Chapter 18—Accounting for Private Not-for-Profit Organizations
Key
1. Which of the following is not a required characteristic of a private not-for-profit organization per the
definition given by the AICPA?
2. Currently, which of the following has jurisdiction over accounting and financial reporting standards for
voluntary health and welfare organizations?
3. Which of the following would fall under the jurisdiction of the GASB rather than the FASB?
4. On the financial statements of a not-for-profit organization, the term that refers to the accumulated excess of
revenues over expenses is:
5. Alice makes a cash gift which has no strings attached to a political party. It is recorded as:
6. Donated services are recognized as a contribution if:
7. Contribution of a work of art to a museum for public exhibit would
8. The Brown Museum of Art would need to recognize a contributed work of art as contribution revenue if it
was:
9. A major corporation makes a donation of $10,000,000 to the local art museum foundation for the
construction of a new art museum provided the community can match the $10,000,000 with other donations.
This is an example of a(n):
10. A major corporation makes a donation of $10,000,000 to the local art museum foundation for the
construction of a new art museum provided the community can match the $10,000,000 with other donations. At
the time the donation is received, it should be recorded as:
11. Which of the following is not true about multi-year pledges or pledges payable in the future?
12. Atlee makes a cash gift to a not-for-profit local ballet company which is designated by the donor to buy
costumes for a new ballet staging. It should be accounted for with the following journal entry:
13. A contribution made in 20X3 to a not-for-profit organization, which is restricted to usage to in the
organization’s 50th anniversary year in 20X5, is recorded as a credit to:
14. A temporary restriction expires when:
15. Reclassifying net assets from temporarily restricted to unrestricted:
16. Rho Pi Phi Fraternity received a $2,000 donation from an alumnus who stipulated the funds be spent to
provide a scholarship for a current member. The funds were spent as stipulated. The entry or entries to record
the expense are:
17. Government grants that require performance by the not-for-profit organization will be accounted for as:
18. Which of the following is not true about accounting for investments that are included in permanently
restricted net assets?
19. In a not-for-profit organization, depreciation on capital assets is recognized on all but which of the
following?
20. The local chapter of a CPA association, a not-for-profit organization, separate their expenses between
program functions and support functions. Which of the following denote a proper classification of expenses?
Program Expense
Support Expense
I.
Continuing Education Programs on Sales/Use Tax
Requirements
Conference Expenses on Selecting Accounting Software
II.
Continuing Education Programs on Sales/Use Tax
Requirements
Executive Director Salary
III.
Fund Raising Expenses
Continuing Education Programs Conference Expenses on
Sales/Use Tax
IV.
Fund Raising Expenses
Executive Director Salary
21. Not-for-profit organizations recognize expenses:
22. Which of the following is not a required external financial statement for a not-for-profit organization?
23. Recently revised accounting standards for mergers and acquisitions of not-for-profit organizations:
24. Which of the following organizations would be classified as a voluntary health and welfare organization?
25. A donation was received by a voluntary health and welfare organization specifically to care for indigent
patients. Which of the following should be used to record the gift?
26. Public support for a voluntary health and welfare organization includes:
27. A donation was received by a voluntary health and welfare organization of materials to be used in providing
services. How would these donated materials be recorded?
28. A voluntary welfare organization is permitted to use building facilities rent free. This should be recorded
as:
29. A CPA donates her services to prepare the annual financial report for a voluntary health and welfare
organization. The services should be recorded as:
30. Hargett Heart Association has received donated services from several members of the community. The
controller must determine which should be recorded as contribution revenue. The services and their values
follow:
1) A retired biology professor conducted two small research projects, which resulted in the organization
receiving a major grant, but did not accept a stipend for either. The stipend is usually $2,000 per project.
2) Local high school students participated in “Clean Up the Neighborhood” Day and provided 100 hours of
labor trimming hedges and raking leaves on the property. The controller estimates the going rate for such work
is $8 per hour.
3) An architect donated plans for a renovation to one of the research labs. The association paid $5,000 for
plans for a similar renovation two years ago.
How much contribution revenue should be recognized from donated services?
31. Which of the following items are considered special events support for a voluntary health and welfare
organization?
32. The American Heart Association is having its annual Heart Ball. The ball is an on-going event and a major
annual event for the association. Any promotional costs of the ball are considered:
33. What is the proper method of carrying investments by a voluntary health and welfare organization?
34. Which of the following expenses would be considered a program service expense for the local cancer
society?
35. Voluntary health and welfare organizations prepare a Statement of Activities which displays program and
supporting services costs. Program expenses for a cancer society would include:
36. Which of the following financial statements is not required when reporting for a voluntary health and
welfare organization?
37. The Statement of Functional Expenses:
38. Depreciation Expense is recorded in which of the following funds for a voluntary health and welfare
organization electing to use fund accounting?
39. Assume that investments in an Endowment Fund are being carried at market value. The annual net
appreciation of investments should:
40. Which of the following would appear in the Custodian (Agency) Funds of a voluntary health and welfare
organization?
Revenues Liabilities
41. Gains and losses, in other than the first year, from pooled investments are distributed to participating funds
based on:
42. Rapitown Arts Council provides financial support to a number of independent fine-art projects in the city.
Data concerning several events follow:
a.
b.
c.
d.
e.
$12,000
6,000
1,500
2,000
Required:
Make the necessary entries to record the transactions.
a.
