CCAP Nonprofit Financial Management 3

Question 1

A nonprofit's program expense ratio is calculated by dividing:

Accepted Answer

Total program expenses by total expenses

Answer

The program expense ratio divides total program expenses by total expenses to show the proportion spent on mission activities.

Question 2

Which internal control best prevents fraudulent disbursements in a nonprofit's accounts payable process?

Accepted Answer

Requiring dual signatures on checks above a set threshold

Answer

Dual signature requirements create segregation of duties by requiring two authorized individuals to approve disbursements, reducing fraud risk.

Question 3

In nonprofit accounting, in-kind contributions of services should be recognized when they:

Accepted Answer

Require specialized skills and would otherwise be purchased

Answer

GAAP requires recognition of contributed services only when they require specialized skills (e.g., legal, accounting, medical) and would otherwise need to be purchased.

Question 4

A CAA's board finance committee is reviewing a budget variance report. An unfavorable variance in program revenue means:

Accepted Answer

Actual revenue fell short of budgeted revenue

Answer

An unfavorable variance in revenue occurs when actual revenue is less than the budgeted amount, signaling a potential cash flow concern.

Question 5

Which cost is typically NOT allowable under federal grants per OMB Uniform Guidance?

Accepted Answer

Alcoholic beverages purchased for a fundraising event

Answer

Alcoholic beverages are explicitly listed as unallowable costs under 2 CFR 200.423 regardless of the funding source or event purpose.

(CCAP) Certified Community Action Professional Practice Test

(CCAP) Certified Community Action Professional Practice Test

CCAP Nonprofit Financial Management 3