ch16 Key

1. Contributed services to professional associations generally are recognized as revenues by the associations. FALSE Larsen - 016 Chapter... #1 2. The accounting period in which pledged revenues are recognized is dependent on donor specifications. TRUE Larsen - 016 Chapter... #2 3. Fund-raising costs expected to benefit future accounting periods are deferred by nonprofit organizations. FALSE Larsen - 016 Chapter... #3 4. Collections are a type of nonexhaustible plant assets of nonprofit organizations. FALSE Larsen - 016 Chapter... #4 5. The modified accrual basis of accounting used by some funds of a governmental entity is appropriate for some funds of a nonprofit organization. FALSE Larsen - 016 Chapter... #5 6. The Designated Fund Balance ledger account of a nonprofit organization's unrestricted fund is similar to a retained earnings appropriation account of a business corporation. TRUE Larsen - 016 Chapter... #6 7. A life income fund of a nonprofit organization resembles a sinking fund for the retirement of debt of a business enterprise. FALSE Larsen - 016 Chapter... #7 8. A quasi-endowment fund may be expended by a nonprofit organization after either the passage of a period of time or the occurrence of an event specified by the donor of the endowment principal. FALSE Larsen - 016 Chapter... #8 9. The provision for doubtful loans of a university's student loan fund is debited to the Doubtful Loans Expense ledger account. FALSE Larsen - 016 Chapter... #9 10. Assets of the unrestricted fund of a nonprofit organization may be transferred to a restricted fund by the organization's board of directors. FALSE Larsen - 016 Chapter... #10 11. Fund accounting is inappropriate for a nonprofit hospital. FALSE Larsen - 016 Chapter... #11 12. Contributed material is recognized as revenues by a nonprofit organization's unrestricted fund. TRUE Larsen - 016 Chapter... #12 13. If a university waives tuition charges for children of its faculty and staff, no revenues are recognized. FALSE Larsen - 016 Chapter... #13 14. Depreciation expense is recognized by nonprofit organizations. TRUE Larsen - 016 Chapter... #14

15. Assets of a nonprofit organization's restricted funds are derived from the operations of the organization. FALSE Larsen - 016 Chapter... #15 16. The principal of term endowment funds may be expended by a nonprofit organization after the passage of a period of time or the occurrence of an event. TRUE Larsen - 016 Chapter... #16 17. Payments to the beneficiary of a nonprofit organization's life income fund are fixed in amount. FALSE Larsen - 016 Chapter... #17 18. The issuance of a statement of activities is appropriate for nonprofit organizations. TRUE Larsen - 016 Chapter... #18 19. A gift to a nonprofit hospital that is not restricted by the donor is credited in the hospital's general fund to: A. Fund Balance B. Deferred Revenues C. Contributions Revenues D. Nonoperating Revenues Larsen - 016 Chapter... #19 20. Which of the following funds of a nonprofit organization makes periodic payments of a fixed amount at equal intervals. A. Annuity fund B. Agency fund C. Endowment fund D. Restricted fund Larsen - 016 Chapter... #20 21. An annuity fund of a nonprofit organization is most similar to the organization's: A. Endowment fund B. Restricted fund C. Agency fund D. Life income fund Larsen - 016 Chapter... #21 22. The current fair value of contributed material is recognized in a nonprofit organization's unrestricted fund with a debit to Inventories and a credit to: A. Undesignated Fund Balance B. Payable to Restricted Fund C. Designated Fund BalanceMerchandise D. Contributions Revenues E. Some other ledger account Larsen - 016 Chapter... #22 23. Are tuition remissions for which there is no intention of collection from the student recognized by a nonprofit university as:

A. Item A C. Item C

B. Item B D. Item D

Larsen - 016 Chapter... #23

24. Which of the following is not a source of resources of a nonprofit organization's restricted fund? A. Operations of the nonprofit organization B. Contributions of individuals or governmental entities C. Gains on disposals of investments D. Revenues from endowments
Larsen - 016 Chapter... #24

