MSA Exam Spring 2007

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Governmental & Non Profit Accounting TEST BANK Spring 2007

NAME _______________________

TEAM ASSIGNMENTS All are required to do problem I, Problem II will be on exam TEAM I First 90 multiple choice TEAM II 90 to end multiple choice TEAM III Even numbered multiple choice TEAM IV Odd numbered multiple choice TEAM V First 90 multiple choice TEAM VI 90 to end multiple choice TEAM VII Even numbered multiple choice TEAM VIII Odd numbered multiple choice

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1. The three sections recommended by GASB for inclusion in the Comprehensive Annual Financial Report (CAFR) are: A) Introductory, financial, and statistical. B) Letter of transmittal, MD&A, and financial. C) Introductory, MD&A, and financial. D) Letter of transmittal, financial, and supplementary.

2. Which of the following would be included in a properly prepared comprehensive annual

financial report (CAFR) but not in the minimum requirements for general purpose financial reporting specified by GASBS 34? A) Management Discussion and Analysis (MD&A). B) Statistical information. C) Notes to the financial statements. D) Fund financial statements.

3. All of the following are characteristics of not-for-profit organizations (NPOs) that

distinguish them from business organizations except A) Contributions by resource providers who do not expect a return on investment. B) Ability to impose taxes on citizens. C) Operating purposes other than to earn a profit. D) Absence of ownership interests.

4. Responsibility for promulgating generally accepted accounting principles for

nongovernmental, not-for-profit entities rests with the FASB and was most clearly established A) In the 1930s. B) When the FASB was created in 1974. C) When the GASB was created in 1984. D) In the AICPA's Statement of Auditing Standards No. 69 (hierarchy of GAAP) in 1992.

5. Statement of Financial Accounting Standards (SFAS) No. 116 on contributions received and

contributions made describes measurement and reporting rules for A) Exchange transactions, such as membership dues and charges for services. B) Nonexchange transactions, such as unrestricted and restricted gifts. C) Gains and losses on investment income. D) All of the above.

6. Statement of Financial Accounting Standards (SFAS) No. 117 requires the following

financial statements for all nongovernmental, not-for-profit organizations A) Statement of financial position, statement of activities, statement of cash flows, and

statement of functional expenses. B) Statement of financial position, statement of operations, statement of cash flows, and

statement of functional expenses. C) Statement of financial position, statement of activities, and statement of cash flows. D) Statement of financial position, statement of revenues and expenses, and statement of

cash flows, and statement of functional expenses.

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7. All of the following are characteristics of nongovernmental, not-for-profit organizations (NPOs) that distinguish them from business organizations except

A) Contributions by resource providers who do not expect proportionate benefits or a return on investment.

B) Operating purposes other than to earn a profit. C) Ability to impose taxes on citizens. D) Absence of ownership interests.

8. Responsibility for promulgating generally accepted accounting principles for

nongovernmental, not-for-profit entities rests with the FASB and was most clearly established

A) In the 1930s. B) When the FASB was created in 1974. C) When the GASB was created in 1984. D) In the AICPA's Statement of Auditing Standards No. 69 (hierarchy of GAAP) in 1992.

9. Statement of Financial Accounting Standards (SFAS) No. 116 on contributions received

and contributions made describes measurement and reporting rules for A) Nonexchange transactions, such as unrestricted and restricted gifts. B) Exchange transactions, such as membership dues and charges for services. C) Gains and losses on investment income. D) All of the above.

10. Statement of Financial Accounting Standards (SFAS) No. 117 requires the following

financial statements for all nongovernmental, not-for-profit organizations A) Statement of financial position, statement of activities, statement of cash flows, and

statement of functional expenses. B) Statement of financial position, statement of operations, statement of cash flows, and

statement of functional expenses. C) Statement of financial position, statement of revenues and expenses, and statement of

cash flows, and statement of functional expenses. D) Statement of financial position, statement of activities, and statement of cash flows.

11. Which of the following are conditions that must be met for contributed services to a not-for-

profit organization (NPO) to be recorded as both a contribution and as an expense?

A) The services create or enhance nonfinancial assets, such as a carpenter renovating a building.

B) The service is provided by someone who possesses specialized skills, such as a lawyer preparing contracts.

C) The services would have to be purchased if not donated, such as the salary of a full time secretary.

D) All of the above are conditions that are relevant in deciding whether to record contributed services.

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12. Investments in equity securities that have a readily determinable market value and all debt securities of a not-for-profit organization are reported at

A) Lower of cost or market. B) Amortized cost. C) Fair value. D) Cost.

13. Which of the following statements is true regarding generally accepted accounting principles (GAAP) for colleges and universities?

A) The FASB has set standards for private colleges and universities from the time of its

inception in 1974. B) The National Association of Colleges and University Business Officers (NACUBO) only

recently began to play a role in establishing accounting and reporting standards for colleges and universities.

C) Public and private colleges and universities must comply with the 1973 AICPA Audit and Accounting Guide Audits of Colleges and Universities for guidance in financial reporting.

D) The GASB is responsible for establishing GAAP for public colleges and universities. 14. GASBS 34/35 accounting and reporting standards applicable to public colleges and

universities

A) Are the same as FASB standards to permit consistent reporting. B) Permit public colleges and universities to use the AICPA model which differs

substantially from the reporting model used by private colleges and universities subject to FASB jurisdiction.

C) Permit public colleges and universities to optionally follow FASB standards. D) None of the above is correct regarding GASB standards.

15. The cost of professors' salaries would normally be recorded in which functional area?

A) Research. B) Instruction. C) Service. D) Institutional support.

16. Cactus College, a small private college, received a research grant from NACUBO to study

whether service efforts and accomplishments measures improve institutional performance. Under the provisions of SFAS No. 116 the grant would be reported as an increase in:

A) Unrestricted net assets. B) The fund balance of restricted current funds. C) Permanently restricted net assets. D) Temporarily restricted net assets.

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17. Which of the following receipts may properly be accounted for as an increase in unrestricted

net assets?

A) Student tuition and fees. B) Gift from an alumnus for a new college of business building. C) Federal grant for genetic research. D) Acceptance of assets the income from which will be paid to the donor.

18. Economic rationality would argue against a university accepting a split interest agreement in

which a fixed annuity is payable to the donor if:

A) The donor has attached conditions to the gift. B) The university has no immediate need for the assets. C) The sum of future annuity payments plus interest thereon exceeds the fair market value of

the assets. D) The present value of the future annuity payments and other liabilities exceed the fair

market value of the assets. 19. Which of the following items would not be reported in the section on revenues and gains in

the statement of activities of a private college or university?

A) Student tuition and fees. B) Gifts and donations. C) Net assets released from restriction. D) None of the above; that is, all are reported as a revenue, support, or gain.

20. Which of the following is not a condition that would permit a public college or private

college or university to avoid accounting recognition of the value of its collections of art, historical treasures, and similar assets?

