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AC 518

NON PROFIT ORGANIZATION


MULTIPLE CHOICE:
1. The following are features of nonprofit organizations, EXCEPT
a. render service for the benefit to the many rather than the few.
b. ot organize for profit and e!empt from income ta!es and
business ta!es.
c. "inances depend on the voluntary contributions of the citizenry.
d. #ust account for the resources on a stewardship basis li$e the
government entities.
%. &'( onprofit organizations are governed by elected or appointed directors.
&''( onprofit organizations adopt the modified accrual basis of accounting used
by government entities.
a. &' is true, &'' is true.
b. &' is false, &'' is false.
c. &' is true, &'' is false.
d. &' is false, &'' is true.
). These are funds that includes all the assets of a nonprofit organization that are
available for use as authorized by the board of directors and not restricted for
specific purposes.
a. *nrestricted funds
b. &pecial funds
c. Endowment funds
d. Temporarily restricted funds
+. These are funds in which the principal must be maintained indefinitely in revenue,producing investments.
a. *nrestricted funds
b. Plant fund
c. Endowment fund
d. Temporarily restricted funds
-. The financial statement not re.uired of a nonprofit organization is(
a. &tatement of "inancial Position
b. &tatement of /ctivities
c. &tatement of Cash "lows
d. &tatement of current fund revenues and e!penses.
0. Transactions of what fund only affect asset and liability accounts and do not result
in revenues and e!penditures.
a. *nrestricted fund
b. 1estricted "und
c. /gency fund
d. Plant fund
2. The Plant fund is composed of the following, EXCEPT
a. une!pended funds to be used in the ac.uisition of physical properties,
b. renewal and replacement funds,
c. retirement of indebtedness funds,
d. restricted income from endowment funds.
3. 4hich of the following should be used in accounting for nonprofit organization5
a. "und accounting and accrual accounting.
b. "und accounting but not accrual accounting.
c. /ccrual accounting but not fund accounting.
d. either accrual accounting and fund accounting.
6. 7ne characteristic of nonprofit organizations that is comparable with that of
government entities is(
a. &tewardship of resources
b. 8overnance by board of directors
c. #easurement of cost e!pirations
d. one of the foregoing
19. / gift to nonprofit organization that is not restricted by the donor is credited in
the unrestricted :general; fund to(
a. "und balance
b. Contribution revenues
c. <eferred revenues
d. onoperating revenues
11. The &tatement of "inancial Position of a nonprofit organization displays the
organization=s assets, liabilities, and
a. "und balance
b. E!cess of assets over liabilities
c. et /ssets
d. E.uity
1%. The current fair value of contributed material is recognized in a nonprofit
organization=s unrestricted fund with a debit to 'nventories and a credit to(
a. *ndesignated "und >alance
b. Payable to 1estricted "und
c. Contributions 1evenues
d. <esignated "und >alance , #erchandise
1). 4hich of the following is not a source of resources of a nonprofit organization=s
restricted fund5
a. .7perations of the nonprofit organization
b. Contributions of individual or government entities
c. 8ains on disposals of investments
d. 1evenues from endowment
1+. / nonprofit private elementary school occupies its school building rent,free as
permitted by the building owner. The e!istence of rent,free facilities is
recognized in the school=s *nrestricted "und as
. a. 1ent e!pense and contibution revenue.
b. 1ent e!penses and an increase in fund balance.
c. /n item re.uiring disclosure in the notes to the financial statements.
d. "inancial aid e!penses and other operating support
1-. 1-. <uring the year ended <ecember )1, %993, Cultural Center of the Philippines, a nonprofit
organization, received the following donor restricted contributions and investment income(
a. Cash contribution of P199,999 to be permanently invested.
b. Cash dividends and interest of P-,999 to be used for the ac.uisition of theater e.uipment.
/s a result of these cash receipts, the statement of cash flows for the year ended <ecember )1, %993,
would report an increase of (
a. P19-,999 from financing activities
. b. P-,999 from operating activities and an increase of P199,999 from
financing activities.
c. P19-,999 from operating activities
d. P199,999 from operating activities and an increase of P-,999 from
financing activities.
10. 10. / prominent collector donated an art collection to a private nonprofit museum with the stipulation that
the art collection be shown to the public, that it should be preserved and not be sold. 7n the date of
donation, what was the effect of the donation on the museum=s financial statements5
a. *nrestricted net assets increased.
b. Temporarily restricted net assets increased.
c. Permanently restricted net assets increased.
d. o effect on net assets.
