31) 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.
32) Which of the following is a reason why a not-for-profit organization 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 election of a senate candidate.
D) It has unrelated business income.
33) The Internal Revenue Service may impose intermediate sanctions on all of the following
transactions between a not-for-profit organization and its executive officer except:
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) Fringe benefits comparable to those given to all employees.
34) 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.
35) 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.
36) 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.
37) Public disclosure rules require that a tax-exempt not-for-profit organization:
A) Make available a copy of its Form 990 to the public for a period of up to three years.
B) Post a copy of its articles of incorporation and by-laws on its website.
C) Provide a copy of the minutes to all board meetings to any person who requests the minutes
within 90 days of the board meeting.
D) Make available a copy of its Form 990-T, but not its Form 990, to the public for a period of up
to two years.
38) The organization Shelter the Needy is completing its Form 990 and it is trying to determine if
it has unrelated business income on which it must pay taxes. Which of the following would be
subject to unrelated business income taxes?
A) The Shelter sold art work it had received as a donation.
B) Volunteers raised several thousand dollars in a marathon sponsored for the benefit of the
Shelter.
C) The Shelter earned revenues from the self-service laundry facilities it provides for the benefit of
tenants of its low-income temporary housing facilities.
D) None of the items listed would be subject to unrelated business income taxes.
39) A good measure that can be used to help assess whether a not-for-profit organization is
spending too much on overhead, such as general and administrative expenses, is:
A) Percentage of unrestricted net assets to operating expenses.
B) Current ratio.
C) Total revenues divided by total expenses.
D) Percentage of program expenses to total expenses.
40) A good measure of whether a not-for-profit organization is a “going concern” and can sustain
its operations into the future is:
A) Total revenues divided by assets.
B) Percentage of unrestricted net assets to operating expenses.
C) Percentage of program expenses to total expenses.
D) Fund-raising expenses as a percentage of public support.
41) A good measure of whether a not-for-profit organization is “liquid” and can meet its short-term
obligations is:
A) Percentage of program expenses to total expenses.
B) Total revenues divided by total expenses.
C) Current assets divided by current liabilities.
D) Percentage of unrestricted net assets to operating expenses.
42) A good measure of whether a not-for-profit organization is efficient in its fund-raising efforts
is:
A) Fund-raising expenses as a percentage of public support.
B) The ratio of program expenses to number of clients served.
C) Total revenues divided by total expenses.
D) Percentage of program expenses to total expenses.
43) All of the following organizations may be not-for-profit except:
A) Colleges and universities.
B) Hospitals.
C) Privately held partnerships.
D) Human service organizations.
44) A good measure of whether a not-for-profit organization is operating its programs efficiently
is:
A) Fund-raising expenses as a percentage of public support.
B) The ratio of program expenses to number of clients served.
C) Total revenues divided by total expenses.
D) Percentage of program expenses to total expenses.
45) The local Kennel Club is a not-for-profit organization with gross receipts of $23,500 for the
current tax year. Under the Internal Revenue Service Code, the Kennel Club would be required to
file which of the following forms for the tax year?
A) Form 990-N.
B) Form 990-EZ.
C) Form 990-PF.
D) Since its gross receipts are less than $25,000 it need not file with the Internal Revenue Service.
46) The Form 990 consists of 12 parts (core form) and several schedules. Which of the following
would not be included as one of the parts of the core form of the Form 990?
A) Statement of program service accomplishments.
B) Management analysis of the financial condition of the organization.
C) Balance sheet.
D) A checklist of required schedules.
47) Which of the following is the incorporating document of a not-for-profit organization that
describes the purpose or mission of the organization?
A) By-laws.
B) IRS Form 1023 request for tax-exempt status.
C) Articles of incorporation.
D) Charter.
48) A not-for-profit organization is granted its legal status by which of the following?
A) Federal government.
B) State government.
C) The city or county in which it resides.
D) The courts.
49) Which of the following would not be required under not-for-profit incorporation laws?
A) Appointment of a board of directors.
B) Establishment of by-laws.
C) A clearly stated purpose for the organization.
D) Application for 501(c)(3) status.