AICPA Governmental & Not-for-Profit Accounting 3

Question 1

Under FASB ASC 958, not-for-profit organizations classify net assets into which two categories?

Accepted Answer

Net assets with donor restrictions and net assets without donor restrictions

Answer

Restricted and unrestricted

Answer

Temporarily restricted and permanently restricted

Answer

Operating and capital net assets

Question 2

The Statement of Activities for a not-for-profit organization reports revenues and expenses:

Accepted Answer

Separated by each program and supporting service with functional expense allocation

Answer

Only in the unrestricted net asset class

Answer

Organized by fund type (general, special, capital)

Answer

Based on the government-wide full accrual model

Question 3

Unrelated Business Income Tax (UBIT) applies to a tax-exempt organization when it earns income from:

Accepted Answer

A trade or business regularly carried on that is not substantially related to its exempt purpose

Answer

Contributions and grants from donors

Answer

Investment income from endowment funds

Answer

Government contracts for program services

Question 4

Which of the following correctly describes how a not-for-profit organization recognizes contribution revenue?

Accepted Answer

At fair value when the contribution is unconditional and the organization has legal control

Answer

When cash is physically received, regardless of conditions

Answer

Only when donor restrictions have been satisfied

Answer

Ratably over the period to which the contribution relates

Question 5

A community foundation receives a gift with the stipulation that only the investment income may be used and the principal must be maintained in perpetuity. Under FASB ASC 958, this is reported as:

Accepted Answer

Net assets with donor restrictions — perpetual in nature

Answer

Net assets without donor restrictions

Answer

Net assets with donor restrictions — purpose restriction

Answer

A liability until the income is earned

Question 6

State and local governments must present which schedule as part of their pension-related required supplementary information under GASB 68?

Accepted Answer

Schedule of employer contributions and a schedule of changes in net pension liability

Answer

Schedule of investments at fair value

Answer

Schedule of infrastructure condition assessments

Answer

Schedule of long-term debt maturities

Question 7

When a not-for-profit organization's board designates a portion of unrestricted net assets for a specific future project, this creates:

Accepted Answer

A board-designated (quasi-endowment) portion of net assets without donor restrictions

Answer

Net assets with donor restrictions

Answer

A contractual liability to third parties

Answer

Temporarily restricted net assets pending donor approval