#finalexams | Explore Tumblr posts and blogs

examsage · 10 days ago

Text

Accounting for Nonprofit Organizations Practice Exam By Exam Sage

To access the complete practice exam with detailed questions and answers, follow these easy steps:

Copy the URL below

Paste it into your browser's address bar.

Download your practice exam to start studying

Hit Us Email for Any Inquiry at: [email protected]

Visit our website for More Practice Exams : https://examsage.com

What is the primary objective of nonprofit financial reporting?

a) To maximize profits. b) To comply with federal tax laws. c) To provide information useful to present and potential resource providers. d) To calculate dividends for shareholders.

Contributions to nonprofit organizations are typically recorded as:

a) Liabilities. b) Revenues. c) Gains. d) Equity.

Under GAAP, how are donor-imposed restrictions on contributions classified?

a) Temporarily restricted net assets. b) Permanently restricted net assets. c) Either temporarily or permanently restricted net assets. d) Unrestricted net assets.

Which financial statement is unique to nonprofit organizations?

a) Statement of Cash Flows. b) Statement of Activities. c) Income Statement. d) Statement of Equity.

A nonprofit receives a pledge that is not conditional. How should it be recorded?

a) As a liability. b) As revenue. c) As an expense. d) Not recorded until the pledge is received.

What is the basis of accounting used by most nonprofit organizations?

a) Cash basis. b) Modified accrual basis. c) Accrual basis. d) Tax basis.

The Statement of Functional Expenses is primarily used by:

a) Healthcare organizations. b) Educational institutions. c) Voluntary health and welfare organizations. d) Government agencies.

Which of the following is NOT a component of net assets for a nonprofit?

a) Unrestricted net assets. b) Temporarily restricted net assets. c) Permanently restricted net assets. d) Retained earnings.

Donated services are recognized as revenue if the services:

a) Are performed by volunteers. b) Require specialized skills and would typically need to be purchased. c) Are provided by the organization’s board members. d) Are offered at no charge.

A nonprofit’s Statement of Activities includes:

a) Revenues, expenses, and changes in net assets. b) Assets, liabilities, and equity. c) Revenues, expenses, and net income. d) Assets, expenses, and liabilities.

Which of the following is classified as a temporarily restricted net asset?

a) A building donation with no restrictions. b) A cash donation restricted for a specific program. c) An unrestricted cash contribution. d) Investment income with no donor-imposed restrictions.

In nonprofit accounting, an endowment is:

a) An unrestricted contribution. b) A contribution that must be maintained in perpetuity. c) A contribution restricted for a specific use. d) A grant received annually.

How are investments reported in a nonprofit organization’s financial statements?

a) At historical cost. b) At fair value. c) At net realizable value. d) At the lower of cost or market.

What type of fund is used by nonprofits to account for scholarships funded by donations?

a) General fund. b) Restricted fund. c) Designated fund. d) Permanent fund.

What document governs the allocation of expenses between program and support services?

a) GASB Statement No. 34. b) FASB ASC 958. c) Sarbanes-Oxley Act. d) Internal Revenue Code Section 501(c).

Membership dues in a nonprofit organization are recognized as:

a) Contributions. b) Fees for services. c) Revenue. d) Deferred revenue.

Which of the following is NOT an example of program expenses?

a) Salaries of program staff. b) Direct materials for services. c) Administrative office supplies. d) Educational program supplies.

When a nonprofit sells an asset for more than its book value, the excess is reported as:

a) Revenue. b) A gain. c) A contribution. d) Deferred income.

If a donor-imposed restriction is met in the same reporting period, the contribution is classified as:

a) Temporarily restricted. b) Permanently restricted. c) Unrestricted. d) Deferred revenue.

Depreciation expense in nonprofit accounting is:

a) Not recorded. b) Reported only if unrestricted. c) Allocated to both program and supporting services. d) Always recorded as temporarily restricted.

Which of the following is an example of support services?

a) Community outreach. b) Fundraising. c) Medical assistance. d) Educational workshops.

Unconditional promises to give are recognized as:

a) Contributions at fair value. b) Contributions at face value. c) Liabilities. d) Deferred revenue.

Which organization establishes accounting standards for nonprofit organizations?

a) GASB. b) FASB. c) AICPA. d) SEC.

A nonprofit’s fiscal year-end financial statements must include:

a) A Balance Sheet. b) A Statement of Financial Position. c) An Income Statement. d) A Retained Earnings Statement.

A nonprofit organization receives a contribution restricted for building renovations. Where is this reported?

a) Permanently restricted net assets. b) Temporarily restricted net assets. c) Unrestricted net assets. d) Deferred income.

When is contributed equipment recognized as revenue?

a) When it is used. b) When it is received. c) When it is sold. d) When it is pledged.

Which statement is NOT required for nonprofits under GAAP?

a) Statement of Cash Flows. b) Statement of Changes in Net Assets. c) Statement of Activities. d) Statement of Functional Expenses.