Cash
100,000
Contributions Receivable
25,000
Contributions—Unrestricted
125,000
b.
Provisions for Uncollectible Contributions
2,500
Allowance for Uncollectible
Contributions
2,500
c.
Cash
20,000
Special Events Support—Unrestricted
20,000
Cost of Special Events
8,000
Cash
8,000
d.
Cash
22,000
Contributions Receivable
22,000
e.
Salary and Related Expenses
12,000
Rent Expense
6,000
Postage Expense
1,500
Conference Expenses
2,000
Cash
21,500
43. The following events affected the Rapitown Arts Council:
a.
Contributions of $20,000, restricted for use in the children’s art program, are received.
b.
Stocks with a book value of $10,000 and a fair market value of $11,000 were donated. The proceeds from the sale of the stocks are to be
used by the local drama group.
c.
A famous author lectured to high school students in the children’s art program. The cost was $3,000 and was paid by the contributions
from part (a).
d.
The stock donated in part (b) is sold for $11,500.
Required:
Make the necessary journal entries.
Cash
20,000
Contributions—Temporarily Restricted
20,000
b.
11,000
Contributions—Temporarily Restricted
11,000
Cost of Children’s Arts Program
3,000
Cash
3,000
Reclassification Out—Temporarily
Restricted Satisfaction of Program
Restrictions
3,000
Reclassification In—Unrestricted
Satisfaction of Program Restrictions
3,000
d.
Cash
11,500
Investments
11,000
Realized Gain on Investment
Transactions—Temporarily Restricted
500
44. The following events are for South City Shelter, a voluntary health and welfare organization that provides
emergency shelter and health care for the homeless, as well as educational programs:
a.
A fund-raising program for a portable medical clinic yielded cash contributions of $50,000 and pledges of $100,000. In the past, 5% of
pledges have been shown to be uncollectible.
b.
A note for $100,000 was signed to finance the remaining cost of the clinic.
c.
The mobile clinic and support materials were purchased for $240,000.
d.
A note payment of $5,000 and $1,500 in interest was paid for the note in part (c).
Required:
Record the necessary journal entries.
Cash
50,000
Contributions Receivable
100,000
Contributions—Temporarily Restricted
150,000
Provision for Uncollectible Contributions
5,000
Allowance for Uncollectible
Contributions
5,000
b.
Cash
100,000
Note Payable
100,000
c.
Land, Building and Equipment
240,000
Cash
240,000
Reclassification Out—Temporarily
Restricted-Satisfaction of Plant
Acquisition Restrictions
150,000
Reclassification In—Unrestricted—
Satisfaction of Plant Acquisition
Restrictions
150,000
d.
Note Payable
5,000
Interest Expense (to be allocated to
programs and support services)
1,500
Cash
6,500
45. South City Shelter is a voluntary health and welfare organization that provides emergency shelter and health
care for the homeless, as well as educational programs. South City Shelter incurred the following transactions:
a.
A computer with a book value of $500 (original cost, $2,800) was sold for $650.
b.
Kitchen equipment with a book value of $1,100 (original cost, $3,500) was damaged in a fire and taken to the dump.
c.
Total depreciation for the year was $60,000.
d.
To close the depreciation expense, it was determined that 70% should be allocated to the Shelter Program, 15% to the Education Program,
and 15% to the Health Care Program.
Required:
Make the necessary journal entries to reflect the events.
a.
Cash
650
Accumulated Depreciation
2,300
Land, Building and Equipment
2,800
Gain on Sale—Unrestricted
150
b.
Accumulated Depreciation
2,400
Loss on Disposal of Plant
1,100
Land, Building, and Equipment
3,500
Depreciation Expense
60,000
Accumulated Depreciation
60,000
d.
Shelter Program Expense
42,000
Education Program Expense
9,000
Health Care Program Expense
9,000
Depreciation Expense
60,000
46. In the year 20X5, a group of merchants in the community of Gunning organized a merchant group, The
Gunning Group, in an effort to work together to increase business to Gunning area merchants. Each of the 100
members pays dues of $200 per year for operations and fund raising. All dues were collected in 20X5. Other
group activities for 20X5 were as follows:
Net receipts-July 4 food and beverage booth
$35,000
Unrestricted donation
50,000
Investment of donation made into marketable securities
40,000
Interest earned on investment
3,200
Paid program expenses
18,500
Receipt of contribution restricted to speaker fees for the year 20X5/20X6
5,000
Expense made in compliance with donor restriction: speaker fee paid for annual meeting of merchants
1,500
Received a government grant to encourage minority business development in Gunning
15,000
Expenses incurred in conjunction with provision of the grant
8,000
Make the necessary entries to account for the above listed transactions.
47. The Good Health Agency is a voluntary health and welfare organization that conducts two programs: public
health research and public health education.
a.
$ 60,000
295,000
15,000
b.
c.
d.
e.
f.
g.
$171,900
75,600
35,000
19,700
16,900
19,200
17,700
15,000
$371,000
h.
i.
$118,300
140,800
59,500
52,400
$371,000
Required:
Prepare journal entries for these events. Charge the respective services for their share of expenses.
a.
Cash
60,000
Contributions Receivable
295,000
Contributions—Unrestricted
355,000
To record cash and pledges received.
Provision for Uncollectible Contributions
15,000
Allowance for Uncollectible Contributions
15,000
To record estimated uncollectible contributions.