A) The assets are held for public exhibition, education, or research in furtherance of public

service rather than financial gain. B) The assets are protected, kept unencumbered, cared for, and preserved. C) The assets are subject to an organizational policy that ensures the proceeds of sales of

collectible assets are used for operations of the organization. D) None of above; all three items are conditions that will avoid accounting recognition.

21. Which of the following is required as part of a complete set of financial statements for a

private college or university?

A) Statement of changes in financial position. B) Statement of revenues, expenses, and changes in net assets. C) Statement of activities. D) All of these statements are required.

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22. Assets that the governing board of a public university, rather than a donor or other outside

agency, has determined are to be retained and invested for future scholarships would be reported as

A) An endowment. B) Unrestricted net assets. C) Deposits held in custody for others. D) Restricted net assets.

.

23. Pinewood College, a public college, has a 10-week summer session that starts on June 25,

2008, so that one week is held during FY 2008 and the other nine weeks meet during FY 2009. Tuition and fees in the amount of $900,000 were collected from students for classes to be conducted in this session. What amount should Pinewood College recognize as unrestricted revenue in each of the years ended June 30, 2008 and June 30, 2009.

Year Ended Year EndedJune 30, 2008 June 30, 2009

A) $90,000 $810,000 B) $0 $900,000 C) $900,000 $0 D) Either A or C is allowed, provided the same pattern of recognition is applied consistently

in successive years. 24. Tuition scholarships for which there is no intention of collection from the student should be

classified by a private university as

A) Revenues and expenditures. B) A reduction of gross revenue to arrive at net revenue. C) Revenues and expenses. D) Any of the above.

25. An alumnus donates securities to St. Aloysius College, a private college, and stipulates that

the principal be held in perpetuity and income from the securities be used for faculty travel. Dividends received from the securities should be recognized as increases in:

A) Endowments. B) Unrestricted net assets. C) Permanently restricted net assets. D) Temporarily restricted net assets.

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26. During the years ended June 30, 2008 and 2009, Jasper University, a public university, conducted a cancer research project financed by a $1,000,000 gift from an alumnus. The entire amount was pledged by the donor on July 10, 2007, although she paid only $200,000 at that date. The gift was restricted to the financing of this particular research project. During the two-year research period, Jasper’s related gift receipts and research expenditures were as follows:

How much gift revenue should Jasper University report for the year ended June 30, 2009?

A) $1,000,000 B) $900,000 C) $800,000 D) $0

27. Are public and private colleges and universities required to report depreciation expense in

their financial statements?

A) Public: No; Private: No B) Public: Yes; Private: No C) Public: Yes; Private: Yes D) Public: No; Private: Yes

28. State appropriations received by a public university are classified as which of the following

on the statement of revenues, expenses, and changes in net assets?

A) Nonoperating revenue. B) Operating revenue. C) Other financing source. D) Increase in unrestricted net assets.

29. An example of an increase in net assets for a not-for-profit organization that would be

labeled revenue rather than support is

A) An unconditional promise to give. B) Investment income. C) A restricted gift. D) All of the above.

Year Ended June 30 2008 2009 Gift receipts $200,000 $800,000 Cancer research expenditures $100,000 $900,000

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30. Which of the following statements is true about financially related not-for-profit entities?

A) If an NPO has a controlling interest in a for-profit entity, it should consolidate that entity's financial information with its own.

B) If an NPO has significant influence over a for-profit entity, it should use the equity method to report that investment on its financial statement.

C) If an NPO has an economic interest in another entity but not control, it should disclose that in the notes to the financial statements.

D) All of the above statements are true. 31. Depreciation expense in a not-for-profit organization should be

A) Allocated to the functions to which it relates. B) Reported as a functional support expense under management and general. C) Disclosed in the notes to the financial statements. D) Allocated to program but not support functions.

32. A good reason for an NPO to adopt fund accounting even though FASB standards do not

require it is that

A) The NPO provides more than one type of program service. B) The NPO's capital assets are significant. C) Restrictions have been placed on the use of certain of its assets by donors. D) The NPO's donated services are significant.

33. Temporarily restricted net assets are released from restrictions

A) When funds are returned to the donor. B) As assets are spent for the purposes intended by the donor. C) At the end of each fiscal year. D) When they are converted to permanently restricted net assets.

34. A local philanthropist pledged to make a donation of $100,000 to an NPO to be paid in five

equal installments of $20,000 beginning in the next fiscal year. Under FASB standards the pledge would be recognized as

A) Support of $20,000 in each of the following five years. B) Support of $20,000 in the year the pledge was made and $80,000 as deferred support. C) Deferred support of $100,000 in the year the pledge was made. D) Support of $100,000 in the year the pledge was made.

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35. Which of the following statements is correct regarding reporting of special events and related

direct costs under current FASB standards?

A) Special events and related direct costs must be reported separately at their gross amounts if they relate to the ongoing major operations of an NPO.

B) Special events may be reported net of related direct costs if they are of a peripheral or incidental nature.

C) Expenses of promoting and conducting special events should be reported as part of fund-raising expense rather than netting them against special events support.

D) All of the above are correct statements. 36. An NPO 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) Program services expenses. C) Supporting services expenses. D) A reduction of permanently restricted assets.

37. Which of the following would be considered "support" rather than "revenue" of an NPO?

A) Gain on disposal of capital assets. B) Contributions received from a fund-raising campaign. C) Rent earned from rental of surplus office space. D) Investment earnings.

38. Securities donated to an NPO should be recorded at the

A) Donor's recorded amount. B) Fair market value at the date of the gift, or the donor's recorded amount, whichever is

lower. C) Fair market value at the date of the gift, or the donor's recorded amount, whichever is

higher. D) Fair market value at the date of the gift.

39. Accounting standards for NPOs require

A) Full accrual accounting. B) Modified accrual accounting. C) Fund accounting. D) Capitalization of collections.

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40. Which of the following organizations would be covered by the AICPA Audit and Accounting

Guide Not-for-Profit Organizations?

A) Political parties. B) Employee benefit and pension plans. C) Proprietary hospitals. D) Farm cooperatives.

41. Which of the following contributions would not have to be reported as an asset on the

statement of financial position of a not-for-profit organization?

A) Land was donated to the Friends of the Forest Society for conversion into a nature trail. B) The original courthouse was donated to the Historical Preservation Society that is

converting the courthouse to a museum. C) An art collector donated a famous oil painting to a local nongovernmental art museum for

display in its exhibit hall. D) None of the above donated assets would have to be reported on the balance sheets of the

not-for-profit organization. 42. The primary standards-setting body for a public museum that receives the majority of its

funding from local property taxes is

A) American Institute of CPAs (AICPA) B) Financial Accounting Standards Board (FASB) C) Government Accountability Office (GAO) D) Governmental Accounting Standards Board (GASB)

43. A not-for-profit organization, in order to conform to generally accepted accounting principles

(GAAP), displays the changes in all classes of net assets on the

A) Statement of financial position. B) Statement of cash flows. C) Statement of activities. D) Statement of functional expenses.

