50) Which of the following defines an appeal to the public to take action on a legislative matter?
A) Grass-roots lobbying.
B) Propaganda.
C) Lobbying.
D) Political influence.
51) Not-for-profit organizations can take which of the following organizational forms?
A) Nongovernmental.
B) Governmental.
C) Business.
D) Both governmental and nongovernmental are acceptable organizational forms.
52) An individual can generally receive a tax deduction for contributions to which type of
not-for-profit organization?
A) 501(c)(1) organization.
B) 501(c)(3) organization.
C) 527 organization.
D) Any not-for-profit organization granted tax exemption by the IRS.
53) For each of the following definitions, select the key term from the list that best matches by
placing the appropriate terms.
A. Unrelated business income
B. Public charity
C. Charitable solicitation
D. Lobbying
E. Debt financed income
F. Private foundation
G. Propaganda
________1. A not-for-profit exempt under IRC Sec. 501(c)(3) that receives most of its support
from a small number of donors or investment income than it does from the public at large.
________ 2. A direct request for credit or financial assistance that will be used for the 501(c)(3)’s
mission.
________ 3. Information that is skewed toward a particular belief with little basis in fact.
________ 4. Gross income from a trade or business regularly carried on by a tax-exempt
organization.
________ 5. Contacting elected officials to encourage specific legislative action.
54) For each of the following performance indicators, select the type of ratio from the list that best
matches by placing the appropriate ratios.
A. Liquidity
B. Going concern
C. Capital structure
D. Program effectiveness
E. Efficiency
F. Leverage and debt coverage
G. Fund-raising ratio
H. Fund-raising efficiency
I. Investment performance
________1. Are earnings on investments on target?
________ 2. What percentage of contributions remains after deducting the cost of raising the
contributions?
________ 3. Does the organization rely more on debt or net assets to finance its operations?
________ 4. Is an appropriate amount spent on accomplishing the organization’s program goals?
________ 5. Are revenues sufficient to cover expenses?
55) Describe the process for becoming a tax-exempt organization. Why do you believe it is
important for an accountant to understand this process?
56) Why do states and the federal government exercise oversight responsibility over not-for-profit,
tax-exempt corporations? How do states and the federal government differ in the way they
exercise this responsibility?
57) Your client is a nongovernmental not-for-profit museum that operates a gift shop. Explain the
unrelated business income tax to your client and suggest ways to avoid this tax.
58) Explain the purpose of “intermediate sanctions.”
59) Describe the difficulty in comparing the financial performance of a not-for-profit organization
to other similar organizations. What benchmarks are available to assist in this task?