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Chapter 19 – Not-for-Profit Entities
P19-24 True-False Questions about Not-for-Profit Accounting and Reporting
1.
F
Per ASC 958, a statement of functional expenses is required only for
voluntary health and welfare organizations.
2.
T
According to ASC 958, pledge revenue is recorded net of estimated
uncollectibles.
3.
F
Time restricted contributions should be recorded in the temporarily restricted
net assets until the time restriction has expired. At that point, the resources
may be transferred to the unrestricted net asset class.
4.
F
Contractual adjustments should be a direct reduction of patient revenue, not
an expense.
5.
F
Designated resources are part of the unrestricted net asset class. Only
external donor-restricted resources are reported in the restricted asset
classes.
6.
T
The net asset transfer from the temporarily restricted net asset class is
appropriate at the point the unrestricted net asset class expends the
resources in accordance with the donor’s restrictions.
7.
F
According to ASC 958, donated supplies should be recognized as
contribution revenue in the period received and as an operating expense in
the period used.
8.
T
ASC 958 specifies that income on permanently restricted endowment assets
should be recognized in the appropriate net asset class for which the income
is directed. In this example, the income is restricted for a specific use.
Therefore, the investment income should be recognized directly in the
temporarily restricted net asset class.
9.
F
ASC 958 requires that investments held by not-for-profit organizations should
be revalued to their fair values at each balance sheet date. The total
investment return for the period would be determined and that portion
designated for current operations would be reported above the operating
performance measure in the statement of operations.
10.
T
ASC 958 states that contributions of art or historical works do not need to be
recorded as contribution revenue and capitalized as assets of the not-for-
profit organization if the works are for public display, the organization agrees
to care and preserve the collection, and any proceeds from sales of any
collection item will be used only for acquiring other items for the collection.