44. When a not-for-profit (nongovernmental) organization spends money for the purpose for

which an external donor intended, then the expense is reported as a

A) Decrease in temporarily restricted net assets. B) Decrease in unrestricted net assets. C) Decrease in permanently restricted net assets. D) Decrease in current-restricted fund balance.

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45. The purpose of a statement of functional expenses is to

A) Report on the net income of each program compared to that of supporting the programs. B) Report on program expenses and supporting expenses. C) Report on the natural expenses (object-of-expense), as well as by program and support

functions. D) Report on the cash flows of each program and that of supporting the programs.

46. Unrealized gains on the investment portfolio of a not-for-profit organization are

A) Reported on the statement of activities. B) Reported in the net asset section of the balance sheet. C) Depends on whether the gains relate to trading, available-for-sale, or held-to-maturity

assets. D) Not recognized.

47. Which of the following is not one of the criteria specified in AICPA Statement of Position

98-2 that provides guidance on when joint costs with a fund-raising appeal can be reported with program expenses rather than as fund-raising expenses?

A) Purpose B) Audience C) Time period D) Content

48. Which of the following terms is used to indicate that a donor provided a gift with explicit

instructions that the gift is to be used for a specific purpose by the NPO but the entire amount may be spent right away?

A) Board-designated net assets. B) Permanently restricted net assets. C) Endowment assets. D) Temporarily restricted net assets.

49 Which of the following statements is true regarding fund accounting and

nongovernmental, not-for-profit organizations (NPOs)? A) It is not allowed. B) It may be used by NPOs for external purposes, but not internal purposes. C) It may provide a good mechanism for facilitating reporting to funders for restricted

grants. D) SFAS Nos. 116 and 117 method of reporting three classes of net assets (unrestricted,

temporarily restricted, and permanently restricted) replaces fund accounting for both internal and external reporting purposes.

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50. Which of the following are conditions that must be met for contributed services to a nonprofit organization (NPO) to be recorded as both a contribution and as an expense?





51. Which of the following statements is not true about financially related nonprofit entities?

A) If an NPO has a controlling interest in a for-profit entity, it should consolidate that entity's financial information with its own.

B) If an NPO has significant influence over a for-profit entity, it should use the equity method to report that investment on its financial statement.

C) If an NPO has an economic interest in another entity but not control, it should disclose that in the Notes to the Financial Statements.

D) If an NPO has controlling financial interest and an economic interest in another NPO, it should disclose that in the Notes to the Financial Statements.

52. A typical objective of a performance audit is for the auditor to

A) Determine whether the financial statements fairly present the entity's operational results. B) Judge the appropriateness of an entity's program goals. C) Make recommendations for improving performance. D) Attest to whether the financial statements are prepared in accordance with generally

accepted accounting principles. t

53. Which of the following is the highest in the hierarchy of generally accepted accounting principles according to AICPA Statement of Auditing Standard No. 69, as amended by SAS No. 91, for state and local governments?

A) AICPA Audit and Accounting Guide. B) FASB emerging issues task force reports. C) FASAB statements. D) GASB statements.

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54. An auditor performing nonaudit work for a client is in danger of violating the independence

rules in Government Auditing Standards when he or she

A) Conducts a search and recommends a particular person for the position for the client. B) Maintains the accounting records of the entity. C) Makes management decisions. D) All of the above.

55. Which of the following is one of the overarching principles in Government Auditing

Standards related to auditors performing nonaudit work for clients?

A) Auditors should not provide training to clients. B) Auditors should not provide routine advice to clients or serve on advisory committees. C) Auditors should not audit their own work or provide nonaudit services in situations when

the nonaudit services are significant to the audit subject matter. D) Auditors should not propose adjusting and correction entries.

56. Temporarily restricted net assets are released from restrictions when A) Funds are returned to the donor. B) At the end of each fiscal year. C) Assets are spent for the purposes intended by the donor. D) They are converted to permanently restricted net assets.

57. Which statement is false regarding generally accepted accounting principles (GAAP) applicable to health care organizations?

A) Private hospitals follow guidance from the GASB. B) Public health care organizations follow guidance from the GASB. C) The AICPA Audit and Accounting Guide Health Care Organizations provides guidance

for public, private, and for-profit health care entities. D) All of these statements are true.

58. The AICPA Audit and Accounting Guide Health Care Organizations requires that the

following statements be prepared for health care organizations:

A) Balance sheet, statement of activities, statement of changes in equity, statement of cash flows.

B) Balance sheet, statement of revenues and expenses, statement of changes in equity, statement of cash flows.

C) Balance sheet, statement of operations, statement of changes in equity, statement of cash flows.

D) Balance sheet, statement of operations, statement of changes in equity, statement of cash flows, statement of functional expenses.

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59. If the equity section of the balance sheet is comprised of unrestricted net assets, temporarily

restricted net assets, and permanently restricted net assets, then the health care organization is

A) Public, governmental. B) Private, nongovernmental. C) Commercial or proprietary. D) Cannot be determined.

60. Contractual adjustments that arise from differences between the gross charge for patient

services and the amount paid by a third party payor are reported as

A) Bad debt expense. B) Disclosures in the notes to the financial statements. C) It depends on how material the differences are. D) Deductions from gross patient revenue in arriving at net patient revenue.

61. Which of the following statements is true about diagnosis-related groups (DRGs)?

A) DRGs are the basis for a cost accounting method that groups costs together by departments performing the services.

B) The federal Medicare system of retroactive payment for services depends on DRGs. C) A DRG is a case-mix classification scheme that is used to determine the payment

provided to the hospital for inpatient services, regardless of how much the hospital spends to treat a patient.

D) None of the above is a true statement. 62. Assets whose use is limited by contracts or agreements with outside parties other than

donors or grantors are labeled A) Assets limited as to use. B) Designated assets. C) Temporarily restricted net assets. D) Restricted assets.

63. The primary source of revenue for hospitals is

A) Nonexchange transactions, such as contributions. B) Exchange transactions, such as fees for services. C) Investment income. D) Capitation fees from health maintenance organizations.

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64. A contribution that is restricted by the donor to be held in perpetuity and for which the investment income can be spent at the discretion of a nongovernmental, not-for-profit hospital's governing board, will be reported as an increase to

A) Endowments. B) Current restricted funds. C) Permanently restricted net assets. D) Specific purpose assets.

65. Charity service and bad debts in a public hospital that follows business-type accounting are reported

A) The same, both as deductions from gross patient revenue in arriving at net patient

revenue. B) The same, both are reported as expenses. C) Differently, charity service is reported as a deduction from gross patient revenue and bad

debts are reported as an expense. D) Differently, charity service is merely disclosed in the notes to the financial statements,

and bad debts are reported as a deduction from revenue. 66. For which of the following volunteers in a hospital is there most likely going to be reported

contribution income and salary expense?

A) Community members who plant flowers on the grounds once a year in the spring. B) Volunteers in the gift shop who work a few hours a day serving customers. C) Nurses who are affiliated with a religious organization and do not receive a salary. D) An accountant who is a member of the board of directors.

67. Which of the following would not be considered a health care organization required to

follow guidance in the AICPA Audit and Accounting Guide Health Care Organizations?