The term “nonexpendable” is commonly associated with:

a) Unrestricted net assets. b) Endowments. c) Depreciation. d) Deferred revenue.

Which of the following represents program service revenue?

a) Investment income. b) Tuition fees. c) Membership dues. d) Fundraising income.

Donated art that is not to be sold is recorded as:

a) Revenue. b) An asset. c) Expense. d) Not recorded.

Which of the following is a key feature of nonprofit accounting?

a) Profit maximization. b) Separation of profits from operations. c) Financial transparency with donors and the public. d) Use of dividend distributions.

In the Statement of Financial Position of a nonprofit organization, net assets are classified into:

a) Operating and non-operating. b) Unrestricted, temporarily restricted, and permanently restricted. c) Fixed and current. d) Liquid and illiquid.

Which of the following should be recorded as an expense in a nonprofit organization’s financial statements?

a) Contributions from donors. b) Depreciation on fixed assets. c) Proceeds from a fundraising event. d) Grants from the government.

When a nonprofit organization raises funds through a special event, the net income from the event should be classified as:

a) Unrestricted revenue. b) Temporarily restricted revenue. c) Program service revenue. d) A gain.

Under GAAP, which type of nonprofit organization is not required to prepare a Statement of Functional Expenses?

a) Voluntary health and welfare organizations. b) Hospitals and healthcare organizations. c) Colleges and universities. d) Religious organizations.

How are donated goods typically recorded in nonprofit accounting?

a) As deferred revenue. b) As an asset at fair value. c) As an expense at historical cost. d) As a liability.

A nonprofit receives a gift to establish a permanent endowment. The funds must be classified as:

a) Temporarily restricted. b) Unrestricted. c) Permanently restricted. d) Deferred income.

The purpose of the Statement of Functional Expenses is to:

a) Report the financial position of the nonprofit. b) Provide detailed information about expenses categorized by function. c) Calculate the operating surplus or deficit. d) Detail the contributions received during the reporting period.

How should an organization classify and report grants and pledges received for program-related purposes?

a) Unrestricted revenue. b) Temporarily restricted revenue. c) Permanently restricted revenue. d) Deferred revenue.

In nonprofit accounting, which method is used to allocate shared costs between program services and supporting services?

a) Direct method. b) Indirect method. c) Functional allocation method. d) Cost-benefit analysis method.

Nonprofit organizations are required to have an independent audit if their annual revenue exceeds:

a) $500,000. b) $1,000,000. c) $2,000,000. d) $5,000,000.

Which of the following is classified as a non-operating expense in a nonprofit organization?

a) Salaries of program staff. b) Depreciation of program assets. c) Interest on bonds. d) Costs related to delivering educational programs.

Which accounting standard does the Financial Accounting Standards Board (FASB) provide for nonprofit organizations?

a) FASB ASC 958. b) GASB Statement No. 34. c) AICPA SOP 94-3. d) FASB ASC 820.

How are unconditional pledges recorded in nonprofit accounting?

a) As an expense when the promise is made. b) As revenue at the present value of future cash flows. c) As a liability until the pledge is received. d) As deferred revenue until received.

Which of the following is considered a program expense?

a) Fundraising event costs. b) Depreciation on office building. c) Educational material costs for a community program. d) Advertising costs for recruiting volunteers.

In the Statement of Activities for nonprofit organizations, which of the following would not be considered revenue?

a) Gifts and contributions. b) Investment income. c) Gain on the sale of property. d) Capital grants restricted for future use.

What is the proper classification of a cash donation with no restrictions made to a nonprofit organization?

a) Temporarily restricted net assets. b) Unrestricted net assets. c) Permanently restricted net assets. d) Deferred revenue.

If a nonprofit receives a conditional promise to give that is not yet met, it should:

a) Recognize the gift as revenue immediately. b) Recognize the gift as revenue once the condition is fulfilled. c) Record the gift as deferred revenue. d) Not record the gift until it is received.

The purpose of the Form 990 is to:

a) Report the income and expenses of the nonprofit organization. b) Provide financial transparency for public scrutiny. c) Calculate the nonprofit’s tax liability. d) Provide tax-exempt status to the nonprofit.

Which of the following is an example of a permanent restriction on net assets?

a) A donor’s request that funds be used for capital improvements. b) A donation for the ongoing operations of the organization. c) A gift to a foundation with instructions to maintain the corpus in perpetuity. d) A gift designated for program expenses in the next year.

Which of the following is typically classified as “supporting services” in nonprofit accounting?

a) Costs related to program delivery. b) Advertising expenses for fundraising. c) Salaries of program staff. d) Depreciation on program assets.

When a nonprofit organization receives a gift for a specific purpose that is not yet met, the gift is recorded as:

a) Unrestricted revenue. b) Temporarily restricted revenue. c) Permanently restricted revenue. d) Deferred revenue.

