Not-for-Profit Accounting Final Exam
Course Introduction
Not-for-Profit Accounting explores the unique financial reporting and accounting requirements of not-for-profit organizations, including charities, foundations, educational institutions, and government agencies. The course covers topics such as fund accounting, donor-restricted contributions, statement of financial position, statement of activities, grant management, and compliance with regulatory standards like FASB ASC 958. Students will develop an understanding of how to prepare and analyze financial statements, ensure proper stewardship of resources, and maintain transparency and accountability to stakeholders within the not-for-profit sector.
Recommended Textbook
Essentials of Accounting for Governmental and Not for Profit Organizations 9th Edition by Paul Copley
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13 Chapters
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Chapter 1: Introduction to Accounting and Financial
Reporting for Governmental and Not-For-Profit Organizations
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Combining statements are required whenever a nonmajor column is used in one of the fund financial statements.
A)True
B)False Answer: True
Q2) Which of the following is true regarding the proprietary fund financial statements?
A) The proprietary fund financial statements include the Statement of Net Assets, the Statement of Revenues, Expenses and Changes in Fund Net Assets and the Statement of Cash Flows
B) The proprietary funds include enterprise, internal service and permanent funds
C) Both of the above
D) Neither of the above
Answer: A
Q3) Prior-year data may be presented but are not required on government-wide statements
A)True
B)False
Answer: True
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Chapter 2: Overview of Financial Reporting for State and Local Governments
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Sample Questions
Q1) Although certain supplementary information may not be required, if presented, it must follow GASB guidance regarding its format and content.
A)True
B)False
Answer: True
Q2) A city government collects local option sales taxes legally restricted to pay for the hiring of teachers for hearing impaired school children. Which fund should account for the receipt of the sales taxes?
A) Special revenue fund
B) Capital projects fund
C) Private-purpose trust fund
D) General fund
Answer: A
Q3) The Federal Accounting Standards Advisory Board and the Governmental Accounting Standards Board are parallel bodies under the oversight of the Financial Accounting Foundation.
A)True
B)False
Answer: False
Page 4
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Chapter 3: Modified Accrual Accounting: Including the Role of
Fund Balances and Budgetary Authority
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Sample Questions
Q1) Revenues for governmental funds, should be recognized when measurable and available for expenditure in the current period.
A)True
B)False
Answer: True
Q2) An example of expenditure classification by character would be:
A) Capital outlay
B) Public safety
C) Police department
D) Salaries
Answer: A
Q3) The final appropriations budget:
A) Can be changed at any time by the accounting department
B) Can be exceeded by actual appropriations
C) Is legal and binding
D) None of the above
Answer: C
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Page 5
Chapter 4: Accounting for the General and Special Revenue Funds
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Sample Questions
Q1) Expenditures are generally recorded and fund liabilities are recognized
A) When goods and services are received, but only if resources are available in the fund
B) When goods and services are received, regardless of whether or not resources are available in the fund
C) When purchase orders are issued, regardless of whether or not resources are available in the fund
D) When invoices are paid
Q2) Which of the following occurs when uncollectible delinquent taxes are written off? (Ignore interest and penalties)
A) Net receivables remain unchanged
B) Accounts receivable goes down and the Estimated Uncollectible Taxes Account is increased
C) Delinquent Tax Receivable is increased
D) Uncollectible Delinquent Tax Expense is increased
Q3) Interfund services provided and used are recognized as Increases and Decreases in Fund Balance
A)True
B)False
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Chapter 5: Accounting for Other Governmental Fund Types:
Capital Projects, Debt Service, and Permanent
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130 Flashcards
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Sample Questions
Q1) At the inception of a capital lease agreement,
A) A liability is incurred and reported in the governmental fund account
B) A liability is incurred and reported in the government-wide financial statements
C) An expenditure is recorded in the governmental fund account
D) Both B and C
Q2) Siler City receives a trust donation for the purpose of maintaining flower beds in city parks, but the donor does not specify that the principal must be maintained. This type of trust would be most appropriately accounted for in a:
A) Permanent Fund
B) Special Revenue Fund
C) Private Purpose Trust Fund
D) General Fund
Q3) Financial statements in which capital projects funds are reported are the Governmental Funds Balance Sheet and the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances.
A)True
B)False
Q4) What is the difference between Permanent Funds and Private Purpose Trust Funds?
Page 7
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Chapter 6: Proprietary Funds
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Sample Questions
Q1) The City of X had the following debt outstanding: General obligation bonds to be paid from a debt service fund $2,000,000
General obligation bonds to be paid from utility revenues $3,000,000
Revenue bonds to be paid from utility revenues $4,000,000
The amount that should be shown as debt in the utility (enterprise) fund would be:
A) $4,000,000
B) $6,000,000
C) $7,000,000
D) $9,000,000
Q2) The term "proprietary funds" includes enterprise and internal service funds.
A)True
B)False
Q3) When preparing the Statement of Cash Flows for the Proprietary Fund, cash flows from noncapital financing activities include all of the following EXCEPT:
A) Receipts from customers
B) Proceeds and repayment of debt not clearly related to capital outlay
C) Grants received from and paid to other governments for noncapital purposes
D) Transfers to and from other funds
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Chapter 7: Fiduciary Trust Funds
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Q1) Pension Funds are used to account for assets provided to pension trusts.
A)True
B)False
Q2) Jasper City is trustee for the Henry J. Moneybags Endowment Fund, created to provide scholarships for students. This is an example of which type of fund?
