61. Which of the following is not a distinguishing characteristic of a private not-for-profit organization according to FASB Statement No. 116?
A) Operating purposes other than to provide goods or services at a profit.
B) Absence of ownership interests like those of business enterprises.
C) Commonly financed through voluntary contributions.
D) Operate for the direct benefit of members.

62. What are the financial statements required for all nongovernmental, not-for-profit organizations?
A) Statement of Financial Position, Statement of Activities, Statement of Cash Flows, Statement of Functional Expenses.
B) Statement of Financial Position, Statement of Activities, Statement of Functional Expenses.
C) Statement of Financial Position, Statement of Net Assets, Statement of Functional Expenses.
D) Statement of Financial Position, Statement of Activities, Statement of Cash Flows.

63. Which of the following are the net asset classes required by the FASB for private not-for-profit organizations?
A) Assigned, Committed, and Unrestricted.
B) Net investment in capital assets, Restricted, and Unrestricted.
C) Partially Restricted, Temporarily Restricted, Unrestricted.
D) None of the above.

64. Which of the following is not true regarding accounting and financial reporting for nongovernmental, not-for-profit organizations?
A) Expenses are classified as unrestricted or temporarily restricted.
B) Expenses must be reported by function, either in the Statements of Activities or in the notes.
C) Net assets are classified according to donor-imposed restrictions.
D) All of the above are true.

65. Which of the following statements is not correct with respect to contributions to a private not-for-profit?
A) Contributions to a not-for-profit are recorded at fair market value at the date of receipt.
B) Contributions of assets other than cash to a not-for-profit are recorded at the donor’s basis.
C) Contributions to a not-for-profit may be restricted as to purpose or time or for plant acquisition.
D) Revenues, including contributions are considered to be unrestricted unless donor-imposed restrictions apply.

66. Which of the following is not correct with respect to the reporting of expenses for a private not-for-profit?
A) Expenses can be reported in the unrestricted net asset class or restricted net asset class, as appropriate.
B) Expenses are reported by function in the Statement of Activities or in the notes.
C) The FASB describes functions as either program or supporting.
D) Major program classifications should be shown in the Statement of Activities or in the notes.

67. With the exception of collections, fixed assets may be recorded by a private not-for-profit as:
A) Temporarily restricted
B) Unrestricted
C) Permanently restricted
D) Either A or B.

FASB Statement 124, Accounting for Certain Investments of Not-for-Profit Organizations:
A) Requires that investments in equity securities be carried at book value.
B) Requires that investments accounted for under the equity method be adjusted to fair value at the end of the accounting period.
C) Requires that investments in debt securities be carried at fair value.
D) Requires that investments in consolidated subsidiaries be reported as permanently restricted.

Contributed services are recognized as revenue for a private not-for-profit when the service:
A) Is related to administration and fund raising activities.
B) Requires specialized skills, is provided by someone possessing those skills, and typically would be purchased if not provided by donation.
C) A and B are both required for the service to be recorded as revenue
D) None of the above, contributed services are not recorded as revenue

70. Which of the following organizations would not be subject to the accounting and reporting requirements of FASB Statements 116 (Accounting for Contributions) and 117 (Financial Reporting for Not-for-Profit Organizations)?
A) The City of Hannibal Missouri.
B) St. Jude Children’s Hospital.
C) Live Arts Theater.
D) Girl Scouts.

71. Which of the following organizations would not be subject to the (level b) accounting and reporting requirements of the AICPA's Audit and Accounting Guide: Not-for-Profit Organizations?
A) Discovery Museum (nongovernmental).
B) American Heart Association.
C) Meals on Wheels.
D) Local Farm Cooperative.

72. Which of the following is not true regarding the treatment of multiyear pledges, according to FASB Statement 116?
A) They are recorded at the present value of future collections.
B) They should be reported net of an allowance for estimated uncollectibles.
C) They should be recorded as temporarily restricted.
D) At the end of each accounting period, the difference between the new and previously recorded present value is recorded as interest revenue

73. If a donor selects a scholarship recipient, and then donates cash to a ballet school to fund that scholarship, the ballet school would:
A) Record the donated cash as a contribution.
B) Record a liability, as it is merely acting as an agent for the donation.
C) Record the scholarship awarded as a reduction of revenue.
D) Both A & C.

74. Which of the following is part of the treatment of multi-year pledges as required by FASB Statement No. 116?
A) The donation is recorded as a receivable at the present value of the future collections but revenue is not recorded until the pledge is received.
B) At the end of each accounting period, the difference between the balance in the receivable account and the new present value is deducted from the amount of the amount received from the donor which is recorded as income
C) At the end of each accounting period, the difference between the balance in the receivable account and the new present value is recorded as contribution revenue and the receivable is increased.
D) Pledge receivable is recorded for the total amount to be received and revenue is recorded each year as monies are received by the organization.

75. A civic ballet company sells 100 “Benefactor” status memberships for $1,000 each. The Benefactors each receive a season ticket valued at $350, and a listing in the company’s program. How would the ballet company record the sale of these 100 memberships at the beginning of the season?
A) Cash $100,000
Deferred Revenue $100,000
B) Cash – Restricted $ 65,000
Cash – Unrestricted 35,000
Contributions – Restricted $ 65,000
Revenue 35,000
C) Cash $100,000
Revenue $ 35,000
Contributions – Restricted 65,000
D) Cash $100,000
Deferred Revenue $ 35,000
Contributions – Unrestricted 65,000

76. Which of the following is true regarding the Statement of Financial Position for nongovernmental, not-for-profit organizations?
A) The Statement must display assets and liabilities separated between the categories of unrestricted, temporarily restricted, and permanently restricted.
B) The Statement must display totals for net assets separated between the categories of unrestricted, temporarily restricted, and permanently restricted.
C) Both A & B above.
D) Neither A nor B above.

77. Which of the following is not true regarding the Statement of Activities for nongovernmental, not-for-profit organizations?
A) FASB requires that the change in net assets be reported for each of the net asset classes.
B) Expenses are reported as unrestricted, temporarily restricted or permanently restricted.
C) Expenses are reported as decreases in unrestricted net assets.
D) Organization-wide totals must be provided.

Which of the following is not true regarding the Statement of Cash Flows for nongovernmental, not-for-profit organizations?
A) Either the direct or indirect method may be used.
B) If a not-for-profit organization received a restricted cash contribution for long-term purposes, that cash contribution would be reported as a cash flow from financing activities.
C) Restricted contributions used for long-term purposes are reported as financing activities.
D) Four categories of cash flows are used.

79. Which of the following would be a contribution increasing permanently restricted net assets?
A) A contribution by a donor in the amount of $1,000,000, set aside by the governing board as funds not to be expended.
B) A contribution by a donor in the amount of $1,000,000 to be used to acquire fixed assets.
C) A contribution of $1,000,000 to fund an endowment.
D) None of the above.

80. A donor gave artwork to a nongovernmental, not-for-profit museum. The artwork qualified as a “collection,” under FASB rules. The not-for-profit could:
A) Record the artwork at its fair market value at the time of receipt as an increase in permanently restricted net assets.
B) Not record the artwork, but provide information about the artwork in the notes.
C) Do either of the above, depending upon the policy of the not-for-profit.
D) Record the artwork as both a contribution and an expense.