A) A heart research and education foundation. B) A home health agency. C) A hospice. D) A health maintenance organization.

68. Which of the following would usually be considered as temporarily restricted funds in a

nongovernmental not-for-profit hospital?

A) Investment income. B) Donated services by senior citizens. C) A permanent endowment received from the city's leading citizen. D) A research grant from the federal government to study high blood pressure.

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69. Which of the following statements is true?

A) Hospital accounting and financial reporting is identical to that used by for-profit businesses.

B) Hospitals use modified accrual accounting. C) Hospitals record revenues based upon full charges and report contractual adjustments as a

deduction from revenues D) None of the above is true.

70. Contractual adjustments is properly characterized as

A) An expense. B) An other financing use. C) A liability. D) A deduction from revenues.

71. An unrestricted pledge from an annual contributor to a not-for-profit hospital with a

December 31 year end that was made in October 2007 to be paid in cash March 2008 would generally be credited to:

A) Contributions—Temporarily Restricted in 2007. B) Contributions—Unrestricted in 2007. C) Contributions—Temporarily Restricted in 2008. D) Contributions—Unrestricted in equal amounts in 2007 and 2008.

72. Donated medicines that normally would be purchased by a hospital should be recorded at fair market value and should be credited to

A) Net patient Service Revenue. B) Nonoperating Gains. C) Other Revenue. D) Deferred Revenues.

73. Under SFAS No. 116, pledges received by a nongovernmentally owned not-for-profit

hospital during its building construction fund drive, and restricted for that purpose, would be recognized as an increase in temporarily restricted net assets (support)

A) When the building is constructed. B) When the pledge is made. C) When the pledge is collected. D) During each period of construction using the percentage-of-completion method.

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74. SFAS No. 117 requires that interest received on endowment funds be reported in the

statement of cash flows as a(n)

A) Reconciliation of change in net assets to cash. B) Operating activity. C) Investing activity. D) Financing activity.

75. The statement of activities required by SFAS No. 117 for health care entities subject to its

jurisdiction must display changes for the period in which of the following categories of net assets?

A) Unrestricted. B) Temporarily restricted. C) Permanently restricted. D) All of the above.

76. A local philanthropist pledged to make a donation of $100,000 to an NPO to be paid in

five equal installments of $20,000 beginning in the next fiscal year. Under FASB standards the pledge would be recognized as

A) Support of $20,000 in each of the following five years. B) Support of $20,000 in the year the pledge was made and $80,000 as deferred support. C) Support of $100,000 in the year the pledge was made. D) Deferred support of $100,000 in the year the pledge was made.

77. Which of the following statements is correct regarding reporting of special events and related direct costs under current FASB standards?

A) Special events and related direct costs must be reported separately at their gross amounts if they relate to the ongoing major operations of an NPO.

B) Special events may be reported net of related direct costs if they are of a peripheral or incidental nature.

C) Expenses of promoting and conducting special events should be reported as part of fund-raising expense rather than netting them against special events support.

D) All of the above are correct statements.

78. A certain NPO incurred $5,000 in management and general expenses in the current fiscal year. In the organization's statement of activities prepared in conformity with FASB standards, the $5,000 would be reported as

A) A deduction from program revenue. B) Supporting services expenses. C) Program services expenses. D) A reduction of permanently restricted assets.

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A) Gain on disposal of capital assets. B) Investment earnings. C) Rent earned from rental of surplus office space. D) Contributions received from a fund-raising campaign.

80. Securities donated to an NPO should be recorded at the A) Donor's recorded amount. B) Fair market value at the date of the gift, or the donor's recorded amount, whichever is

lower. C) Fair market value at the date of the gift. D) Fair market value at the date of the gift, or the donor's recorded amount, whichever is

higher.

81. Which of the following contributions would not have to be reported as an asset on the statement of financial position of a nongovernmental not-for-profit organization?

A) An art collector donated a famous oil painting to a local nongovernmental art museum for display in its exhibit hall.

B) The original courthouse was donated to the Historical Preservation Society that is converting the courthouse to a museum.

C) Land was donated to the Green Society for conversion into a nature trail. D) None of the above donated assets would have to be reported on the balance sheets of the

not-for-profit organizations.

82. The primary standards-setting body for a public museum that receives the majority of its funding from local property taxes is

A) American Institute of CPAs (AICPA) B) Governmental Accounting Standards Board (GASB) C) General Accounting Office (GAO) D) Financial Accounting Standards Board (FASB)

83. When a nonprofit (nongovernmental) organization spends money for the purpose for which an external donor intended, then the expense is reported as

A) A decrease in unrestricted net assets. B) A decrease in temporarily restricted net assets. C) A decrease in permanently restricted net assets. D) A decrease in current-restricted fund balance.

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84. The purpose of a statement of functional expenses is to A) Report on the net income of each program compared to that of supporting the programs. B) Report on program expenses and supporting expenses. C) Report on the cash flows of each program and that of supporting the programs. D) Report on the natural expenses (object-of-expense), as well as by program and support

functions.

85. Unrealized gains on the investment portfolio of a not-for-profit organization are A) Not recognized. B) Reported in the net asset section of the balance sheet. C) Depends on whether the gains relate to trading, available-for-sale, or held-to-maturity

assets. D) Reported on the statement of activities.

86. Which of the following terms is used to indicate that a donor provided a gift with explicit instructions that the gift is to be used for a specific purpose by the NPO but the entire amount may be spent right away?

A) Board-designated net assets. B) Temporarily restricted net assets. C) Endowment assets. D) Permanently restricted net assets.

87. Which of the following is a true statement about tax-exempt organizations? A) They must be organized to serve the charitable needs of the public at large. B) They must first become a nonprofit corporation (or charitable trust). C) They cannot do any political lobbying. D) They cannot have any unrelated business income.

88. Tax-exempt organizations must complete a Form 990 and send it to the IRS A) Only if they have unrelated business income. B) Whether they are governmental or nongovernmental. C) If they are nongovernmental (and not a church) and their gross receipts are greater than

$25,000. D) None of the above.

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89. The Internal Revenue Service may impose intermediate sanctions on a tax-exempt organization that gives an officer

A) Excessive compensation. B) More than the fair rental value for property owned by the officer. C) A bargain on the sale of assets. D) All of the above are transactions that may result in intermediate sanctions.

90. The income most likely to be considered unrelated business income of a human service organization that provides immunizations to children in the community is

A) Rental of extra space in the building. B) Gain on the sale of equipment no longer needed by the organization. C) Interest and dividend income on investments. D) Regular sale of sweatshirts with the organization's logo on it at a price considerably

above cost.

91. A good measure of whether the NPO is spending too much on overhead, such as general and administrative expenses, is

A) Percentage of total expenses spent on the program function as opposed to support function.

B) Current ratio. C) Total revenues divided by total expenses. D) Percentage of unrestricted net assets to operating expenses.

