Question: Determine whether each of the following is true or false

Determine whether each of the following is true or false. Assume that each organization is a private, not-for-profit entity. It is possible that an item need not be reported on the hospital’s statement of operations.
1. A statement of functional expenses is required for a musical arts association.
2. Pledges received by a research organization should result in recording revenue net of estimated uncollectible pledges.
3. A college should account for a donor-restricted contribution to support student scholarships for the next three years as contribution revenue in its unrestricted net assets.
4. A hospital should record an insurance provider’s contractual adjustment on a patient bill as an operating expense for the period in which the services were provided to the patient.
5. A university should account for its governing board’s designation of resources for the development of a fine arts academic program as a transfer to a temporarily restricted net asset class.
6. An environmental watch organization received a donor-restricted donation for the purchase of equipment and it properly accounted for the donation when it was received. When it acquired the equipment, the organization should record net assets released from temporarily restricted net assets and an addition to unrestricted net assets.
7. A hospital that used donated supplies for its patient services during the year should not record the donation because it incurred no cost to obtain the supplies.
8. An organization earned investment income on its endowment fund that is permanently donor restricted for use in a specific organizational program. The investment income should be recorded directly into the temporarily restricted net asset class.
9. A hospital has a portfolio of securities that decreased in fair market value during the year. Because the securities were not sold during the year, their change in market value should not be recognized on the hospital’s statement of operations.
10. A not-for-profit art museum receives for public display a donation of historical artifacts to care for and preserve. If any item in the collection is ever sold, the museum has agreed to use the proceeds for additional items for the collection. The museum is not required to record the contribution revenue and increase in collection assets.
11. All of a hospital’s building and equipment should be recorded in its restricted building fund.
12. A local accountant donated significant professional services to a local fraternal organization, which should recognize their value as both a contribution revenue and an operating expense.
13. A hospital has estimated uncollectibles on patient accounts that should be reported as a reduction of net patient service revenue.
14. A college received a conditional pledge based on the occurrence of a future event and should record it at its fair value if the future event is determined to be possible.
15. A hospital that received a donation restricted for a cancer awareness education program properly recorded it as contribution revenue in the temporarily restricted net asset class. The cost of the program that the hospital offered should be recorded as an expense in the temporarily restricted net asset class to offset the contribution revenue for the program.
16. A voluntary health and welfare organization received a contribution that the donor specified could not be spent until the next year. Because the organization received it in this year, the donation should be recorded as a debit to Cash and a credit to Deferred Revenue in the unrestricted net asset class.
17. Hospitals are required to use fund accounting, that specifies which funds are unrestricted, which are temporarily restricted, and which are permanently restricted.
18. Hospitals are required to report a performance measure in their statement of operations to separate the operating income from the nonoperating income.
19. A hospital’s building fund transfers resources to the general fund for the purchase of new equipment. The building fund should record this as an expense of the period of the transfer, and the general fund should record this as an income of the period of the transfer.
20. A voluntary health and welfare organization conducted a major fund-raising effort that involved significant expenses. Because they were incurred to obtain contribution revenue, the fund-raising costs should be accounted for as a direct reduction of contribution revenue to obtain the net contribution revenue reported on the organization’s statement of activities.

Sale on SolutionInn
  • CreatedMay 23, 2014
  • Files Included
Post your question