In the Statement of Activities, which of the following is considered a “change in net assets” for a nonprofit?

a) Donated property. b) Depreciation on buildings. c) Donations received for the endowment fund. d) Expenses for administrative overhead.

Which of the following is included in a nonprofit organization’s unrestricted net assets?

a) Funds permanently restricted by the donor. b) Unspent gifts for specific programs. c) Funds with no donor-imposed restrictions. d) Gifts restricted to a future time period.

In nonprofit accounting, grants received for program activities are recorded as:

a) Unrestricted revenue. b) Temporarily restricted revenue. c) Permanently restricted revenue. d) Deferred income.

The “Direct Method” in nonprofit accounting is used to report:

a) Cash flows from operating activities. b) Financial position. c) Functional expenses. d) Contributions from donors.

Nonprofits are required to disclose their methods for allocating expenses in their:

a) Statement of Financial Position. b) Notes to the financial statements. c) Statement of Cash Flows. d) Statement of Activities.

A nonprofit organization’s unrestricted net assets are typically used for:

a) Donor-imposed restrictions. b) Long-term investments. c) Operations and general activities. d) Endowment purposes.

When a nonprofit receives a pledge with a condition (e.g., matching grant), the pledge is recognized as revenue when:

a) The donor is identified. b) The condition is met. c) The pledge is written. d) The funds are transferred.

Which financial statement reflects the changes in a nonprofit’s net assets over a period?

a) Statement of Financial Position. b) Statement of Activities. c) Statement of Cash Flows. d) Statement of Functional Expenses.

When a nonprofit receives a contribution to build a new building, the funds should be classified as:

a) Unrestricted. b) Temporarily restricted. c) Permanently restricted. d) Deferred revenue.

Nonprofit organizations must disclose the fair value of donated services in their financial statements if:

a) The services provide a benefit to the organization and the donor’s identity is known. b) The services are specialized and the amount of the donation can be estimated. c) The services are general and can be easily estimated. d) The services are provided by volunteers.

Nonprofit organizations are required to report the cash flow from financing activities in the:

a) Statement of Financial Position. b) Statement of Cash Flows. c) Statement of Functional Expenses. d) Statement of Activities.

Which of the following would NOT be considered a supporting service expense for a nonprofit?

a) Salaries of the fundraising staff. b) Office rent used for administrative purposes. c) Cost of supplies used for a program. d) Salaries for the executive director.

Which of the following represents a permanent restriction on a nonprofit’s net assets?

a) Money restricted for a building campaign. b) Money restricted to provide scholarships for students. c) Money restricted for investment in perpetuity. d) Money restricted for operating expenses in the coming year.

For a nonprofit, the presentation of the Statement of Cash Flows should follow which method?

a) Direct method. b) Indirect method. c) Either direct or indirect method. d) The cash flows method is not required.

Nonprofit organizations must recognize revenue for pledges received that:

a) Are conditional. b) Are promised in writing. c) Are unconditional. d) Will be received in installments over time.

The purpose of the Form 990 is to:

a) Provide information about the financial activities of a nonprofit to the IRS. b) Provide financial information to the general public. c) Determine eligibility for tax-exempt status. d) Both a and b.

The requirement for nonprofits to provide a detailed report of functional expenses is intended to:

a) Show the nonprofit’s profitability. b) Demonstrate transparency and accountability. c) Meet the IRS’s requirements. d) Report the organization’s total assets.

If a nonprofit organization receives a donation of land, it should:

a) Recognize the land at its purchase price. b) Recognize the land at its fair value. c) Record the land as a liability. d) Record the land as deferred revenue.

When a nonprofit organization receives a grant that is restricted for a specific purpose, how is the revenue recognized?

a) It is recognized as revenue immediately. b) It is recognized as temporarily restricted revenue. c) It is recognized as permanently restricted revenue. d) It is not recognized until the grant is spent.

Which of the following would typically be considered an administrative expense for a nonprofit organization?

a) Salaries of program directors. b) Office supplies used for fundraising activities. c) Depreciation of a program-related vehicle. d) Salaries of executive staff overseeing operations.

A nonprofit organization received a pledge from a donor to donate $50,000 over five years. How should this pledge be recorded initially?

a) As $50,000 in revenue. b) As $50,000 in deferred revenue. c) As revenue based on the present value of the future donations. d) As an unrestricted gift.

A nonprofit organization’s fundraising costs should be classified under which category in the Statement of Activities?

a) Program services. b) Supporting services. c) Investments. d) Assets.

A nonprofit organization’s endowment fund is classified as:

a) Unrestricted net assets. b) Temporarily restricted net assets. c) Permanently restricted net assets. d) Deferred revenue.

#examsage #finalexam #practicequiz #Accounting exam #accounting test bank #Accounting for Nonprofit Organizations #Accounting for Nonprofit Organizations Exam #Accounting for Nonprofit Organizations Test Bank

0 notes