81. Which of the following contributed services would probably not be recognized as contribution revenue?
A) An attorney donates her services to defend the Girl Scouts in a lawsuit.
B) A nurse donates her time to collect blood at an American Red Cross blood drive
C) An electrician donates his services to upgrade the electrical service at a mental health clinic.
D) State CPA society members hand out informational booklets at a shopping mall.

82. A donor gave $60,000 to a nongovernmental, not-for-profit charity with instructions that the funds be transferred to Sam Smith, an individual who lost his home in a fire. The not-for-profit would:
A) Record the $60,000 cash and credit a liability.
B) Record the $60,000 cash and credit temporarily restricted revenue.
C) Do either (a) or (b), depending upon the policy of the not-for-profit.
D) Not record the transaction, because the money is going directly to the intended recipient.

83. Which of the following organizations does not follow the AICPA's Not-for-Profit Guide?
A) Political parties.
B) Voluntary health and welfare organizations.
C) City libraries.
D) Private foundations.

84. In which of the following categories may Investment Income be reported by Not-for-Profit organizations:

I. Unrestricted net asset
II. Temporarily restricted net asset
III. Permanently restricted net asset

A) Only I.
B) Only I & II.
C) Only 1 & III.
D) I, II & III.

85. A skilled carpenter repaired the roof of the administrative building for a private not-for-profit free of charge. The not-for-profit would have had to pay $2,000 for this service if not donated. What entry should the not-for-profit make?
A) No entries are required for this event.
B) Supporting Service expense $2,000
Contribution revenue $2,000
C) Capital Expenditures $2,000
Contribution revenue $2,000
D) Building $2,000
Contribution revenue $2,000

86. Henry Highbrow promises to donate $25,000 to his church toward the purchase of a new piano if the church is able to raise matching funds of $25,000 from other contributors. At what point should the church record revenue?
A) When Henry makes his pledge, as long as collection is reasonably assured.
B) When the matching funds are raised.
C) When the piano is purchased.
D) When Henry pays the $25,000 to the church.

87. Lisa informed her church that she had named the church in her will and later provided a written copy of the will to the church. At what point should the church record the contribution?
A) At the time when the church was informed of her will.
B) At the time the church receives a written copy of the will.
C) At the date the probate court declares the will valid following her death.
D) At Lisa’s death.

88. Care Foundation is a voluntary health and welfare organization funded by contributions from the general public. Care sold equipment for $30,000 which cost $40,000 and had a book value of $25,000 at the time of sale. In recording the sale, Care should:
A) Record “temporarily restricted revenue” of $ 30,000.
B) Record a gain of $ 5,000.
C) Record a loss of $10,000.
D) None of the above.

89. An unconditional pledge of support is properly recorded as Temporarily Restricted Revenue at the time of the pledge. Changes in the present value of the receivable resulting from the passage of time is reported as:
A) Interest income.
B) Contribution revenue.
C) Program revenue.
D) None of above is correct.

1. Care Foundation is a voluntary health and welfare organization funded by contributions from the general public. In its Statement of Activities, the annual provision for depreciation should:
A) Not be included.
B) Be included as an element of support.
C) Be included as an element of changes in fund balances.
D) Be included as an element of expense.

91. Uptown Church received a donation of marketable equity securities from a church member. In reviewing the financial press, it is determined that the securities had appreciated during the year. At what amount should Uptown report its marketable equity securities in the year-end balance sheet?
A) Market value at the date of receipt.
B) Donor's cost.
C) Market value at the balance sheet date.
D) The lower of a, b or c.

92. Which of the following factors, if present, would indicate that a transaction is not a contribution?
A) The resource provider received value in exchange.
B) The resource provider entered into the transaction voluntarily.
C) The transfer of assets was unconditional.
D) The organization has discretion in the use of the assets received.

donor made a gift of cash to a private not-for-profit organization in 2015 with an expressed purpose restriction. All the funds were expended in 2015. The organization must:
A) Record the gift as a temporarily restricted revenue, reclassify the funds to unrestricted, and then report the expense as unrestricted.
B) Record the gift and expense as unrestricted.
C) Record the gift and expense as temporarily restricted.
D) Use either of the methods described in (a) or (b).

94. Which of the following is a legitimate reason for a private not-for-profit organization to have a surplus (increase in net assets)?
A) To establish working capital.
B) To retire debt.
C) Expand or replace physical facilities.
D) All of the above.

95. What financial ratio is most commonly used to evaluate charitable organizations?
A) Current assets / current liabilities.
B) Program expenses / total expenses.
C) Increase in net assets / total assets.
D) Total expenses / total revenues.

96. A donor gave equipment valued at $60,000 at the beginning of 2015 to a private not-for-profit organization. The equipment had a 10-year life and depreciation of $6,000 was charged during 2015. At the end of the year, the net assets to be reported in unrestricted net assets related to this equipment would be:
A) $60,000.
B) $54,000.
C) $ 0.
D) Either $54,000 or $0, depending upon the policy of the organization

97. A private not-for-profit organization received a gift of $640,000 with purpose restrictions in 2014. In 2015 funds were expended for the purpose outlined in the gift, however, it was not possible to determine whether the restricted funds or unrestricted funds were used. The presumption should be:
A) The restricted funds would have been used first.
B) The unrestricted funds would have been used first.
C) The restricted funds and unrestricted funds would have been used equally.
D) The restricted funds and unrestricted funds would have been used, based on a weighted average of the amounts.

98. Which of the following pledges of support would not be recognized in the year the pledge was made?
A) An unconditional pledge restricted to a particular year in the future.
B) A pledge with no restrictions, but conditional on receiving matching pledges.
C) An unconditional pledge restricted to a particular purpose.
D) None of the above – all would be recognized.

99. Under FASB Statement 117, reclassifications of net assets are not made:
A) For satisfaction of time restrictions.
B) For satisfaction of program restrictions.
C) For satisfaction of fixed asset acquisition.
D) For permanently restricted net assets.

100. Which of the following is true of a Statement of Cash Flows for a private sector, private not-for-profit organization?
A) Four categories are used: Operating, Capital Related Financing, Non-capital Related Financing, and Investing.
B) If the direct method is used, the not-for-profit must also present a reconciliation between total change in net assets and cash flows from operating activities.
C) Cash flows must be presented separately for Unrestricted, Temporarily Restricted, and Permanently Restricted categories.
D) None of the above; all are true.

101. Which of the following is not true of a Statement of Activities prepared for a private not-for-profit organization?
A) Expenses are shown only as decreases in unrestricted net assets.
B) Reclassifications for expiration of time restrictions are shown in the revenues and support section.
C) Unrealized gains (losses) on investments are shown only as increases (decreases) in unrestricted net assets.
D) Expenses are classified by function within the categories of Program Services and Supporting Services either in the Statement or the notes

102. The Statement of Functional Expenses:
A) Is no longer a required financial statement of any organization.
B) Is required of all private not-for-profit organizations.
C) Is required of voluntary health and welfare organizations.
D) Is required of all private colleges but not public colleges

103. Which of the following is not a condition for recording donated services?
A) The individual providing the service provides an invoice detailing the hours contributed but waives the requirement for payment.
B) The service requires a specialized skill and the donor possesses those skills.
C) The service would have been paid for if not donated.
D) The service creates or enhances a non-financial asset.