12. 12. 7n ?anuary %, %996, a nonprofit botanical society received a gift of an e!haustible fi!ed asset with an
estimated useful life of 19 years and no salvage value. The donor=s cost of this asset was P%9,999,
and its fair mar$et value at the date of the gift was P)9,999. 4hat amount of depreciation of this
asset should the society recognize in its %996 financial statements5
a. P 9 c. P%,-99
b. P%,999 d. P),999
7n 13. 7n ?uly )1, %996, &t. @incent=s College showed the following amounts to be used for
1enewal and replacement of college properties P %99,999
1etirement of indebtedness on college properties )99,999
Purchase of physical properties for college purposes but
une!pended at 2A)1A%996 +99,999
4hat total amount should be included in &t. @incent=s plant funds at ?uly )1, %9965
a. P 099,999 c. P %99,999
b. P +99,999 d. P 699,999
16. 16. &eniors /ssociation is a nof,for,profit organization that provides services to senior citizens. &eniors
employes a full,time staff of 19 people at an annual cost of P1-9,999. 'n addition, two volunteers
wor$ as par,time secretaries replacing last year=s full,time secretary who earned P19,999. &ervices
performed by other volunteers for special events had an estimated value of P1-,999. These volunteers
were employees of local businesses and they received small,value items for their participation. 4hat
amount should &eniors report for salary and wages e!pense related to the items above5
a. P109,999 c. P10-,999
b. P12-,999 d. P1-9,999
%9. %9. &t. Charles Bospital has a mar$etable e.uity securities portfolio that is appropriately included in the
noncurrent assets in unrestricted funds. The porfolio has an aggregate cost of P)99.999. 't had an
aggregate fair mar$et value of P%-9,999 at the end of %996 and P%69,999 at the end of %993. 'f the
portfolio was properly reported in the balance sheet at the end of %993, the change in the valuation
allowance at the end of %996 would be
a. / decrease of P+9,999 c. /n increase of P +9,999
b. /n increase of P-9,999 d. P 9
%1. The cost of charity care of a nonprofit hospital is presented in the statement of activities as
a. deduction from gross patient service revenue to get the net patient service revenue.
b. notes to financial statements
c. component of program services
d. component of supporting services
%%. / nonprofit hospital received a cash donation from a generous benefactor on ovember -, %993. The
donor re.uested that the donation be used to ac.uire e.uipment for the hospital. The hospital used the
donation to ac.uire e.uipment in ?anuary %996. "or the year ended <ecember )1, %993, the hospital
should report the cash donation on its
a. &tatement of financial position as unrestricted deferred revenue.
b. &tatement of activities as unrestricted revenue
c. &tatement of activities as temporarily restricted.
d. &tatement of financial position as temporarily restricted revenue.
%). >antay >ata "oundation, a nonprofit organization, receives revenue from various sources during the
year to support its child care center. The following cash contributions were received during %993(
a. P+9,999 restricted by the donor to be used for meals of children.
b. P1-,999 received by subscriptions to a monthly child care magazine with a fair value to
subscribe of P19,999,
c. P19,999 to be used only upon completion of a new playroom that was 2-C complete at
<ecember )1, %993.
4hat amount should >antay >ata "oundation record as contribution revenues in its %993 &tatement of
/ctivities5
a. P%9,999 c. P %-,999
b. P 19,999 d. P 11,999

%+. >ohol *niversity, a private nonprofit university, had the following inflows during the year ended
<ecember )1, %993D
'. P+99,999 from students tuition fees
''. P%99,999 from a donor who stipulated that the money be invested indefinitely.
'''. P-9,999 from a donor who stipulated that the money be spent in accordance with the
wishes of the *niversity=s >oard of <irectors.
7n its &tatement of Cash "lows for the year ended <ecember )1, %993, what amount of these
cash flows should be reported as operating activities(
a. P +-9,999 c. P 0-9,999
b. P +99,999 d. P 099,999
%-. *<#C hospital, a nonprofit hospital, earned P%-9,999 revenues from its gift shop located at the lobby
and spent P-9,999 on research during the year ended <ecember )1, %993. The P-9,999 spent on
research was part of a P2-,999 contribution received during <ecember of %992 from a donor who
stipulated that the donation be used for medical research. /ssume none of the gift shop revenues
were spent in %993. "or the year ended <ecember )1, %993, what was the increase in unrestricted
net assets from the events occurring during %9935
a. P )99,999 c. P %-9,999
b. P %99,999 d. P %2-,999
%0. Eiho$ "ilipina, a nonprofit organization, received contributions restricted for research totalling
P-9,999 in %993. /ssume the P-9,999 was not e!pended in %993. These contributions were used
to purchase P)-,999 of research e.uipment in %993. /s a result of these transactions, for the year
ended <ecember )1, %993, the organization will report on its financial statements, a
a. P 1-,999 increase in temporarily restricted net assets.
b. P-9,999 increase in temporarily restricted net assets.
c. P)-,999 increase in unrestricted net assets.
d. P1-,999 increase in unrestricted net assets.