92 A good measure of whether the NPO is “liquid” and can meet its short-term obligations is


B) Current assets divided by current liabilities. C) Total revenues divided by total expenses. D) Percentage of unrestricted net assets to operating expenses.

93. Which of the following statements is true regarding generally accepted accounting

principles (GAAP) for colleges and universities? A) The FASB has set standards for private colleges and universities from the time of its

inception in 1974. B) The GASB is responsible for establishing GAAP for public colleges and universities. C) Public and private colleges and universities must comply with the 1973 AICPA Audit

and Accounting Guide Audits of Colleges and Universities for guidance in financial reporting.

D) The National Association of Colleges and University Business Officers (NACUBO) only recently began to play a role in establishing accounting and reporting standards for colleges and universities.

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94. What type of college or university should report expenses by functional classification,

assuming public colleges and universities have fully implemented GASBS 35? A) Public colleges and universities. B) Private colleges and universities. C) Both private and public colleges and universities. D) Neither private nor public colleges and universities.

95. Which of the following is a not a true statement about tax-exempt organizations?

A) They must be organized to serve the charitable needs of the public at large. B) They must first become a not-for-profit corporation or charitable trust. C) They are permitted to do some political lobbying if guidelines are met. D) Their unrelated business income is taxed at corporate income tax rates.

96. Tax-exempt organizations must complete a Form 990 and send it to the IRS

A) Only if they have unrelated business income. B) If they are nongovernmental (and not a church) and their gross receipts are greater than

$25,000. C) Whether they are governmental or nongovernmental. D) All of the above are true statements.

97. Which of the following not-for-profit organizations is most likely to be tax-exempt under

IRC Sec. 501(c)(3)?

A) Beta Kappa Alpha Sorority. B) Peaceful Dreams Cemetery Association. C) Regional Association of Tree Trimmers. D) Survivors of Breast Cancer Club.

98. Which of the following is a reason why an NPO might fail to qualify for tax-exempt status?

A) It is operated primarily for the benefit of its members. B) Its officers are paid excessive wages. C) Its primary purpose is to promote the passage of legislation favorable to institutions of

higher education. D) It has unrelated business income.

99. The Internal Revenue Service may impose intermediate sanctions on a tax-exempt

organization that gives an officer

A) Excessive compensation. B) More than the fair rental value for property owned by the officer. C) A bargain on the sale of assets. D) All of the above are transactions that may result in intermediate sanctions.

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100. The income most likely to be considered unrelated business income of a human service

organization that provides immunizations to children in the community is

A) Rental of extra space in the building. B) Regular sale of sweatshirts with the organization's logo on it at a price considerably

above cost. C) Interest and dividend income on investments. D) Gain on the sale of equipment no longer needed by the organization.

101. The term that means information skewed toward a particular belief with a tendency to have

little or no factual basis is

A) Political influence. B) Legislation. C) Propaganda. D) Lobbying.

102. A tax-exempt organization that receives its support primarily from a large number of

individuals or corporations and a relatively small amount from investment income is called a

A) Public charity. B) Private foundation. C) Public foundation. D) Voluntary health and welfare organization.

103. The incorporating documents that have an external focus and describe the purpose of the

organization without being too restrictive are called

A) By-laws. B) IRS Form 990. C) Articles of incorporation. D) Minutes of the Board meetings.

104. The incorporating documents that have an internal focus and describe the functional rules of

the organization

A) IRS Form 990. B) By-laws. C) Minutes of the Board meetings. D) Articles of incorporation.

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A) Percentage of unrestricted net assets to operating expenses. B) Current ratio. C) Total revenues divided by total expenses. D) Percentage of total expenses spent on the program function as opposed to supporting the

programs. 106. A good measure of whether the NPO is a “going concern” and can sustain its operations

into the future is

A) Total revenues divided by total expenses. B) Percentage of unrestricted net assets to operating expenses. C) Percentage of total expenses spent on the program function as opposed to support

function. D) Both A and B.

107. A good measure of whether the NPO is “liquid” and can meet its short-term obligations is


B) Total revenues divided by total expenses. C) Current assets divided by current liabilities. D) Percentage of unrestricted net assets to operating expenses.

108. A good measure of whether the NPO is efficient in its fund-raising efforts is

A) Public support as a percentage of fund-raising expenses. B) Current ratio. C) Total revenues divided by total expenses. D) Percentage of total expenses spent on the program function as opposed to support

function.

109. Hudson College, a small private college, received a research grant from NACUBO to study whether service efforts and accomplishments measures improve institutional performance. Under the provisions of SFAS No. 116 the grant would be reported as an increase in:

A) Unrestricted net assets. B) Temporarily restricted net assets. C) Permanently restricted net assets. D) The fund balance of restricted current funds.

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110 Which of the following receipts may properly be accounted for as an increase in unrestricted net assets?

A) Federal grant for genetic research. B) Gift from an alumnus for a new College of Business building. C) Student tuition and fees. D) Acceptance of assets the income from which will be paid to the donor.

111. Which of the following is required as part of a complete set of financial statements for a

private college or university? A) Statement of changes in financial position. B) Statement of activities. C) Statement of revenues, expenses, and changes in net assets. D) None of these.

112. Tuition scholarships for which there is no intention of collection from the student should

be classified by a private university as A) Revenues and expenditures. B) Revenues and expenses. C) A reduction of gross revenue to arrive at net revenue. D) Any of the above.

113. State appropriations received by a public university is classified as which of the following on the statement of revenues, expenses, and changes in net assets?

A) Operating revenue. B) Nonoperating revenue. C) Other financing source. D) Increase in unrestricted net assets.

114. What is the current level of federal grants a charity may receive before a single

audit is required? A) $100,000 B) $300,000 C) $500,000 D) $1,000,000

115. Which of the following is an allowable cost under most federal grant guidelines?

A) Alcoholic beverages B) Fines and Penalties C) Executive Director Salary D) None of the above

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116 For UNCW, tuition revenue A) Is more than half of total operating and non operating revenue for the University B) Is less than bookstore revenue C) Has been increasing as a percent of total revenue in recent years D) All of the above

117 Which of the following assets does not appear on the statement of financial position of the Cameron Arts Museum? A) Assets whose use is limited B) Museum and equipment (property) C) Art Collection D) Liability for amounts held for others

118. The basic format of the Cameron Art Museum financial statements is A) Layered B) Columnar C) Left orientated D) Right orientated

119. Restricted funds are: A) Not available unless the board of directors removes the restrictions B) Restricted as to use by the donor grantor or other source of the resources C) Not available for current operating use; however, the income earnings on the funds is

available D) Restricted as to use only for Board-designated purposes

120. Board designated resources: A) Are ear marked by the Board of Directors for a specific purpose B) May be undesignated by the Board of Directors at any time C) Indicate Board policy decisions D) All of the above

121. Which of the following is the most appropriate method of allocating the executive director’s salary in the statement of functional expense? A) Time reports for the year B) Square feet of his/her office C) 100% administration D) 90% administration, 10% fund raising

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122. Which of the following services should be not be recorded as expense of a not for profit? A) The salary of the executive director B) A local accountant volunteers 10 hours per week to record transaction in the

accounting information system and normally charges $25 per hour for these services C) Several senior citizens serve as greeters at the front door. They assist new customers

with questions. Management is having difficulty valuing their services although the hourly rate for similar services at Walmart is $7 per hour.

