receipts less than $200,000.
D)   A charity with gross receipts less than $500,000.

Question 19

Governmental attestation engagements must comply with the Government Auditing Standards but are exempt from compliance with the AICPA's attestation standards.

Accepted Answer

A) True 
 B)False

Question 20

When computing Unrelated Business Income Tax, charities are permitted to deduct ordinary and necessary business related expenses and the first $1,000 of income is not taxed.

Accepted Answer

A) True 
 B)False

Exam 13: Auditing, Tax-exempt Organizations, and Evaluating Performance

According to GASB, Service Efforts and Accomplishments Reporting is to provide more complete information about a governmental entity's performance.

Correct AnswerverifiedShow Answer

A tax-exempt organization must pay income taxes on income generated from trade or business activities unrelated to the entity's tax-exempt purposes.

Correct AnswerverifiedShow Answer

Churches, schools and hospitals are public charities.

Correct AnswerverifiedShow Answer

Which of the following may be deducted in computing income from unrelated business activities?

Correct AnswerverifiedShow Answer

Which of the following is true regarding the Single Audit Act and its amendments?

Correct AnswerverifiedShow Answer

In order to compute the operating ratio-enterprise funds, one would look in the CAFR in which of the following sections?

Correct AnswerverifiedShow Answer

Which organization promulgates the Government Auditing Standards?

Correct AnswerverifiedShow Answer

Which of the following applies to governmental auditing and not private sector auditing?

Correct AnswerverifiedShow Answer

Governmental attestation engagements must comply with the Government Auditing Standards but are exempt from compliance with the AICPA's attestation standards.

Correct AnswerverifiedShow Answer

If a tax-exempt organization is found by the IRS to have paid unreasonable benefits, the individual must pay a tax penalty of 25% of the excess benefit and the individuals who approved the benefits must pay a 10% penalty.

Correct AnswerverifiedShow Answer

What is the maximum threshold for a tax-exempt organization to file a form 990-N electronic postcard for tax years after 2011?

Correct AnswerverifiedShow Answer

Beginning in 2012, entities that are tax-exempt under IRS Section 501c3 with gross receipts less than $75,000 may file Form 990-N electronic postcard.

Correct AnswerverifiedShow Answer

are required to file Form 990 by the 15th day of the 9th month following the organization's taxable year.

Correct AnswerverifiedShow Answer

Entities that are tax-exempt under IRS Section 501c3 are prohibited from having surpluses revenues exceed expenses.

Correct AnswerverifiedShow Answer

Which of the following is a governmental audit type that has a primary concern with providing reasonable assurance about whether financial statements are presented fairly?

Correct AnswerverifiedShow Answer

How is the Unrelated Business Income Tax computed?

Correct AnswerverifiedWhen computing unrelated business income...View AnswerShow Answer

Government financial audits must comply with the following:

Correct AnswerverifiedShow Answer

When computing Unrelated Business Income Tax, charities are permitted to deduct ordinary and necessary business related expenses and the first $1,000 of income is not taxed.

Correct AnswerverifiedShow Answer

To apply for tax-exempt status, an organization must complete an IRS Form 1023.

Correct AnswerverifiedShow Answer

Supporting expenses are not included in the denominator of the program expense ratio.

Correct AnswerverifiedShow Answer

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When computing unrelated business income...
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