ACCOUNTING FOR NOT-FOR-PROFIT

ORGANIZATIONS

1. The statement of financial position

(balance sheet) for Founders Library, a
private nonprofit organization, should
report separate dollar amounts for the
librarys net assets according to which of
the following classifications?
a. Unrestricted and permanently restricted.
b. Temporarily restricted and permanently
restricted.
c. Unrestricted and temporarily restricted.
d. Unrestricted, temporarily restricted, and
permanently restricted.

1. The statement of financial position

(balance sheet) for Founders Library, a
private nonprofit organization, should
report separate dollar amounts for the
librarys net assets according to which of
the following classifications?
a. Unrestricted and permanently restricted.
b. Temporarily restricted and permanently
restricted.
c. Unrestricted and temporarily restricted.
d. Unrestricted, temporarily restricted, and
permanently restricted.

2. National Museum, a private nonprofit

organization, has both regular and term
endowments. On the museums statement of
financial position (balance sheet), how should the
net assets of each type of endowment be
reported?
Term endowments
Regular endowments
a. Temporarily restricted
Permanently
restricted
b. Permanently restricted Permanently
restricted
c. Unrestricted
Temporarily
restricted
d. Temporarily restricted
Temporarily restricted

2. National Museum, a private nonprofit

organization, has both regular and term
endowments. On the museums statement of
financial position (balance sheet), how should the
net assets of each type of endowment be
reported?
Term endowments
Regular endowments
a. Temporarily restricted
Permanently
restricted
b. Permanently restricted Permanently
restricted
c. Unrestricted
Temporarily
restricted
d. Temporarily restricted
Temporarily restricted

3. Kerry College, a private not-for-profit college,

received 25,000 from Ms. Mary Smith on April 30,
2003. Ms. Smith stipulated that her contribution
be used to support faculty research during the
fiscal year beginning on July 1, 2003. On July 15,
2003, administrators of Kerry awarded research
grants totaling 25,000 to several faculty in
accordance with the wishes of Ms. Smith. For the
year ended June 30, 2003, Kerry College should
report the 25,000 contribution as
a. Temporarily restricted revenues on the
statement of activities.
b. Unrestricted revenue on the statement of
activities.
c. Temporarily restricted deferred revenue on the
statement of activities.

3. Kerry College, a private not-for-profit college,

received 25,000 from Ms. Mary Smith on April 30,
2003. Ms. Smith stipulated that her contribution
be used to support faculty research during the
fiscal year beginning on July 1, 2003. On July 15,
2003, administrators of Kerry awarded research
grants totaling 25,000 to several faculty in
accordance with the wishes of Ms. Smith. For the
year ended June 30, 2003, Kerry College should
report the 25,000 contribution as
a. Temporarily restricted revenues on the
statement of activities.
b. Unrestricted revenue on the statement of
activities.
c. Temporarily restricted deferred revenue on the
statement of activities.

4. Good Hope, a private not-for-profit voluntary

health and welfare organization, received a cash
donation of 500,000 from Mr. Charles Peobody on
November 15, 2003. Mr. Peobody directed that his
donation be used to acquire equipment for the
organization. Good Hope used the donation to
acquire equipment costing 500,000 in January of
2004. For the year ended December 31, 2003,
Good Hope should report the 500,000 contribution
on its
a. Statement of activities as unrestricted revenue.
b. Statement of financial position as temporarily
restricted
deferred revenue.
c. Statement of financial position as unrestricted
deferred

4. Good Hope, a private not-for-profit voluntary

health and welfare organization, received a cash
donation of 500,000 from Mr. Charles Peobody on
November 15, 2003. Mr. Peobody directed that his
donation be used to acquire equipment for the
organization. Good Hope used the donation to
acquire equipment costing 500,000 in January of
2004. For the year ended December 31, 2003,
Good Hope should report the 500,000 contribution
on its
a. Statement of activities as unrestricted revenue.
b. Statement of financial position as temporarily
restricted
deferred revenue.
c. Statement of financial position as unrestricted
deferred

5. On the statement of activities for a private notfor-profit

performing arts center, expenses should be
deducted from
I. Unrestricted revenues.
II. Temporarily restricted revenues.
III. Permanently restricted revenues.
a. I, II, and III.
b. Both I and II.
c. I only.
d. II only.

5. On the statement of activities for a private notfor-profit

performing arts center, expenses should be
deducted from
I. Unrestricted revenues.
II. Temporarily restricted revenues.
III. Permanently restricted revenues.
a. I, II, and III.
b. Both I and II.
c. I only.
d. II only.