D) All of the above should be recorded in the statement of activities

123.Which of the following is most likely to be taxed as unrelated business income of a charity? A) Sale of T shirts with a charity logo in a charity run store with paid staff B) Bingo games revenue C) Golf tournament income D) Investment earnings

124Which of the following could result in loss of exempt status by a charity or church A) Lobbying for change in laws to help abuse victims by Domestic Violence charity B) Endorsing of a presidential candidate by the minister of a church in the pulpit on

Sunday C) Over 20% of income from investment earnings D) Over 50% of costs for fund-raising

125Not-for-profit reporting standards require net assets to be reported in all of the following classes except

A) Unrestricted net assets B) Invested in capital asset, net of related debt C) Permanently restricted net assets D) Temporarily restricted net assets E) All of the above are required

126.Cura Foundation, a nongovernment VHWO supported by contributions from the general public, included the following costs in its Statement of Functional Expenses for the year ended December 31, 2006:

Fund-raising ........................................................................$500,000 Administrative (including data processing) ..........................300,000 Research ................................................................................100,000 Cura’s functional expenses for 2006 program services were A) $900,000 B) $500,000 C) $300,000 D) $100,000

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127. The permanently restricted new assets of an ONPO include net assets from which of the following? Term Capital Endowment Asset Restricted Gifts Gifts A) No No B) No Yes C) Yes Yes D) Yes No

128. During the years ended June 30, 2005, and 2006, a nongovernment ONPO conducted a cancer research project financed by a $2,000,000 restricted gift. This entire amount was pledged by the donor on July 10, 2003, although he paid only $500,000 at that date. During the 2-year research period, the ONPO-related gift receipts and research expenses, were as follows: Year Ended June 30 2005 2006 Gift receipts $700,000 $800,000 Cancer research expenses 900,000 1,100,000 How much support should the ONPO report in its Statements of Activities for the year ended June 30, 2006? A) $0 B) $800,000 C) $1,100,000 D) $2,000,000

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129. The Governmental Accounting Standards Board has the responsibility for setting accounting and financial reporting standards for

A) State and local government entities and governmentally-related units and agencies, such

as utilities, authorities, hospitals, and colleges and universities. B) Governments; such as federal agencies, states, cities, counties, villages, and townships. C) Not-for-profit organizations. D) All of the above.

130. The Financial Accounting Standards Board has the responsibility for setting accounting

and financial reporting standards for

A) All federal and state organizations. B) All not-for-profit organizations that are nongovernmental and business entities. C) All not-for-profit organizations. D) Both B) and C) are correct.

131. The body that has been established to recommend accounting and financial reporting

standards for the federal government is the

A) Financial Accounting Standards Board (FASB). B) Governmental Accounting Standards Board (GASB). C) Cost Accounting Standards Board (CASB). D) Federal Accounting Standards Advisory Board (FASAB).

132. The GASB has identified which of the following as the "cornerstone" of all financial

reporting in government?

A) Understandability. B) Representational faithfulness. C) Accountability. D) Interperiod equity.

133. An audit of a government, conducted in accordance with generally accepted auditing standards (GAAS), includes

A) A determination of efficiency and effectiveness. B) An examination of financial statements and underlying records for conformance with

generally accepted accounting principles (GAAP). C) Tests for compliance with laws and regulations. D) Both B and C.

134. Audits of state and local governments may be performed by

A) Independent CPAs. B) State audit agencies. C) Federal grantor agencies. D) All of the above.

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135. All of the following are characteristics of nongovernmental, not-for-profit organizations (NPOs) that distinguish them from business organizations except

A) Contributions by resource providers who do not expect proportionate benefits or a return on investment.

B) Operating purposes other than to earn a profit. C) Ability to impose taxes on citizens. D) Absence of ownership interests.

136. Responsibility for promulgating generally accepted accounting principles for nongovernmental, not-for-profit entities rests with the FASB and was most clearly established

A) In the 1930s. B) When the FASB was created in 1974. C) When the GASB was created in 1984. D) In the AICPA's Statement of Auditing Standards No. 69 (hierarchy of GAAP) in 1992.

137 Statement of Financial Accounting Standards (SFAS) No. 116 on contributions received and contributions made describes measurement and reporting rules for

A) Nonexchange transactions, such as unrestricted and restricted gifts. B) Exchange transactions, such as membership dues and charges for services. C) Gains and losses on investment income. D) All of the above.

138. Statement of Financial Accounting Standards (SFAS) No. 117 requires the following financial statements for all nongovernmental, not-for-profit organizations

A) Statement of financial position, statement of activities, statement of cash flows, and statement of functional expenses.

B) Statement of financial position, statement of operations, statement of cash flows, and statement of functional expenses.

C) Statement of financial position, statement of revenues and expenses, and statement of cash flows, and statement of functional expenses.

D) Statement of financial position, statement of activities, and statement of cash flows.

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139. Which of the following statements is true regarding fund accounting and nongovernmental, not-for-profit organizations (NPOs)?

A) It is not allowed. B) It may be used by NPOs for external purposes, but not internal purposes. C) It may provide a good mechanism for facilitating reporting to funders for restricted

grants. D) SFAS Nos. 116 and 117 method of reporting three classes of net assets (unrestricted,

temporarily restricted, and permanently restricted) replaces fund accounting for both internal and external reporting purposes.

140. Which of the following are conditions that must be met for contributed services to a nonprofit organization (NPO) to be recorded as both a contribution and as an expense?





141. Which of the following statements is not true about financially related nonprofit

entities? A) If an NPO has a controlling interest in a for-profit entity, it should consolidate that

entity's financial information with its own. B) If an NPO has significant influence over a for-profit entity, it should use the equity

method to report that investment on its financial statement. C) If an NPO has an economic interest in another entity but not control, it should disclose

that in the Notes to the Financial Statements. D) If an NPO has controlling financial interest and an economic interest in another NPO, it

should disclose that in the Notes to the Financial Statements.

142. Temporarily restricted net assets are released from restrictions when A) Funds are returned to the donor. B) At the end of each fiscal year. C) Assets are spent for the purposes intended by the donor. D) They are converted to permanently restricted net assets.

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143. A local philanthropist pledged to make a donation of $100,000 to an NPO to be paid in five equal installments of $20,000 beginning in the next fiscal year. Under FASB standards the pledge would be recognized as

A) Support of $20,000 in each of the following five years. B) Support of $20,000 in the year the pledge was made and $80,000 as deferred support. C) Support of $100,000 in the year the pledge was made. D) Deferred support of $100,000 in the year the pledge was made.

144. Which of the following statements is correct regarding reporting of special events and

related direct costs under current FASB standards? A) Special events and related direct costs must be reported separately at their gross

amounts if they relate to the ongoing major operations of an NPO. B) Special events may be reported net of related direct costs if they are of a peripheral or

incidental nature. C) Expenses of promoting and conducting special events should be reported as part of

fund-raising expense rather than netting them against special events support. D) All of the above are correct statements.

