Multiple Choice Questions 1. At the beginning of 2014, a private not-for-profit museum receives a donation of
Question:
1. At the beginning of 2014, a private not-for-profit museum receives a donation of equity securities valued at $10,000,000. The donor specifies that the securities be held as a permanent endowment, and income from the securities is restricted to the purchase of Native American artifacts. The securities have a fair value of $9,500,000 at the end of 2014. The museum reports the $500,000 decline in the value of the securities as
a. A reduction in permanently restricted net assets.
b. A reduction in temporarily restricted net assets.
c. A reduction in unrestricted net assets.
d. Not reported.
2. On its statement of activities, a private NFP hospital reports charity care
a. At cost.
b. At the fair value of services rendered.
c. At fair value net of cost to provide services.
d. In the footnotes to its financial statements, not on the statement of activities itself.
3. Critics of the FASB's reporting requirements for NFPs have a common concern, that current GAAP for not- for-profit organizations
a. Does not accurately recognize pledges of contributions.
b. Misreports the actual value of investments.
c. Does not recognize all donations of services.
d. Overstates resources available for spending.
4. Which of the following is most likely your major concern when auditing an NFP?
a. The NFP is overstating pledges receivable.
b. The NFP is understating fund-raising expenses.
c. The NFP is overstating investment income.
d. The NFP is understating cash contributions.
5. At the beginning of 2014, a private not-for-profit museum receives a donation of $10,000,000. The donor specifies that the donation be held as a permanent endowment, and income from its investment can be used for any purpose. The museum invests the $10,000,000 in equity securities. The securities have a fair value of $9,500,000 at the end of 2014. The museum reports the $500,000 decline in the value of the securities as
a. A reduction in permanently restricted net assets.
b. A reduction in temporarily restricted net assets.
c. A reduction in unrestricted net assets.
d. Not reported?
GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...
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1 A A reduction in permanently restricted net assets 2 A At cost 3 D Overstates resou...View the full answer
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Related Book For 
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
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