1. When a temporary restriction on resources of a nongovernmental not-for-profit entity is met by the incurrence of an expense for the restricted purpose:
a. The expense is reported in the statement of activities as an increase in unrestricted net assets
b. Amounts reported in the temporarily restricted net assets are reclassified as unrestricted net assets
c. The entry is a debit to expense and a credit to the program services
d. The expense is reported in restricted net assets
2. A nongovernmental not-for-profit entity gives donors a sweatshirt imprinted with its logo when they pay $25 dues.
The value of the sweatshirt is approximately $25. This transaction is most likely reported as:
a. An exchange transaction
b. An agency transaction
c. A contribution
d. A gift in kind
3. How will a nongovernmental not-for-profit entity record an agency transaction in which it receives resources?
a. No entry is made in the accounts.
b. Debit the asset account and credit contribution revenue.
c. Debit the asset account and credit temporarily restricted net assets.
d. Debit the asset account and credit a liability account.
4. Unconditional promises to give that are collectible within one year of the financial statement date:
a. Should be reported at their gross amount
b. Should be reported at the gross amount less an allowance for uncollectible accounts
c. Should be reported at the present value of the amounts expected to be collected, using the donor’s incremental borrowing rate
d. Should not be reported until collected
5. In preparing the statement of cash flows for a nongovernmental not-for-profit entity, cash contributions that are restricted for long-term purposes are classified as:
a. Operating activities
b. Investing activities
c. Financing activities
d. None of the above