Question

Select the correct answer for each of the following questions.
1. Which basis of accounting should a voluntary health and welfare organization use?
a. Cash basis for all funds.
b. Modified accrual basis for all funds.
c. Accrual basis for all funds.
d. Accrual basis for some funds and modified accrual basis for other funds.
(Note: The following data are for questions 2 and 3.)
Town Service Center is a voluntary health and welfare organization funded by contributions from the general public. During 20X6, it received unrestricted pledges of $800,000, half of which were payable in 20X6 with the other half payable in 20X7 for use in 20X7. It was estimated that 10 percent of these pledges would be uncollectible. In addition, Ladd, a social worker on Town’s permanent staff earning $30,000 annually for a normal workload of 1,500 hours, contributed an additional 600 hours of time to Town at no charge.

2. How much should Town report as unrestricted contribution revenue for 20X6 with respect to the pledges?
a. $0.
b. $360,000.
c. $720,000.
d. $800,000.

3. How much should Town record in 20X6 for contributed service expenses?
a. $0.
b. $1,200.
c. $10,000.
d. $12,000.

4. A voluntary health and welfare organization received a pledge in 20X1 from a donor specifying that the amount pledged be used in 20X3. The donor paid the pledge in cash in 20X2. For what amount should it be accounted?
a. Contribution revenue in 20X3.
b. Contribution revenue in 20X2.
c. Contribution revenue in 20X1.
d. Contribution revenue in the period in which the funds are spent.

5. Turner Fund, a voluntary health and welfare organization funded by contributions from the general public, received unrestricted pledges of $300,000 during 20X4. It was estimated that 10 percent of these pledges would be uncollectible. By the end of 20X4, $240,000 of them had been collected. It was expected that $35,000 more would be collected in 20X5 and the balance of $25,000 would be written off as uncollectible. What amount should Turner include as contribution revenue in 20X4?
a. $300,000.
b. $275,000.
c. $270,000.
d. $240,000.

(The following data are for questions 6 through 9.)
On January 1, 20X2, State Center Health Agency, a voluntary health and welfare organization, received a bequest of a $200,000 certificate of deposit maturing on December 31, 20X6. The contributor’s only stipulations were that the certificate be held to maturity and the interest revenue received annually be used to purchase books for children in the preschool program run by the agency to read.
Interest revenue each of the years was $9,000, and the full $9,000 was spent for books each year. When the certificate was redeemed, the board of trustees adopted a formal resolution designating $150,000 of the proceeds for future purchase of playground equipment for the preschool program.

6. What should the temporarily restricted fund report in the 20X2 statement of activities?
a. Legacies and bequests of $200,000.
b. Investment income of $9,000.
c. Transfers to unrestricted fund of $9,000.
d. All of the above.

7. What amounts should the 20X2 statement of activities for the unrestricted fund report?
a. Legacies and bequests of $200,000.
b. Investment income of $9,000.
c. Transfers from the restricted fund of $9,000.
d. Contributions of $209,000.

8. What should be reported for the unrestricted fund in the 20X6 statement of activities?
a. Transfers from restricted fund of $209,000.
b. Board-designated funds of $150,000.
c. Playground equipment of $150,000.
d. Transfers to plant and equipment fund of $150,000.

9. What should be reported for the unrestricted fund in the December 31, 20X6, statement of financial position?
a. Liability for purchase of playground equipment, $150,000.
b. Due to plant and equipment fund, $150,000.
c. Board-designated funds, $150,000.
d. Temporarily restricted funds, $200,000.



$1.99
Sales0
Views20
Comments0
  • CreatedMay 23, 2014
  • Files Included
Post your question
5000