104. A donor made a cash contribution of $90,000 to a private not-for-profit organization for the purpose of acquiring a building. The not-for-profit organization properly recorded the gift of cash as temporarily restricted revenue. When the building is acquired, the organization should:
A) Record the building as permanently restricted.
B) Record the building as temporarily restricted.
C) Record the building as either unrestricted or temporarily restricted, as long as a consistent policy is followed.
D) Show an expense equivalent to the amount paid for the building in unrestricted net assets and reclassify the same amount from temporarily restricted to unrestricted net assets.

105. In 2015, a major drug company agreed to give a not-for-profit private college $300,000 to perform testing of a new drug. An advance payment of $200,000 was received in 2015. The college was to receive $1,500 per individual test. In 2015, the college completed 100 tests. How much revenue should the college report for 2015?
A) $ 300,000
B) $ 200,000
C) $ 150,000
D) $ 100,000

106. A donor made an unconditional pledge in 2014 of $ 50,000 to a private not-for-profit organization with the intent to pay the cash in 2015 for unrestricted use in 2015. The organization should:
A) Record the pledge receivable and deferred revenue in 2014.
B) Record the pledge as temporarily restricted revenue in 2014 and reclassify it to unrestricted in 2015.
C) Record the pledge as unrestricted revenue in 2014.
D) Record the pledge as temporarily restricted revenue in 2014 and reclassify it to unrestricted in 2015, but only in an amount equivalent to the amount that is spent in 2015.

107. A donor gave $ 1,000,000 to a private not-for-profit organization to be held in endowment. In addition, the governing board permanently designated $ 500,000 to the endowment. In the Statement of Financial Position, how should these amounts be classified?
A) Permanently Restricted: $1,500,000; Unrestricted: $ - 0 -
B) Permanently Restricted: $1,000,000; Unrestricted: $ 500,000
C) Permanently Restricted: $ 500,000; Unrestricted: $1,000,000
D) Permanently Restricted: $ - 0; Unrestricted: $1,500,000

108. The FASB has the authority to set accounting standards for all of the following organizations except:
A) Political parties.
B) City owned hospital.
C) For profit hospitals.
D) Trade associations.

109. Which of the following would not be an example of a voluntary health and welfare organization?
A) A state community college.
B) A private mental health facility.
C) A senior citizen center.
D) A food bank.

110. Under which of the following conditions is it appropriate for a private not-for-profit to allocate the cost of mass mailings from fund raising to a program related activity, such as Public Education?
A) The purpose of the mailing includes accomplishing program functions.
B) The audience is selected based on characteristics other than ability to make contributions.
C) The mailing calls for specific action by the recipient that is consistent with the goals of the not-for-profit's mission.
D) All of the above.

111. Which of the following is not a characteristic that distinguishes a private not-for-profit organization from a business?
A. Contributions are from resource providers who expect nothing in return.
B. Financial statements are intended primarily for use by donors.
C. The organization’s revenues exceed expenses.
D. Absence of ownership interests.

112. Which of the following is not an example of a voluntary health and welfare organization?
A. Meals on Wheels.
B. Performing arts organizations.
C. Big Brothers/Big Sisters.
D. Girl and Boy Scouts.

113. Reclassifications from permanently restricted net assets to temporarily restricted net assets would occur only under which of the following circumstances?
A) Time restrictions placed on the permanently restricted net assets have been
met.
B) Purpose restrictions placed on the permanently restricted net assets have
been met.
C) Either of the above criteria (A and B) have been met.
D) Permanently restricted net assets would not be reclassified to temporarily
restricted net assets.

114. FASB statement 116 requires contributions to be recorded as revenue when
A) The contribution is promised.
B) The contributed asset is actually received.
C) The contribution is likely to be received.
D) The contribution is probable and measurable.

115. Which of the following statements is false with respect to private not-for-profit organizations?
A) Exchange transactions should be recorded on the accrual basis of accounting where the revenues are recognized when earned.
B) An intention to give should be recorded as revenue when the intention is communicated to the not-for-profit.
C) In certain situations contributed services should be recognized as revenue.
D) FASB statement 124 requires that investments in equity securities with readily determinable values be reported at fair market value.

116. Donors to private not-for-profit entities are primarily concerned with which of the following performance measures?
A) Return on Investment.
B) Program Expense Ratio.
C) Change in Net Assets.
D) Ending Unrestricted Net Assets.

1. A Statement of Functional Expenses is required for
A) State governments.
B) Tax agencies.
C) Voluntary health and welfare organizations.
D) Colleges and universities.

118. Supporting activities as classified in the Statement of Activities, normally include
A) Management and general.
B) Fund-raising.
C) Membership development.
D) All of the above.

119. In 2015, Susan tells The Art Museum, a private not-for-profit organization, that she has named the museum in her will. When should the organization recognize the contribution revenue?
A) Only after Susan dies and the will is declared valid.
B) Ratably over a five year period beginning in 2015.
C) All in 2015.
D) When the Museum receives the contribution.

120. When should unconditional pledges be recorded as revenue?
A) Never.
B) When money is received.
C) When the pledge is made.
D) When full collection is assured.

121. A membership pass to the YMCA (a private not-for-profit organization) includes unlimited rights to all facilities and a health magazine subscription. Non-members do not possess these rights. How must the YMCA account for membership dues?
A) The dues are a non-exchange transaction, so it should report all dues in the year received.
B) The dues are a non-exchange transaction, so it should report dues on a pro-rata basis determined by the length of the individual memberships.
C) The dues are an exchange transaction, so it should report dues on a pro-rata basis determined by the length of the individual memberships.
D) The dues are an exchange transaction, so it should report all dues in the year received.

122. The entry to record the expiration of program restrictions includes which of the following?
A) Debit Reclassification from Temporarily Restricted Net Assets.
B) Credit Performance Expense.
C) Debit Reclassification to Unrestricted Net Assets.
D) Credit Reclassification from Temporarily Restricted Net Assets.

123. Which of the following is not an example of a donor imposed restriction?
A) Funds are not to be used until the following year.
B) Funds must be used on certain programs.
C) Funds are to be endowed.
D) All of the above are examples of donor imposed restrictions.

124. The equity section of Statement of Financial Position for private not-for-profits includes which accounts?
A) Unrestricted, Temporarily Restricted, Permanently Restricted Net Assets.
B) Net investment in capital assets, Restricted and Unrestricted net assets.
C) Unreserved Fund Balance, Reserved Fund Balance.
D) None of the above.

125. The institution’s governing board decided to create an endowment from contributed funds, this is called a(n) ________ and the funds are unrestricted.
A) Endowment.
B) Term endowment.
C) Quasi-endowment.
D) None of the above.

126. Which of the following financial statements is required for private not-for-profit organizations?
A) Income Statement.
B) Statement of Net Assets.
C) Statement of Cash Flows.
D) Budgetary Comparison Schedule.

127. The FASB requires that expenses of voluntary health and welfare organizations be reported according to function. Which of the following are FASB required function categories:
A) Operating and Nonoperating
B) Program and Supporting Services.
C) Operating, Investing and Financing.
D) Capital and Noncapital Related

128. Investments by private not-for-profit organizations in equity securities should be carried at
A) Historical cost.
B) Fair Market Value.
C) Lower of cost or Market.
D) None of the above.