%2. &an ?ose Clinic, a nonprofit clinic, affiliated with &an ?ose College, had the following cash receipts
for the year ended <ecember )1, %993(
Patient service revenue P2-9,999
Contribution from donor to be invested
'ndefinitely :endowment fund; %-9,999
Tuition fees from nursing school -9,999
<ividends received from permanent investments 39,999
The dividends received are restricted by the donor for hospital building improvements. o
improvements were made during %993. 7n the hospital=s statement of cash flows for the year
ended <ecember )1, %993, what amount of these cash receipts would be included in the amount
reported for net cash provided :used; by operating activities5
a. P 339,999 c. P 1,9-9,999
b. P399,999 d. P 2-9,999
%3. / nonprofit hospital affiliated with a private university, reported the following data for the year
ended <ec. )1, %993(
Cash contributions received from donors for ac.uisitioned
computer e.uipment on %996 P 1-9,999
Proceeds from sales of hospital gift shop and snac$ bar 2-,999
<ividend income not restricted by donor %-,999
*sing the information provided, what amount should be reported as Fother revenue and gainsG on
the hospital=s statement of activities for the year ended <ecember )1, %9935
a. P %-,999 c. P199,999
b. P2-,999 d. P%-9,999
%6. 7n <ecember )1, %993, &t. Eu$e hospital, a nonprofit organization, received a P2,999,999 donation
of >#4 shares of stoc$ with donor stipulated re.uirements as follows(
&hares valued at P-,999,999 are to be sold, with the proceeds used to erect a building.
&hares valued at P%,999,999 are to be retained, with the dividends used to support current operations.
/s a result of the receipt of the >#4 shares, how much should &t. Eu$e hospital report as temporarily
restricted net assets on its %993 statement of financial position5
a. P 9 c. P -,999,999
b. P %,999,999 d. P2,999,999
)9. C1 "oundation, 'nc., Ha nonprofit organization; accounting records disclosed the following
information(
Cost of property and e.uipment net of accumulated depreciation P 16,999,999
>oard designated funds 0,999,999
4hat amount should be included as part of the *nrestricted net /ssets5
a. P%-,999,999 c. P 0,999,999
b. P 16,999,999 d. P 9
)1. apoles "oundation , a not,for,profit organization, receives revenue from various sources during the year
to support its day care center. The following cash amounts were received during %91%(
, P%,999 restricted by the donor to be used for meals for the children.
, P1,-99 received for subscriptions to a monthly child care magazine with a fair mar$et value to
subscribes of P1,999.
, P19,999 to be used only upon completion of a new playroom that was 2-C complete at <ecember
)1, %91%.
4hat amount should apoles record as contribution revenue in its %91% &tatement of /ctivities5
a. P%,999 b. P%,-99 c. P19,999 d. P11,999
)%. The property, plant and e.uipment of a not,for,profit hospital should be accounted for as part of
a. *nrestricted funds c. &pecific purpose funds
b. 1estricted funds d. 7ther non,operating funds
)). 1evenue from the par$ing lot operated by a hospital would normally be included in(
a. Patient service revenue.
b. /ncillary service revenue.
c. 7ther operating revenue.
d. 7ther non,operating revenue
)+. / non,government, not,for,profit entity gives donors a sweatshirt imprinted with its logo when they pay
P1- dues. The value of the sweatshirt is appro!imately P1-. This transaction is most li$ely reported as(
a. /n e!change transaction
b. /n agency transaction.
c. / Contribution
d. / gift in $ind.
)-. et assets that are restricted by the governing board of a nongovernment, not,for,profit organization are
reported as a part of(
a. Permanently restricted net assets
b. Temporarily restricted net assets
c. *nrestricted net assets
d. Either permanently restricted or temporarily restricted net assets, depending on the
Term of the restriction.

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