25. One-half of the tuition of classes taken by spouses of Colby College faculty members is remitted (waived) by Colby. In the journal entry for tuition for a four-unit course for a professor's spouse, with tuition at $210 a unit, Tuition Revenues is credited for: A. $0 (credit Remission Revenue) B. $420 C. $840 D. Some other amount Larsen - 016 Chapter... #25 26. The type of endowment fund for which the principal may be expended after the occurrence of an event specified by the donor of the principal is: A. A pure endowment fund B. A quasi-endowment fund C. An expendable endowment fund D. None of the foregoing Larsen - 016 Chapter... #26 27. Any restrictions on gifts, grants, or bequests received by nonprofit organizations are imposed by: A. State laws B. Governing boards C. Donors D. "Nonprofit Organizations" Larsen - 016 Chapter... #27 28. Are unpaid amounts of conditional pledges that may be revoked by a nonprofit organization recognized as expense when:

A. Item A C. Item C

B. Item B D. Item D

Larsen - 016 Chapter... #28

29. The difference between a nonprofit organization's annuity funds and life income funds is: A. The nature of the Fund Balance ledger account B. The fixed versus variable amount of payments to recipients C. The status of each fund in the organization's investment pool D. Some other difference
Larsen - 016 Chapter... #29

30. One characteristic of nonprofit organizations that is comparable with characteristics of governmental entities is: A. Stewardship of resources B. Governance by board of directors C. Measurement of cost expirations D. None of the foregoing Larsen - 016 Chapter... #30 31. A nonprofit organization's restricted fund typically is established in Rationale to: A. A resolution of the organization's board of trustees B. A mandate of a governmental agency C. Provisions of a contribution to the organization D. Some other transaction or event
Larsen - 016 Chapter... #31

32. Prepare journal entries (omit explanations) for the following transactions or events of the General Fund and Anna Waters Restricted Fund of Modem Hospital (a nonprofit organization) during January, 2006.

Larsen - 016 Chapter... #32

33. On July 1, 2006, the Unrestricted Fund, Restricted Fund, and Endowment Fund of Urban Health Organization, a nonprofit organization, pooled their investments, as follows:

During the month of July, 2006, the Urban Health Organization investment pool, managed by the Unrestricted Fund, received interest and dividends revenue totaling $64,000. Prepare journal entries dated July 31, 2006, in the three funds of Urban Health Organization to record receipt of the interest and dividends revenue. Omit explanations, but identify the fund in which each journal entry is recorded.

Larsen - 016 Chapter... #33

34. The Student Loan Fund of Dorris College had the following transactions and events during the month of September, 2006. (1) Disbursed new loans totaling $400,000. (2) Received payments of $120,000 on loans receivable, including $4,000 interest. (3) Wrote off uncollectible loans totaling $30,000. (4) Estimated a required increase of $40,000 in the Allowance for Doubtful Loans ledger account balance on September 30, 2006. (5) Computed accrued interest of $8,000 on loans receivable on September 30, 2006. Prepare journal entries for the Dorris College Student Loan Fund to record the foregoing transactions and events. Omit explanations.

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35. Martha Randall, audit manager of the CPA firm Alan West & Company, is conducting a staff training program on accounting and auditing of nonprofit organizations. During the program, staff assistant Milton Rogers questions the feasibility of the Financial Accounting Standards Board's establishing accounting standards for all nonprofit organizations. "Given the wide variety of nonprofit organizations, from cemetery organizations to zoological societies," says Rogers, "it seems unfeasible to believe that one set of standards would fit all such organizations." What should be Martha Randall's (or another training program participant's) Rationale to Milton Rogers? Explain. Milton Rogers's point is a valid one because there are some significant differences among the various types of nonprofit organizations. Foremost among these differences is the self-sufficiency of such nonprofit organizations as labor unions, private foundations, and professional associations, which do not rely significantly on contributions revenue, compared with the many other types of nonprofit organizations that must obtain such revenue. However, the common characteristics of nonprofit organizations, chiefly service to society and no profit motivation, make it desirable that there not be wide variations among the accounting standards used by the organizations. The Financial Accounting Standards Board's requirement that nonprofit organizations disclose in the statement of financial position and statement of activities data concerning unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets should accommodate the different types of nonprofit organizations.
Larsen - 016 Chapter... #35