129. The three classes of net assets reported for a private not-for-profit organization include all of the following except:
A) Unrestricted net assets.
B) Temporarily restricted net assets.
C) Capital restricted net assets.
D) Permanently restricted net assets.

130. How is the receipt of an unconditional pledge to contribute to a private not-for-profit organization recorded?
A) Not recorded until received.
B) As revenue when pledged.
C) As unearned revenue when pledged.
D) None of the above.

131. How does a for-profit organization record contributions made to a private not-for-profit organization?
A) As an expense when originally pledged.
B) As a reduction in revenue when pledged.
C) As an expense when contributed.
D) As a reduction in revenue when contributed.

132. If a person names a private not-for-profit organization in his or her will, this is considered a(n) ________ and is __________.
A) Conditional promise to give; not recorded.
B) Unconditional promise to give; recorded.
C) Intention to give; recorded.
D) Intention to give; not recorded.

133. The following treatment is correct with regards to payments that are partially exchange transactions and partially contributions:
A) Reported only as an exchange transaction.
B) Reported only as a contributions.
C) Reported as either an exchange transaction or contribution, depending on management’s judgment.
D) The two parts should be separately accounted for.

134. Which of the following would not be recognized as contribution revenue by a private not-for-profit organization?
A) A pledge to support an educational program for the next 3 years.
B) A gift restricted to purchase equipment.
C) A health clinic is paid to perform clinical trials of a new medicine.
D) Dues paid in excess of the fair value of benefits received.

135. Which of the following is not correct with respect to mergers under the rules established by FASB Statement No. 164, Not-for-Profit Entities: Mergers and Acquisitions?
A) If the combination qualifies as a merger, it will be accounted for using the carryover method.
B) Goodwill is recognized on long term assets only
C) Assets and liabilities are transferred from both existing entities to the new entity at book value.
D) The entity resulting from the merger is a new reporting entity, with no activity before the date of the merger.

136. Which of the following is not correct with respect to acquisitions under the rules established by FASB Statement No. 164, Not-for-Profit Entities: Mergers and Acquisitions?
A) If the combination qualifies as an acquisition, the not-for-profit may acquire control of a business enterprise or other not-for-profit organization and will be accounted for using the acquisition method.
B) Combinations not meeting the definition of a merger are reported as acquisitions.
C) Assets and liabilities of the acquired entity are recorded at fair value on the books of the not-for-profit
D) Entities that derive their revenues from business-like activities are required to expense the goodwill at the date of acquisition.

58. Private colleges and universities are (primarily) subject to financial reporting standards issued by?
A) FASB.
B) GASB.
C) AICPA.
D) None of the above.

59. Public colleges and universities are (primarily) subject to financial reporting standards issued by:
A) FASB.
B) GASB.
C) AICPA.
D) None of the above.

60. Private universities follow the authoritative standards of _____ and use the _____ basis of accounting.
A) FASB, Accrual.
B) FASB, Modified-accrual.
C) GASB, Accrual.
D) GASB, Modified-accrual.

61. A government owned college follows whose standards?
A. FASB because GASB doesn’t have standards for universities.
B. GASB.
C. AICPA
D. None of the above.

62. In addition to a Statement of Financial Position and a Statement of Activities, a private college or university is required to present:
A) A Statement of Functional Expense.
B) A Statement of Cash Flows.
C) Both (a) and (b).
D) Neither (a) nor (b).

rivate colleges are required to report net assets in the following categories:
A) Unrestricted and Restricted
B) Temporarily Restricted , Permanently Restricted and Unrestricted
C) Unrestricted, Temporarily Restricted and board designated
D) Restricted, Unrestricted and Temporarily Restricted

64. The three classes of net assets required to be presented by a private college or university are:
A) Permanently Restricted, Temporarily Restricted, and Unrestricted.
B) Reserved, Unreserved, and Undesignated.
C) Net investment in capital assets, Restricted, and Unrestricted.
D) Educational and General, and Auxiliary Enterprises

If a donor were to contribute money with instructions that the funds be invested for a period of time and then released to be used for any purpose, this would be called a(n):
A) Permanent endowment
B) Quasi-endowment
C) Term endowment
D) Unrestricted endowment

Which of the following would not be correct with respect to accounting for colleges and universities under the jurisdiction of the FASB?
A) If both unrestricted and restricted resources are available for a restricted purpose, the FASB requires that the institution recognize the use of unrestricted resources first
B) Accrual accounting is used. Revenues and expenses are reported at gross amounts and gains and losses are reported net.
C) Expenses are reported by function, either in the statements or in the notes
D) If an institution decides not to capitalize museum and other inexhaustible collections, note disclosures are required regarding the collections

67. Which of the following would not be correct with respect to accounting for colleges and universities under the jurisdiction of the FASB?
A) Contributed services should be recognized only when the services create or enhance nonfinancial assets or require specialized skills, are provided by an individual possessing those skills, and would typically be purchased if not provided by donation
B) Multiyear pledges are recorded as restricted revenue and receivable for the gross amount of the pledge when the pledge is made
C) Depreciation is recorded
D) Investments in stock with determinable fair values and all debt securities are reported at market value

68. According to the FASB, fixed assets acquired by colleges and universities with either unrestricted or restricted resources are recorded as:
A) Restricted
B) Unrestricted
C) Initially as temporarily restricted and reclassified as unrestricted in accordance with the depreciation schedule
D) Either B or C

69. When a private college or university has a foundation, and that foundation receives contributions specifically directed for the benefit of the college or university,
A) The college or university records no revenue until monies are received from the foundation
B) The college or university must recognize its interest in the contribution as an asset and revenue at the same time as the foundation.
C) At the time of the contribution to the foundation, the college or university records an increase in net assets and unearned revenue. When the money is received the unearned revenue is reduced and revenue is recorded.
D) None of the above

70. How should the following revenues be reported by a private college?
− $15,000 for the improvement of a study lounge,
− $5,600 in unrestricted contributions,
− $600 unrestricted investment income on endowment investments,
− $11,600 sales of services by auxiliary enterprises.

Unrestricted Restricted
A) 32,800 0
B) 17,800 15,000
C) 17,200 15,600
D) 5,600 27,200

71. The FASB has the authority to set accounting standards for all of the following organizations except:
A) Public colleges.
B) Private colleges.
C) For profit proprietary schools.
D) Educational foundations established to support a private college or university.

72. Which of the following is a required statement for a private college?
A) Statement of Changes in Fund Balance.
B) Statement of Revenues and Expenditures.
C) Budgetary Comparison Statement.
D) None of the above is a required statement.

73. On December 1, 2015, St. Sebastian University, a private college, received cash of $3,000 and a pledge for another $6,000 to be paid in January 2015. The amounts are to establish a permanent endowment to provide scholarships for music majors. How should this event be recorded on December 1, 2015?
A) Cash 3,000
Contributions receivable 6,000
Revenues: Temporarily restricted contributions 9,000
B) Cash 3,000
Contributions receivable 6,000
Revenues: Permanently restricted contributions 9,000
C) Cash 3,000
Revenues: Permanently restricted contributions 3,000
D) Cash 3,000
Contributions receivable 6,000
Revenues: Permanently restricted contributions 3,000
Deferred Revenues 6,000

74. Which of the following is true of a Statement of Activities prepared for a private college or university?
A) Only realized gains or losses on investments are reported.
B) Reclassifications from unrestricted to permanently restricted net assets are reported when the governing board designates unrestricted funds for permanent investment in the endowment.
C) All expenses are shown as unrestricted.
D) All of the above are true.