145. A certain NPO incurred $5,000 in management and general expenses in the current fiscal year. In the organization's statement of activities prepared in conformity with FASB standards, the $5,000 would be reported as

A) A deduction from program revenue. B) Supporting services expenses. C) Program services expenses. D) A reduction of permanently restricted assets.


A) Gain on disposal of capital assets. B) Investment earnings. C) Rent earned from rental of surplus office space. D) Contributions received from a fund-raising campaign.

147. Securities donated to an NPO should be recorded at the A) Donor's recorded amount. B) Fair market value at the date of the gift, or the donor's recorded amount, whichever is

lower. C) Fair market value at the date of the gift. D) Fair market value at the date of the gift, or the donor's recorded amount, whichever is

higher.

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148. Which of the following contributions would not have to be reported as an asset on the statement of financial position of a nongovernmental not-for-profit organization?

A) An art collector donated a famous oil painting to a local nongovernmental art museum for display in its exhibit hall.

B) The original courthouse was donated to the Historical Preservation Society that is converting the courthouse to a museum.

C) Land was donated to the Green Society for conversion into a nature trail. D) None of the above donated assets would have to be reported on the balance sheets of the

not-for-profit organizations.

149. The primary standards-setting body for a public museum that receives the majority of its funding from local property taxes is

A) American Institute of CPAs (AICPA) B) Governmental Accounting Standards Board (GASB) C) General Accounting Office (GAO) D) Financial Accounting Standards Board (FASB)

150. When a nonprofit (nongovernmental) organization spends money for the purpose for

which an external donor intended, then the expense is reported as A) A decrease in unrestricted net assets. B) A decrease in temporarily restricted net assets. C) A decrease in permanently restricted net assets. D) A decrease in current-restricted fund balance.

151. The purpose of a statement of functional expenses is to A) Report on the net income of each program compared to that of supporting the programs. B) Report on program expenses and supporting expenses. C) Report on the cash flows of each program and that of supporting the programs. D) Report on the natural expenses (object-of-expense), as well as by program and support

functions.

152. Unrealized gains on the investment portfolio of a not-for-profit organization are A) Not recognized. B) Reported in the net asset section of the balance sheet. C) Depends on whether the gains relate to trading, available-for-sale, or held-to-maturity

assets. D) Reported on the statement of activities.

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153. Which of the following terms is used to indicate that a donor provided a gift with explicit instructions that the gift is to be used for a specific purpose by the NPO but the entire amount may be spent right away?

A) Board-designated net assets. B) Temporarily restricted net assets. C) Endowment assets. D) Permanently restricted net assets.

154. Which of the following is a true statement about tax-exempt organizations?

A) They must be organized to serve the charitable needs of the public at large. B) They must first become a nonprofit corporation (or charitable trust). C) They cannot do any political lobbying. D) They cannot have any unrelated business income.

155. Tax-exempt organizations must complete a Form 990 and send it to the IRS

A) Only if they have unrelated business income. B) Whether they are governmental or nongovernmental. C) If they are nongovernmental (and not a church) and their gross receipts are greater than

$25,000. D) None of the above.

156. The Internal Revenue Service may impose intermediate sanctions on a tax-exempt

organization that gives an officer A) Excessive compensation. B) More than the fair rental value for property owned by the officer. C) A bargain on the sale of assets. D) All of the above are transactions that may result in intermediate sanctions.

157. The income most likely to be considered unrelated business income of a human service

organization that provides immunizations to children in the community is A) Rental of extra space in the building. B) Gain on the sale of equipment no longer needed by the organization. C) Interest and dividend income on investments. D) Regular sale of sweatshirts with the organization's logo on it at a price considerably

above cost.



B) Current ratio. C) Total revenues divided by total expenses. D) Percentage of unrestricted net assets to operating expenses.

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159. A good measure of whether the NPO is “liquid” and can meet its short-term obligations is


B) Current assets divided by current liabilities. C) Total revenues divided by total expenses. D) Percentage of unrestricted net assets to operating expenses.

160 Which of the following statements is true regarding generally accepted accounting principles (GAAP) for colleges and universities?

A) The FASB has set standards for private colleges and universities from the time of its inception in 1974.

B) The GASB is responsible for establishing GAAP for public colleges and universities. C) Public and private colleges and universities must comply with the 1973 AICPA Audit

and Accounting Guide Audits of Colleges and Universities for guidance in financial reporting.

D) The National Association of Colleges and University Business Officers (NACUBO) only recently began to play a role in establishing accounting and reporting standards for colleges and universities.

161. What type of college or university should report expenses by functional classification,

assuming public colleges and universities have fully implemented GASBS 35? A) Public colleges and universities. B) Private colleges and universities. C) Both private and public colleges and universities. D) Neither private nor public colleges and universities.

162. Hudson College, a small private college, received a research grant from NACUBO to

study whether service efforts and accomplishments measures improve institutional performance. Under the provisions of SFAS No. 116 the grant would be reported as an increase in:

A) Unrestricted net assets. B) Temporarily restricted net assets. C) Permanently restricted net assets. D) The fund balance of restricted current funds.

163. Which of the following receipts may properly be accounted for as an increase in unrestricted net assets?

A) Federal grant for genetic research. B) Gift from an alumnus for a new College of Business building. C) Student tuition and fees. D) Acceptance of assets the income from which will be paid to the donor.

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164. Which of the following is required as part of a complete set of financial statements for a private college or university?

A) Statement of changes in financial position. B) Statement of activities. C) Statement of revenues, expenses, and changes in net assets. D) None of these.

165. Tuition scholarships for which there is no intention of collection from the student should be classified by a private university as

A) Revenues and expenditures. B) Revenues and expenses. C) A reduction of gross revenue to arrive at net revenue. D) Any of the above.

166. State appropriations received by a public university is classified as which of the

following on the statement of revenues, expenses, and changes in net assets? A) Operating revenue. B) Nonoperating revenue. C) Other financing source. D) Increase in unrestricted net assets.

