CCAP Nonprofit Financial Management 2

Question 1

Which financial statement shows a nonprofit's assets, liabilities, and net assets at a specific point in time?

Accepted Answer

Statement of Financial Position

Answer

The Statement of Financial Position (equivalent to a balance sheet) reports assets, liabilities, and net assets at a specific date.

Question 2

Under FASB ASC 958, net assets without donor restrictions are best described as:

Accepted Answer

Resources the board can use for any mission-related purpose

Answer

Net assets without donor restrictions are resources not subject to donor-imposed stipulations and available for board-directed purposes.

Question 3

A community action agency receives a $50,000 grant that must be spent on housing services by December 31. This is classified as:

Accepted Answer

Net assets with donor restrictions

Answer

Funds with time or purpose restrictions imposed by donors are classified as net assets with donor restrictions under FASB ASC 958.

Question 4

Which ratio measures how many months an organization could operate using only its liquid unrestricted net assets?

Accepted Answer

Months of liquid unrestricted net assets (LUNA)

Answer

LUNA measures organizational liquidity by dividing liquid unrestricted net assets by average monthly expenses.

Question 5

The primary purpose of an operating reserve policy is to:

Accepted Answer

Ensure adequate funds to sustain operations during revenue shortfalls

Answer

An operating reserve policy ensures the organization has a financial cushion to maintain operations during unexpected revenue gaps.

(CCAP) Certified Community Action Professional Practice Test