75. Which of the following types of college/university would have these components of the Financial Report?
• Statement of Financial Position.
• Statement of Activities.
• Statement of Cash Flows.
• Notes to the Financial Statements.
A) Investor Owned.
B) Public University.
C) Private Not-for-Profit.
D) None of the above.

76. For private colleges and universities, reclassifications of temporarily restricted and unrestricted net assets could be made:
A) For satisfaction of purpose restrictions.
B) When time restrictions expire.
C) If the resources donated for fixed assets have been expended on such assets.
D) All of the above.

77. Which of the following is true regarding accounting and financial reporting for private colleges and universities?
A) Expenses may be unrestricted or temporarily restricted depending on donor intent.
B) The Statement of Cash Flows must use the direct method.
C) A Statement of Unrestricted Revenues, Expenses and Other Changes in Unrestricted Net Assets and a Statement of Changes in Net Assets may be presented instead of a Statement of Activities.
D) None of the above are true.

78. Investment income on Endowments held by private colleges and classified as permanently restricted net assets should be recorded as an increase in:
A) Unrestricted net assets.
B) Temporarily restricted net assets.
C) Permanently restricted net assets.
D) Any of the above, depending on the terms of the trust agreement

79. Which of the following is true regarding the investments of private colleges in securities with determinable fair values?
A) Investments are to be carried at fair value or amortized cost, depending upon whether the investments are in equity or debt securities.
B) Investments are to be carried at fair value; unrealized gains and losses are to be reported in the Statement of Activities along with realized gains and losses.
C) Investments are to be carried at the lower of cost or market with unrealized losses reported in the Statement of Activities along with realized gains and losses.
D) None of the above.

80. According to NACUBO guidelines, what is the correct treatment for recognizing summer school revenues and expenses when a college’s fiscal year ends on June 30?
A) Recognize the entire amount of revenues and expenses in the year in which the summer term is predominantly conducted.
B) Recognize the entire amount of revenues and expenses in the year in which the summer term began.
C) Apportion the revenues and expenses to the two fiscal years, following accrual accounting practices similar to those employed by commercial enterprises.
D) Recognize expenses in the year in which they were billed and the expenses in the year in which they were incurred.

81. Which of the following would not be considered a split-interest agreement, according to the Not-for-Profit Guide?
A) Charitable remainder trusts.
B) Charitable gift annuities.
C) Permanent income-sharing agreements.
D) Pooled (life) income funds.

82. A private university billed $20,000,000 in tuition and fees during an academic year. Graduate assistantships, for which services were required, were awarded in the amount of $1,200,000. Scholarships, for which no services were required, were awarded in the amount of $1,400,000. Provision for bad debt was estimated to be $2,000,000. The net tuition and fees that would be reported in the Statement of Activities would be:
A) $18,000,000.
B) $16,800,000.
C) $16,600,000.
D) $15,400,000.

83. A donor gave a gift of $40,000 cash to a private college in 2014 to support basic psychology research. The funds were expended in 2015. The private college would recognize the $40,000 as:
A) Revenue in 2014 increasing temporarily restricted net assets; recognize the expense in 2015, and reclassify the resources from temporarily restricted net assets to unrestricted net assets in 2015.
B) Deferred revenue in 2014 and as revenue in 2015, increasing temporarily restricted net assets. The expense would be recognized also in 2015, and the resources would be reclassified from temporarily restricted net assets to unrestricted net assets in 2015.
C) Deferred revenue in 2014 and as revenue in 2015, increasing unrestricted net assets. The expense would be recognized in 2015.
D) Either (b) or (c), depending upon the policy of the private college.

84. Which of the following is true of a Statement of Cash Flows for a private college or university?
A) Either the direct or indirect method is acceptable.
B) Four categories are used: Operating, Capital Related Financing, Non-capital Related Financing, and Investing.
C) Cash flows must be presented separately for Unrestricted, Temporarily Restricted, and Permanently Restricted categories.
D) All of the above are true.

85. A private college received a $2,000,000 gift from a donor. The college’s governing board voted to use the $2,000,000 to establish an endowment, with the intent to keep the principal intact forever. The income from the endowment was to be used to fund research in the biology department. How should the college classify the $2,000,000 gift?
A) Unrestricted.
B) Temporarily restricted.
C) Permanently restricted.
D) Either temporarily or permanently restricted.

86. The NACUBO Financial Accounting and Reporting Manual treats estimates of uncollectible student accounts as:
A) A reduction in tuition and fee revenue
B) Bad debt expense
C) Either bad debt expense or a reduction in tuition and fee revenue as long as the policy is consistently applied
D) None of the above; colleges and universities must use the direct write off method

87. In 2015, a major drug company agreed to give a not-for-profit private college $2,100,000 to perform testing of a new drug. An advance payment of $700,000 was received in 2015. The college was to receive $7,000 per individual test. In 2015, the college completed 100 tests. How much revenue should the college report for 2015?
A) $ - 0 - .
B) $ 400,000.
C) $ 700,000.
D) $1,700,000.

A private foundation made a multi-year pledge to a private college on December 31, 2014, the last day of the fiscal year. The pledge was to pay $15,000 per year each year for five years, beginning on December 31, 2015. The discount rate is 6%. The present value of five payments of $15,000 is $63,185. The present value of four payments of $15,000 is $51,977. No purpose or plant restrictions were involved.

88. The private college would:
A) Record contribution revenue in the amount of $15,000 in each of the years 2015, 2015, 2015, 2015 and 2016.
B) Record contribution revenue in the amount of $63,185 in 2014.
C) Record contribution revenue in the amount of $51,977 in 2015.
D) None of the above

A private foundation made a multi-year pledge to a private college on December 31, 2014, the last day of the fiscal year. The pledge was to pay $15,000 per year each year for five years, beginning on December 31, 2015. The discount rate is 6%. The present value of five payments of $15,000 is $63,185. The present value of four payments of $15,000 is $51,977. No purpose or plant restrictions were involved. 89. The private college would:
A) Record contribution revenue of $3,792 in 2014.
B) Record contribution revenue of $3,792 in 2015.
C) Record interest revenue of $3,792 in 2014.
D) Record interest revenue of $3,792 in 2015.

A private foundation made a multi-year pledge to a private college on December 31, 2014, the last day of the fiscal year. The pledge was to pay $15,000 per year each year for five years, beginning on December 31, 2015. The discount rate is 6%. The present value of five payments of $15,000 is $63,185. The present value of four payments of $15,000 is $51,977. No purpose or plant restrictions were involved. 90. As of December 31, 2014, the contribution revenue would be classified as:
A) Unrestricted.
B) Temporarily restricted.
C) Permanently restricted
D) None of the above.

