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Chapter 19 – Not-for-Profit Entities
E19-5 Multiple-Choice Questions on Voluntary Health and Welfare Organization
1.
c –
The accrual basis is used for all funds.
2.
b –
$800,000 x .50 =
$400,000
$400,000 x .10 =
(40,000)
$360,000
3.
d –
30,000/1500 = $20 per hour. 20 * 600 = 12,000. If these services create or
enhance nonfinancial assets or require specialized skills, are provided by
individuals possessing those skill, and typically would be purchased then
they will be recognized as an expense.
4.
c –
Pledges are accounted for in the period they are pledged when the
promise becomes unconditional.
5.
b –
$275,000 = $240,000 + $35,000
6.
d –
All of these items are added to the temporarily restricted fund.
7.
c –
The interest income will first be located in the restricted fund, and when
the funds are released for the purchase of books they will be moved to the
general fund.
8.
a –
In 20X6 200,000 will be transferred to the general fund, 150,000 for
purchase of a playground, and 9,000 will be transferred for the purchase
of books, both from a restricted fund.
9.
c –
The 150,000 will be taken from the restricted fund to purchase the
playground. It is a board-designated fund because the board designated
the 150,000 for purchase of the playground upon receiving the funds.
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P19-10 Financial Statements for a Private, Not-for-Profit College
a.
Friendly College
Statement of Financial Position
June 30, 20X3 and 20X2
Item
20X3
20X2
Cash
$ 824,900
$217,000
Accounts receivable (student tuition and
fees, less allowance for uncollectibles
of $11,000 and $9,000, respectively)
137,000
341,000
State appropriations receivable
50,000
75,000
Investments
89,000
60,000
Total assets
$1,100,900
$693,000
Accounts payable
$ 59,000
$ 45,000
Deferred revenue
158,000
66,000
Net assets:
Unrestricted
716,000
515,000
Temporarily restricted by donors
117,900
67,000
Permanently restricted by donors
50,000
-0-
Total liabilities and net assets
$1,100,900
$693,000
b.
Friendly College
Statement of Activities
For Year Ended June 30, 20X3
Temporarily
Permanently
Unrestricted
Restricted
Restricted
Total
Revenues, gains, and other support:
Tuition and fees
$1,900,000
$1,900,000
State appropriation
50,000
50,000
Interest income
6,000
$ 7,000
13,000
Contributions
25,000
50,000
$ 50,000
125,000
Gain on sale of investments
5,000
5,000
Investment income
1,900
1,900
Net assets released
from temporary restriction*
13,000
(13,000)
Total revenue, gains, and
other support
$1,994,000
$ 50,900
$ 50,000
$2,094,900
Expenses and other deductions
1,793,000
1,793,000
Change in net assets
$ 201,000
$ 50,900
$ 50,000
$ 301,900
Net assets at beginning of Year
515,000
67,000
582,000
Net assets at end of year
$ 716,000
$117,900
$ 50,000
$ 883,900
*The transfers of temporarily restricted resources are reported as Net
Assets Released from Temporary Restriction and included in unrestricted expenses.