167. What is the current level of federal grants a charity may receive before a single

audit is required? E) $100,000 F) $300,000 G) $500,000 H) $1,000,000

168. Which of the following is an allowable cost under most federal grant guidelines?

E) Alcoholic beverages F) Fines and Penalties G) Executive Director Salary H) None of the above

169. For UNCW, tuition revenue E) Is more than half of total operating and non operating revenue for the University F) Is less than bookstore revenue G) Has been increasing as a percent of total revenue in recent years H) All of the above

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170. Which of the following assets does not appear on the statement of financial

position of the Cameron Arts Museum? E) Assets whose use is limited F) Museum and equipment (property) G) Art Collection H) Liability for amounts held for others

171. The basic format of the Cameron Art Museum financial statements is E) Layered F) Columnar G) Left orientated H) Right orientated

172. Restricted funds are: E) Not available unless the board of directors removes the restrictions F) Restricted as to use by the donor grantor or other source of the resources G) Not available for current operating use; however, the income earnings on the funds is

available H) Restricted as to use only for Board-designated purposes

173. Board designated resources: E) Are ear marked by the Board of Directors for a specific purpose F) May be undesignated by the Board of Directors at any time G) Indicate Board policy decisions H) All of the above

174. Which of the following is the most appropriate method of allocating the executive director’s salary in the statement of functional expense? E) Time reports for the year F) Square feet of his/her office G) 100% administration H) 90% administration, 10% fund raising

175. Which of the following services should be not be recorded as expense of a not for profit? E) The salary of the executive director F) A local accountant volunteers 10 hours per week to record transaction in the

accounting information system and normally charges $25 per hour for these services G) Several senior citizens serve as greeters at the front door. They assist new customers

with questions. Management is having difficulty valuing their services although the hourly rate for similar services at Walmart is $7 per hour.

H) All of the above should be recorded in the statement of activities

176Which of the following is most likely to be taxed as unrelated business income of a charity?

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E) Sale of T shirts with a charity logo in a charity run store with paid staff F) Bingo games revenue G) Golf tournament income H) Investment earnings

177Which of the following could result in loss of exempt status by a charity or church E) Lobbying for change in laws to help abuse victims by Domestic Violence charity F) Endorsing of a presidential candidate by the minister of a church in the pulpit on

Sunday G) Over 20% of income from investment earnings H) Over 50% of costs for fund-raising

178Not-for-profit reporting standards require net assets to be reported in all of the following classes except

F) Unrestricted net assets G) Invested in capital asset, net of related debt H) Permanently restricted net assets I) Temporarily restricted net assets J) All of the above are required

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Problem I (20 points) Using the information in the financial statements, answer each of the following in 30 words or less:

A. What is your assessment of Children’s Counseling Center’s ability to pay bills (liquidity) How did you reach your conclusion?

B. What is your assessment of its use of resources to accomplish its mission How did you reach your conclusion C. What is your assessment of the Center’s handling of grants from donors for

specific purposes? Have these grants increased during the year? What portion of the grants were used in accordance with the terms of the grant? Why is the $48,100 shown as a financing source in cash flows?

D. Did they make a profit for the year? How much and should a charity make a profit?

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CHILDREN’S COUNSELING CENTER STATEMENT OF FINANCIAL POSITION JUNE 30, 2005 ASSETS LIABILITIES AND NET ASSETS CASH $ 126,500 ACCOUNTS PAYABLE $ 13,520 PLEDGES RECEIVABLE ($41,000 less uncollectible pledges of $4,100) 36,900 INVENTORY 2,800 INVESTMENTS (at fair value) 178,000 NET ASSETS: UNRESTRICTED 204,080 FURNITURE AND EQUIPMENT, TEMPORARILY RESTRICTED 76,600 PERMANENTLY RESTRICTED 100,000 ($210,000 net of Accumulated Depreciation of $160,000) 50,000 TOTAL NET ASSETS 380,680 TOTAL LIABILITIES AND TOTAL ASSETS $394,200 NET ASSETS $394,200

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CHILDREN’S COUNSELING CENTER STATEMENT OF FUNCTIONAL EXPENSES

YEAR ENDED JUNE 30, 2005 PROGRAM SERVICES SUPPORTING SERVICES PROFES- COUNSELING SIONAL COMMUNITY MGT AND FUND- SERVICES TRAINING SERVICES TOTAL GENERAL RAISING TOTAL TOTAL EXPENSES SALARIES AND FRINGES $114,564 $42,961 $ 28,641 $186,166 $71,603 $28,641$100,244 $286,410 OCCUPANCY AND UTILITY 15,360 5,760 3,840 24,960 9,600 3,840 13,440 38,400 SUPPLIES 2,776 1,041 694 4,511 1,735 694 2,429 6,940 PRINTING AND PUBLISHING 1,676 629 419 2,724 1,047 419 1,466 4,190 TELEPHONE AND POSTAGE 1,400 525 350 2,275 875 350 1,225 3,500 UNREALIZED LOSS 0 0 0 0 1,480 0 1,480 1,480 UNCOLLECTIBLE PLEDGES 0 0 0 0 2,000 2,000 2,000 DEPRECIATION 4,200 4,200 4,200 12,600 4,200 4,200 8,400 21,000 TOTAL EXPENSES $139,976 $55,116 $38,144 $233,236 $92,540 $38,144 $130,684 $363,920

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CHILDREN’S COUNSELING CENTER STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2005

Unrestricted

TemporarilyRestricted

Permanently Restricted

Total 2005

Revenues gains, and other support:

Contributions $ 340,300 $ 48,100 $ 388,400 Investment Income 9,200 9,200 Temporarily Restricted

Net Assets Released from Restrictions

22,000 (22,000) 0

Total revenues, gains, and other support

371,500 26,100 397,600

Expenses and losses:

Program services: Counseling services 139,976 Professional training 55,116 Community service 38,144 ______ _______ _______ Total program expenses 233,236 Support expenses:

Management and general 92,540 Fund-raising 38,144 Total support expenses 130,684 ______ ______ _______Total expenses and losses 363,920 0 0 363,920 Change in net assets 7,580 26,100

0 33,680

Net assets, July 1, 2004 196,500 50,500 100,000 347,000Net assets, June 30, 2005 204,080 76,600 100,000 380,680

Page 1

CHILDREN’S COUNSELING CENTER STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2005 CASH FLOWS FROM OPERATING ACTIVITIES: CASH RECEIVED FROM CONTRIBUTORS $310,800 CASH RECEIVED AS INVESTMENT INCOME 9,200 CASH PAID TO EMPLOYEES (286,410) CASH PAID FOR OPERATING EXPENSES (86,504) NET CASH PROVIDED BY OPERATING ACTIVITIES (52,914) CASH FLOWS FROM INVESTING ACTIVITIES: PURCHASE OF FURNITURE AND EQUIPMENT (22,000) CASH FLOWS FROM FINANCING ACTIVITIES: PROCEEDS FROM CONTRIBUTIONS RESTRICTED FOR: INVESTMENT IN CAPITAL ASSETS 48,100 NET INCREASE IN CASH (26,814) CASH, JULY 1, 2004 153,314 CASH, JUNE 30, 2005 $ 126,500 RECONCILIATION OF CHANGES IN NET ASSETS TO NET CASH USED FOR OPERATING ACTIVITIES: CHANGE IN NET ASSETS $ 33,680 ADJUSTMENTS TO RECONCILE CHANGE IN NET ASSETS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: DEPRECIATION 21,000 INCREASE IN NET PLEDGES RECEIVABLE (6,000) INCREASE IN INVENTORY (1,000) DECREASE IN ACCOUNTS PAYABLE ( 100,594) CASH PROVIDED BY OPERATING ACTIVITIES $ (52,914) Problem II (10 points) As you succeed in your career, you will want to give back to the community? What charity or government service are you interested in and why?

Documents

MSA Exam Spring 2007