91. In 2014 a faculty member at a private college received a grant from the National Science Foundation to conduct basic research on tree frogs in the amount of $400,000. Expenses associated with the grant totaled $375,000 in 2015. In the Statement of Activities for 2015, the college should show:
A) Temporarily Restricted Revenues of $400,000 and Unrestricted expenses of $375,000.
B) Temporarily Restricted Revenues of $375,000 and Unrestricted expenses of $375,000.
C) Revenues of $375,000 and expenses of $375,000 in Unrestricted Net Assets.
D) Expenses of $375,000 in Unrestricted Net Assets and a decrease in Temporarily Restricted Net Assets of $375,000.

92. A donor made a cash contribution of $300,000 to a private college for the purpose of acquiring a building. The private college properly recorded the gift of cash as a temporarily restricted revenue. When the building is acquired, the college should:
A) Record the building as unrestricted.
B) Show an expense equivalent to the amount paid for the building in unrestricted net assets and reclassify the same amount from temporarily restricted to unrestricted net assets.
C) Record the building as either unrestricted or temporarily restricted, as long as a consistent policy is followed.
D) Record the building as permanently restricted.

93. A donor made a gift of cash to a private college or university in 2015 with an expressed purpose restriction. All of the funds were expended in 2015. The private college or university must:
A) Record the gift as a temporarily restricted revenue, reclassify the funds to unrestricted, and then report the expense as unrestricted.
B) Record the gift and expense as unrestricted.
C) Record the gift and expense as temporarily restricted.
D) Use either of the methods described in (a) or (b).

94. In 2014, a private college received a grant of $100,000 with purpose restrictions. In 2015 funds were expended for the purpose outlined in the gift; however, it was not possible to determine whether the restricted funds or unrestricted funds were used. The presumption should be:
A) The restricted funds would have been used first.
B) The unrestricted funds would have been used first.
C) The restricted funds and unrestricted funds would have been used equally.
D) The restricted funds and unrestricted funds would have been used, based on a weighted average of the amounts.

95. Under NACUBO guidelines, tuition waivers associated with athletic or academic scholarships should be reported as:
A) Reductions in revenue.
B) Decreases in Temporarily Restricted Net Assets.
C) Transfers.
D) Expenses.

96. Under NACUBO guidelines, tuition waivers associated with student work study programs should be reported as:
A) Reductions in revenue.
B) Decreases in Temporarily Restricted Net Assets.
C) Transfers.
D) Expenses.

97. Under NACUBO guidelines, the current period provision for uncollectible accounts should be reported as:
A) Bad debt expense.
B) Decreases in Temporarily Restricted Net Assets.
C) Reductions in revenue.
D) Transfers.

98. Which of the following student tuition or fee reductions should be listed as a reduction in revenue?
A) Graduate Assistantships.
B) Athletic or Academic Scholarships.
C) Work-Study Programs.
D) None of the Above.

99. Inflows from self-supporting university operations, known as auxiliary enterprises, are classified as
A) Unrestricted.
B) Temporarily Restricted.
C) Permanently Restricted.
D) Either A or B.

100. An alum pledges $9,000 to Greystone College in 2015 on the condition that matching funds are raised. The matching funds are raised in 2016, how much revenue will Greystone College recognize in 2015?
A) $ 0.
B) $3,000.
C) $6,000.
D) $9,000.

101. If the receivable for a student is $9,000 and the student pays only $1,000 as the result of receiving a work study appointment from the school, what would be the appropriate debits?
A) Debit Cash and Debit Discount on Revenue.
B) Debit Cash and Debit Expense.
C) Debit Cash and Debit accounts receivable.
D) Debit Cash.

102. If the receivable for a student is $8,000 and the student pays only $500 as the result of receiving an athletic scholarship from the school, what would be the appropriate debits
A) Debit Cash.
B) Debit Cash and Debit Expense.
C) Debit Expense.
D) Debit Cash and Debit Tuition Discount on Accounts Receivable.

103. The equity section of the balance sheet for investor-owned colleges and universities includes which of the following designations?
A) Unrestricted Net Assets, Temporarily Restricted Net Assets, and Permanently Restricted Net Assets.
B) Paid in Capital and Retained Earnings.
C) Net Investment in Capital Assets, net of related Debt; Restricted Net position; and Unrestricted Net position.
D) None of the above.

104. The NACUBO Financial Accounting and Reporting Manual treats estimates of uncollectible student accounts as:
A) Bad debt expense.
B) Reduction in revenue.
C) Other financing uses.
D) None of the above.

105. When summer school classes at a university cover parts of two fiscal years, the revenues and expenses are
A) All recognized in the second of the two years.
B) Apportioned to the two fiscal years.
C) Recognized in the year in which the term was predominantly conducted.
D) All recognized in the first of the two years.

106. Which of the following is an example of a temporarily restricted revenue?
A) Tuition and fees.
B) Contribution for plant acquisition.
C) Auxiliary enterprises.
D) Quasi- Endowment.

107. Student scholarships for which no service was required were applied to student accounts in the amount of $5,000. What is the journal entry to record this event?
A) Debit: Tuition discount-Unrestricted-Student aid $5,000 Credit: Accounts Receivable $5,000.
B) Debit: Scholarship Expense $5,000 Credit: Accounts Receivable $5,000.
C) Debit: Tuition waiver $5,000 Credit: Loan to student $5,000.
D) None of the above.

108. Sam Smith died, leaving a will that provided that $1,000,000 be transferred to a not-for-profit hospital. The hospital is to invest the funds for 10 years and give $40,000 each year to the granddaughter. At the end of the 10 years, the $1,000,000 can be used for any purpose desired by the hospital. Which of the following is true?
A) The hospital would record revenue in the amount of $1,000,000, increasing temporarily restricted net assets.
B) The hospital would record revenue in an amount equal to the $1,000,000 less the present value of the 10 payments to the granddaughter.
C) The hospital would record revenue in an amount equal to the present value of the 10 payments to the granddaughter.
D) The hospital would not record revenue for 10 years; then a revenue would be recorded, increasing unrestricted net assets.

43. Private not-for-profit health care organizations follow standards set by:
A) GASB.
B) FASB.
C) SEC.
D) All of the above.

44. Health care organizations that are privately owned and operated to provide a return to investors follow which standards:
A) GASB.
B) FASB, including standards specifically for not-for-profits.
C) FASB, excluding standards specifically for not-for-profits.
D) None of the above.

45. The AICPA Audit and Accounting Guide: Health Care Organizations applies to:
A) Private not-for-profit health care organizations.
B) Governmentally owned health care organizations.
C) Investor-owned health care organizations.
D) All of the above.

46. The AICPA Audit and Accounting Guide: Health Care Organizations provides reporting requirements for all of the following organizations except:
A) The University of Virginia Hospital, a government-owned hospital.
B) A psychiatrist operating as a limited liability corporation.
C) A nursing home operated by the Lutheran Church.
D) Voluntary health and welfare organizations

47. The AICPA Audit and Accounting Guide: Health Care Organizations applies to:
A) Private sector, not-for-profit hospitals.
B) Public sector, government-owned hospitals.
C) Both (a) and (b) above.
D) Neither (a) nor (b) above.