A) Permanent
B) Pension trust
C) Agency
D) Private-purpose trust
Q3) Fiduciary funds use accrual accounting.
A)True
B)False
Q4) The required financial statements for agency funds include a Statement of Fiduciary Net Assets and a Statement of Changes in Fiduciary Net Assets.
A)True
B)False
Q5) Fiduciary Funds are reported by activity.
A)True
B)False
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Chapter 8: Government-Wide Statements, Capital Assets,
Long-Term Debt
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Sample Questions
Q1) Which of the following must be done to convert modified accrual basis to accrual basis?
A) Record capital assets
B) Change expenditures for debt service principal to reduction of liabilities
C) Make adjustments to revenues to convert to the accrual basis of revenue recognition
D) All of the above
Q2) Internal Service funds use the accrual basis of accounting.
A)True
B)False
Q3) Internal service funds are most commonly reported in which section of the Government-wide financial statements?
A) Governmental Activities
B) Business-type activities
C) Both A & B
D) Neither of the above
Q4) The difference between assets and liabilities in the government-wide statements is called net equity.
A)True
B)False
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Chapter 9: Accounting for Special-Purpose Entities, Including
Public Colleges and Universities
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Sample Questions
Q1) A public college had tuition and fees for the year ended June 30, 2009 in the amount of $45,000,000. Scholarships, for which no services were required, amounted to $2,500,000. Graduate assistantships, for which services were required, amounted to $2,300,000. The amount to be reported by the college for net tuition and fee revenue would be:
A) $40,200,000
B) $42,700,000
C) $42,500,000
D) $45,000,000
Q2) Higher education institutions that report as special purpose entities engaged in business-type activities only should report the same net asset classifications (invested in capital assets, net of related debt, restricted, unrestricted) as are reported in the government-wide statement of net assets.
A)True
B)False
Q3) GASB clearly defines the criteria when determining whether a government is general-purpose or special-purpose.
A)True
B)False
Page 11
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Chapter 10: Accounting for Private Not-For-Profit Organizations
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Sample Questions
Q1) With respect to the Statement of Cash Flows for a not-for-profit organization, the purchase of equipment would be considered an investing activity.
A)True
B)False
Q2) Expenditures, encumbrances and budgetary accounts are not used by not-for-profit organizations.
A)True
B)False
Q3) When expenses are recognized for a transaction and the not-for-profit possess funds restricted for transactions of that type, it is assumed that ______________.
A) Unrestricted Funds Are Used First
B) Funds Restricted for That Purpose are Used First
C) Permanently Restricted Funds Are Used First
D) Either Purpose Restricted Funds or Unrestricted Funds are Used First
Q4) The Statement of Cash Flows for a not-for-profit organization, has four different classifications of cash flows.
A)True
B)False
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Chapter 11: College and University Accounting Private Institutions
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105 Flashcards
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Sample Questions
Q1) Which of the following is true of a Statement of Activities prepared for a private college or university?
A) All expenses are shown as unrestricted
B) Reclassifications from unrestricted to permanently restricted net assets are reported when the governing board designates unrestricted funds for permanent investment in the endowment
C) Only realized gains or losses on investments are reported
D) All of the above are true
Q2) A tuition waiver for a student who works as a graduate assistant is treated as compensation expense.
A)True
B)False
Q3) If the receivable for a student is $8,000 and the student pays only $500 as the result of receiving an assistantship from the school, what would be the appropriate debits.
A) Debit Cash and Debit Discount on Revenue
B) Debit Cash and Debit Expense
C) Debit Cash and Debit accounts receivable
D) Debit Cash
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Chapter 12: Accounting for Hospitals and Other Health Care
Providers
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Sample Questions
Q1) The AICPA Health Care Guide requires a performance indicator in the financial statements of private sector not-for-profit health care providers.
A)True
B)False
Q2) A private sector not-for-profit hospital received a gift of $100,000 cash on the first day of 2009 with a donor restriction that the resources be used to purchase certain equipment. The equipment was purchased on the same day and is expected to last five years with no salvage value. The Statement of Financial Position as of December 31, 2009 would reflect as net assets of:
A) $80,000 unrestricted and $0 temporarily restricted
B) $0 unrestricted and $80,000 temporarily restricted
C) Either (a) or (b), depending on the policy of the hospital
D) None of the above
Q3) Assume you are reviewing the financial statements of a not-for-profit hospital. Where would you find the account "Assets whose is limited" and how is it used?
Q4) What is the basis of accounting for hospitals and other health care organizations and what organizations are responsible for setting Level A GAAP?
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Chapter 13: Auditing, Tax-Exempt Organizations, and Evaluating Performance
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Sample Questions
Q1) The single audit act provides assurance to the federal government that federal funds are protected through a system of internal controls and sound financial management practices
A)True
B)False
Q2) Describe the different types of governmental audit and attestation engagements.
Q3) Service Efforts and Accomplishments Reporting is voluntary for not-for-profit organizations
A)True
B)False
Q4) Which of the following would be a financial audit (or a part of a financial audit) under the Government Auditing Standards?
A) An audit expressing an opinion on the basic financial statements of a state or local government audit
B) An examination to determine whether purchasing procedures are appropriately designed to assure program supplies meet standards
C) Both of the above
D) Neither of the above
Q5) What is the purpose of the Unrelated Business Income Tax?
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