Multiple Choice Choose the best answer 1 The FASB s objective
Multiple Choice. Choose the best answer.
1. The FASB’s objectives of financial reporting for not-for-profit organizations include all of the following except:
a. Making resource allocation decisions.
b. Helping compare budgeted revenues and expenditures to actual revenues expenditures.
c. Assessing economic resources, obligations, net resources, and changes in them.
d. Assessing services and the ability to provide services.
2. Voluntary health and welfare organizations are required to present which of the following financial statements?
a. Statement of financial position.
Statement of cash flows.
c. Statement of functional expenses.
d. All of the above are required.
3. Temporarily restricted net assets may be released from restriction by:
a. Written authorization of the organization’s board of directors.
b. Approval of the independent auditor.
c. Satisfaction of purpose restrictions.
d. All of the above are correct.
4. In the statement of activities for a voluntary health and welfare organization, depreciation expense should:
a. Be reported as part of both program services and supporting services expenses.
b. Be reported as a separate expense line item.
c. Be reported as a contra-support item in the revenue section.
d. Not be reported.
5. A wealthy donor promised $1 million to the local art museum to expand the size of its building, contingent on the museum obtaining a grant from the State Endowment for the Arts of at least $500,000. Upon completing a signed agreement with the donor, the museum should:
a. Record a debit to Contributions Receivable—Temporarily Restricted in the amount of $1,000,000.
b. Record a debit to Contributions Receivable—Temporarily Restricted in the amount of $500,000.
c. Not make a journal entry until the conditions of the agreement have been met.
d. Either a or b are permissible, depending on the museum director’s assessment of the likelihood of receiving the state grant.
6. Sharon Helper, a local CPA, volunteered her time to develop a new computerized accounting system for an after-school development program for disadvantaged children. If Sharon had not volunteered her time, it would have been necessary for the organization to hire an accountant for this project. The value of Sharon’s time devoted to this project should be recorded as:
a. Contribution revenue.
b. A supporting services expense.
c. Neither a nor b are correct.
d. Both a and b are correct.
7. The Maryville Cultural Center recently conducted a successful talent show in which local talent performed for a nominal prize. The talent show is an ongoing major event and is central to the center’s mission. The event raised $4,800 in gross revenue. Expenses related to the event included $1,000 to rent an auditorium. $1,200 to advertise the event, $500 for trophies and other awards for the winner and the runners up, and $100 for printing and mailing tickets. The center believes there was no monetary value received by donors (attendees). To report this event in its statement of activities, the center will report:
a. Special event revenue of $4,800 and special event expense of $1,500.
b. Special event revenue of $4,800 and fund-raising expense of $1,300.
c. Special event revenue of $2,300 and fund-raising expense of $1,300.
d. Both a and b are correct.
8. Many not-for-profit organizations attempt to classify fund-raising expenses as program services expenses by making the activities look educational in nature or advocating for the mission of the organization. For such expenses to be reported as program services expenses, they must meet which of the following three criteria:
a. Purpose, mission-related, and benefit to the public.
b. Purpose, audience, and content.
c. Purpose, expand donor base, and content.
d. Reasonable, improve financial condition, and benefit to the public.
9. Long-term investments of not-for-profit organizations should be reported at:
a. Cost.
b. Lower of cost or market.
c. Fair value.
d. Replacement value.
10. A particular organization functions as an intermediary between donors and other beneficiary organizations. The intermediary organization must report contribution revenue from donors if:
a. The organization has variance power.
b. The organization elects to consistently report such donor gifts as contribution revenue.
c. The beneficiary organization requests a delay in receiving the contribution from the intermediary organization.
d. All of the above are correct.

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