48. The equity section of the Statement of Net Position of a government-owned hospital may contain which of the following descriptions?
A) Fiduciary, Proprietary, and General.
B) Nonspendable, Committed, Restricted and Assigned.
C) Permanently Restricted, Temporarily Restricted, and Unrestricted.
D) Net Investment in Capital Assets, Restricted, and Unrestricted Net Position.

49. The equity section of the Statement of Net Assets of a private not-for-profit hospital may contain which of the following descriptions?
A) Fiduciary, Proprietary, and General.
B) Nonspendable, Committed, Restricted and Assigned.
C) Permanently Restricted, Temporarily Restricted, and Unrestricted.
D) Net Investment in Capital Assets, Restricted, and Unrestricted Net Position.

Which of the following is not correct with respect to reporting of patient service revenue for health care organizations?
A) Patient service revenue must be reported net of estimated adjustments for contractual adjustments.
B) Patient service revenue does not include amounts representing charity care.
C) Changes to estimates of contractual adjustments related to prior periods must be reported as a prior period adjustment if material.
D) Unrestricted bequests and investment income for current unrestricted purposes may be reported as either operating or nonoperating revenue, depending on the policy of the entity.

51. Which of the following is correct with respect to the recording of charity care for health care organizations?
A) Revenues are not recorded for the value of charity care services provided, but related expenses are included with other expenses on the Statement of Operations
B) Charity care is recorded as revenue and an adjustment is recorded for the difference between the value of the revenue and expenses incurred in providing health care services.
C) The value of foregone charity care revenue is deducted as a charitable contribution expense in the Statement of Operations
D) Management’s policy for providing charity care and the level of charity care provided is an optional disclosure

St. David’s is a not-for-profit business-oriented hospital. What is the journal entry for the following transaction: During the month, gross patient service revenue amounted to $93,000 of which $82,000 was received in cash. Contractual adjustments to third-party payers amounted to $10,000 (actual, not estimated).
A) Cash 82,000
Patient Accounts Receivable 11,000
Operating Revenues – Unrestricted - Patient Service Revenue 93,000
Contractual Adjustments – Unrestricted 10,000
Patient Accounts receivable 10,000
B) Cash 82,000
Patient Accounts Receivable 11,000
Operating Revenues – Patient Service Revenue, Restricted 93,000
Bad Debts Expense – Restricted 10,000
Patient Accounts receivable 10,000
C) Cash 82,000
Patient Accounts Receivable 11,000
Operating Revenues – Unrestricted - Patient Service Revenue 93,000
Operating Revenues-Unrestricted patient Service Revenue 10,000
Patient Accounts receivable 10,000
D) Not shown for length

53. St. David’s is a not-for-profit business-oriented hospital. What is the journal entry for the following transaction: Cash was received for pledges made in the prior year in the amount of $85,000. That amount has been recorded as temporarily restricted net assets, based on time restrictions.
A) Cash 85,000
Contributions receivable 85,000
Reclassification from Temporarily Restricted Net Assets-
Expiration of Time Restrictions 85,000
Reclassification to Unrestricted Net Assets – Expiration
of Time restrictions 85,000
B) Cash 85,000
Contributions receivable 85,000
Reclassification to Unrestricted Net Assets - Expiration
of Time Restrictions 85,000
Reclassification from Temporarily Restricted Net Assets
– Expiration of Time restrictions 85,000
C) Contributions Receivable-Unrestricted 85,000
Contributions Receivable – Restricted 85,000
Cash 85,000
Contributions receivable-Unrestricted 85,000
D. Not shown to length

54. Which of the following is not a required statement of a private not-for-profit hospital?
A) Statement of Functional Expense.
B) Statement of Financial Position.
C) Statement of Cash Flows.
D) Statement of Operations

55. Which of the following is not true regarding financial reporting of health care entities?
A) It is important to distinguish operating revenues and expenses from nonoperating.
B) It is important to distinguish between current and noncurrent assets and liabilities.
C) Private sector organizations use a three-category format for the Statement of Cash Flows, and public sector organizations us a four-category format.
D) Private sector organizations use accrual accounting, while public sector organizations use modified accrual.

56. Private sector, not-for-profit health care organizations have a category of assets called “Assets Whose Use is Limited.” That category refers to:
A) Assets that have been restricted by donor action.
B) Unrestricted assets that have been limited by individuals or entities other than contributors (such as by bond covenants).
C) Both (a) and (b) above.
D) Neither (a) nor (b) above.

57. The statement reflecting revenues, expenses, and other changes in unrestricted net assets for a private sector, not-for-profit hospital is called the:
A) Statement of Changes in Unrestricted Net Assets.
B) Statement of Operations.
C) Statement of Activities.
D) Income Statement.

58. Which of the following is true regarding the financial statements of a private sector not-for-profit hospital?
A) Revenues are measured using the accrual basis of accounting.
B) Changes in net assets must be shown by net asset classification.
C) The Statement of Cash Flows uses a three-category format.
D) All of the above are true.

59. Which of the following is true regarding revenue recognition for health care organizations?
A) Patient service revenue includes an imputed charge for charity care.
B) Patient service revenue is reported net of contractual adjustments.
C) Both (a) and (b) above.
D) Neither (a) nor (b) above.

60. A private sector not-for-profit hospital received a gift of $250,000 cash on the first day of 2015 with a donor restriction that the resources be used to purchase certain equipment. The equipment was purchased on the same day and is expected to last five years with no salvage value. The Statement of Financial Position as of December 31, 2015 would reflect as net assets of:
A) $200,000 unrestricted and $0 temporarily restricted.
B) $0 unrestricted and $200,000 temporarily restricted.
C) Either (a) or (b), depending on the policy of the hospital.
D) None of the above.

A private sector, not-for-profit hospital received a pledge of $100,000 in 2014, with no purpose restriction. The pledge card indicated that the funds were to be used in 2015. Cash was turned over to the hospital in 2015. The not-for-profit hospital would recognize contribution revenue in:
A) When the funds are expended.
B) 2014.
C) 2015.
D) Either 2014 or 2015, depending on the policy of the hospital.

62. A private sector, not-for-profit hospital received a pledge of $150,000 in 2014 to be used for a building to be constructed in 2015 but contingent on the hospital being able to raise an equivalent amount from other donors. As of the end of 2014, half the amount had been raised from other donors. In 2015, the hospital raised the amount from other donors. The donor gave the $150,000 to the hospital in 2015 and the building was completed in 2016. In which year should the hospital recognize the $150,000 from the pledge?
A) 2014.
B) 2015.
C) 2016.
D) $75,000 should be recognized in 2014 and $75,000 in 2015.

63. Which of the following is true regarding the reporting of expenses by private sector, not-for-profit hospitals?
A) All expenses are considered reductions in unrestricted net assets.
B) Expenses must be reported by natural (i.e. salaries, supplies, etc.) classification in the statements.
C) Both (a) and (b) above.
D) Neither (a) nor (b) above.

64. Not-for-profit health care entities are distinguished from voluntary health and welfare organizations in the following manner:
A) Health care organizations provide health care services while voluntary health and welfare organizations do not.
B) Health care organizations use accrual accounting whereas voluntary health and welfare organizations do not.
C) Health care organizations are considered to be primarily business-oriented whereas voluntary health and welfare organizations raise a significant portion of their money from voluntary contributions.
D) Health care organizations do not provide services to individuals who are unable to pay.