6. Albert University, a private not-for-profit

university, had the following cash inflows during
the year ended June 30, 2003:
I. 500,000 from students for tuition.
II. 300,000 from a donor who stipulated that the
money be invested indefinitely.
III. 100,000 from a donor who stipulated that the
money be spent in accordance with the wishes of
Alberts governing board.
On Albert Universitys statement of cash flows for
the year ended June 30, 2003, what amount of
these cash flows should be reported as operating
activities?
a. 900,000
b. 400,000
c. 800,000

6. Albert University, a private not-for-profit

university, had the following cash inflows during
the year ended June 30, 2003:
I. 500,000 from students for tuition.
II. 300,000 from a donor who stipulated that the
money be invested indefinitely.
III. 100,000 from a donor who stipulated that the
money be spent in accordance with the wishes of
Alberts governing board.
On Albert Universitys statement of cash flows for
the year ended June 30, 2003, what amount of
these cash flows should be reported as operating
activities?
a. 900,000
b. 400,000
c. 800,000

7. Gamma Pi, a private nonprofit fraternal

organization, should prepare a statement of
financial position and which of the following
financial statements?
I. Statement of activities.
II. Statement of changes in fund balances.
III. Statement of cash flows.
a. I, II, and III.
b. III only.
c. II and III.
d. I and III.

7. Gamma Pi, a private nonprofit fraternal

organization, should prepare a statement of
financial position and which of the following
financial statements?
I. Statement of activities.
II. Statement of changes in fund balances.
III. Statement of cash flows.
a. I, II, and III.
b. III only.
c. II and III.
d. I and III.

8. Save the Planet, a private nonprofit research

organization,
received a 500,000 contribution from Ms. Susan
Clark. Ms. Clark stipulated that her donation be
used to purchase new computer equipment for
Save the Planets research staff. The contribution
was received in August of 2003, and the
computers were acquired in January of 2004.
For the year ended December 31, 2003, the
500,000 contribution should be reported by Save
the Planet on its
a. Statement of activities as unrestricted revenue.
b. Statement of activities as deferred revenue.
c. Statement of activities as temporarily restricted
revenue.
d. Statement of financial position as deferred

8. Save the Planet, a private nonprofit research

organization,
received a 500,000 contribution from Ms. Susan
Clark. Ms. Clark stipulated that her donation be
used to purchase new computer equipment for
Save the Planets research staff. The contribution
was received in August of 2003, and the
computers were acquired in January of 2004.
For the year ended December 31, 2003, the
500,000 contribution should be reported by Save
the Planet on its
a. Statement of activities as unrestricted revenue.
b. Statement of activities as deferred revenue.
c. Statement of activities as temporarily restricted
revenue.
d. Statement of financial position as deferred

9. United Ways, a private not-for-profit voluntary

health and welfare organization, received a
contribution of $10,000 from a donor in 2003. The
donor did not specify any use restrictions on the
contribution; however, the donor specified that
the donation should not be used until 2004. The
governing board of United Ways spent the
contribution in 2004 for fund-raising expenses. For
the year ended December 31, 2003, United Ways
should report the contribution on its
a. Statement of financial position as deferred
revenue.
b. Statement of activities as unrestricted revenue.
c. Statement of financial position as an increase in
fund balance.
d. Statement of activities as temporarily restricted

9. United Ways, a private not-for-profit voluntary

health and welfare organization, received a
contribution of $10,000 from a donor in 2003. The
donor did not specify any use restrictions on the
contribution; however, the donor specified that
the donation should not be used until 2004. The
governing board of United Ways spent the
contribution in 2004 for fund-raising expenses. For
the year ended December 31, 2003, United Ways
should report the contribution on its
a. Statement of financial position as deferred
revenue.
b. Statement of activities as unrestricted revenue.
c. Statement of financial position as an increase in
fund balance.
d. Statement of activities as temporarily restricted

10. Sea Lion Park, a private not-for-profit

zoological society,
received contributions restricted for research
totaling 50,000 in 2003. None of the contributions
were spent on research in 2003. In 2004, 35,000
of the contributions were used to support the
research activities of the society.
The net effect on the statement of activities for
the year ended December 31, 2004, for Sea Lion
Park would be a
a. 15,000 increase in temporarily restricted net
assets.
b. 35,000 decrease in temporarily restricted net
assets.
c. 35,000 increase in unrestricted net assets.
d. 35,000 decrease in unrestricted net assets.

10. Sea Lion Park, a private not-for-profit

zoological society,
received contributions restricted for research
totaling 50,000 in 2003. None of the contributions
were spent on research in 2003. In 2004, 35,000
of the contributions were used to support the
research activities of the society.
The net effect on the statement of activities for
the year ended December 31, 2004, for Sea Lion
Park would be a
a. 15,000 increase in temporarily restricted net
assets.
b. 35,000 decrease in temporarily restricted net
assets.
c. 35,000 increase in unrestricted net assets.
d. 35,000 decrease in unrestricted net assets.

11. For Guiding Light, a nongovernmental

nonprofit religious
organization, net assets that can be expended in
accordance
with the wishes of the governing board of the
organization
should be reported as
I. Unrestricted.
II. Temporarily restricted.
III. Permanently restricted.
a. I only.
b. Both I and II.
c. I, II, and III.
d. Either I or II.

11. For Guiding Light, a nongovernmental

nonprofit religious
organization, net assets that can be expended in
accordance
with the wishes of the governing board of the
organization
should be reported as
I. Unrestricted.
II. Temporarily restricted.
III. Permanently restricted.
a. I only.
b. Both I and II.
c. I, II, and III.
d. Either I or II.