65. Which of the following health care organizations must follow standards established by the Governmental Accounting Standards Board?
A) Private not-for-profit hospitals.
B) Government owed hospitals.
C) Both (a) and (b) above.
D) Neither (a) nor (b) above.

66. Which of the following health care organizations have “Category B” GAAP established by the AICPA's Audit and Accounting Guide: Health Care Organizations?
A) Cook County Hospital, a department of Cook County.
B) Kishwaukee Hospital, a nongovernmental, not-for-profit hospital.
C) Open Door Urgent Care, a privately owned for-profit organization.
D) All of the above.

67. A “performance indicator” is required in the Statement of Operations for health care entities. Which of the following must be reported below that performance indicator?
A) Other revenue, such as parking lot or cafeteria revenue.
B) Net assets released from restrictions for operating purposes.
C) Both (a) and (b) above.
D) Neither (a) nor (b) above.

68. A donor contributed $1,000,000 to a not-for-profit hospital with the restriction that the funds be invested indefinitely and the income be used for cancer research. Which of the following would be true?
A) The gift would be recorded as an increase in permanently restricted net assets.
B) The income from the endowment would be recorded as an increase in temporarily restricted net assets.
C) Both (a) and (b) above.
D) Neither (a) nor (b) above.

69. Which of the following is true regarding accounting and financial reporting for not-for-profit health care organizations?
A) Charity care is reported as operating revenue at the normal and customary rate and bad debt expense is reported for an equal amount.
B) Contractual adjustments with insurance companies are reported as a reduction in patient service revenue.
C) Both (a) and (b) above.
D) Neither (a) nor (b) above.

70. A donor pledged $500,000 to a not-for-profit hospital in 2014 to conduct medical research, conditional on the hospital raising $500,000 from other donors. The other donors met the condition in 2015. The donor transferred the funds to the hospital in 2015. In which year would the revenue be recognized?
A) 2014.
B) 2015.
C) Half in 2014 and half in 2015.
D) None of the above; the hospital would only recognize revenue when the amounts had been expended according to the donor's wishes.

71. Which of the following could be recognized as contributed services revenue by a not-for-profit hospital?
A) A high school student class volunteered to answer the telephone during the Friday night midnight shift.
B) An architect developed building plans for a new outpatient clinic.
C) Both (a) and (b) above.
D) Neither (a) nor (b) above.

72. Which of the following is not true regarding accounting and financial reporting for private not-for-profit hospitals?
A) Expenses may be unrestricted or temporarily restricted depending on donor intent.
B) Fund accounting is not required.
C) The Statement of Cash Flows may use either the direct or indirect method.
D) Net assets are classified as Unrestricted, Temporarily Restricted or Permanently Restricted.

73. Which of the following is true regarding revenue recognition for health care organizations?
A) Patient service revenues are reported net of contractual adjustments.
B) Revenues do not include charity care.
C) Revenues may include fees for parking, cafeteria sales, and gift shops.
D) All of the above are true.

74. Which of the following is a required statement for a governmental hospital?
A) Statement of Changes in Fund Balance.
B) Statement of Revenues and Expenditures.
C) Statement of Functional Expense.
D) Statement of Cash Flows.

75. A hospital reported the following uncollectible amounts:

$ 10,000 for services rendered to homeless individuals with no intention of collection.
$ 30,000 for services rendered with the expectation of collection, but which proved to be uncollectible.

What amount should be reported in revenues and provision for bad debt for these items?
A) Revenues: $ 40,000; Provision for Bad Debt: 40,000.
B) Revenues: $ 40,000; Provision for Bad Debt: 30,000.
C) Revenues: $ 30,000; Provision for Bad Debt: 30,000.
D) Revenues: $ 0; Provision for Bad Debt: 0.

76. The difference between accounting for private not-for-profit hospitals and government- owned hospitals is:
A) Government owned hospitals do not have to prepare a Statement of Cash Flows.
B) Government owned hospitals do not have to record depreciation.
C) The equity accounts have different titles and definitions.
D) All of the above.

77. The difference between the financial statements of private not-for-profit hospitals and private not-for-profit voluntary health and welfare organizations is:
A) Voluntary health and welfare organizations do not have to prepare a Statement of Cash Flows.
B) Hospitals do not have to prepare a Statement of Functional Expense.
C) Both (a) and (b) above.
D) Neither (a) nor (b) above.

78. Private health care organizations follow _____ standards while governmentally owned health care organizations follow _____ standards.
A) GASB; FASB.
B) FASB; GASB.
C) FASB; FASAB.
D) GASB; FASAB.

79. A private not-for-profit entity estimated its Allowance for Contractual Adjustment. During the next year, the hospital found that the actual total of contractual adjustments applied to receivables on hand at the end of the previous year was $ 5,000 higher than the estimate. How should the difference be reported?
A) The hospital should reduce current period net patient service revenues for the $5,000.
B) The hospital should make a prior period adjustment to retained earnings for $5,000.
C) The hospital should record a current period expense for the $5,000.
D) The hospital should record a “cumulative effect of a change in accounting principle” for the $5,000.

80. Private not-for-profit health care organizations include what categories in the equity section of the Statement of Net Assets?
A) Paid in capital and retained earnings.
B) Unrestricted, temporarily restricted, and permanently restricted.
C) Net investment in capital assets, restricted, and unrestricted.
D) Operating, investing, financing.

81. According to the AICPA Audit and Accounting Guide: Health Care Organizations, which of the following items should be included in the determination of the performance indicator?
A) Receipt of temporarily or permanently restricted contributions.
B) Items requiring separate display (such as extraordinary items, discontinued operations, and the effect of changes in accounting principle).
C) Premium revenue.
D) None of the above.

82. Which of the following is false regarding revenues of health care organizations:
A) Patient service revenues are to be reported net of estimated contractual adjustments in the operating statement.
B) Operating Revenues are often classified as net patient service revenue and other revenue.
C) Patient service revenue includes charge for charity care.
D) Revenues are measured on the accrual basis.

83. Dukes Medical Center performed charity care at a cost of $5,000 and a standard charge of $11,000. How much should Dukes recognize as revenue?
A) $11,000.
B) $ 6,000.
C) $ 5,000.
D) $ 0

84. If a clinic raises a significant amount or nearly all their resources from voluntary contributions or grants, they are subject to the guidance in the AICPA:
A) Not-for-Profit Guide.
B) Health Care Guide.
C) Voluntary Health and Welfare Guide.
D) Contributions and Grants Guide.

85. When accounting for health care organizations, services provided for charity care are:
A) Recorded as revenues but the costs are expensed as normal.
B) Must be disclosed in the notes to the financial statements.
C) Not recorded as revenues and the costs are not expensed.
D) None of the above.

86. Contractual allowances for amounts billed to 3rd parties are treated as:
A) Contractual allowance expense.
B) A contra-revenue.
C) A bad debt expense.
D) An other financing use.

87. Which of the following is/are true with respect to health care organizations?
A) Expenses must be reported using their natural classifications.
B) Assets that have limited use are temporarily restricted on the balance sheet.
C) Private sector not-for-profits health care entities must disclose expenses by functional classifications, if not provided in the Statement of Operations.
D) All of the above are true.

88. According to AICPA Health Care Guide, which of the following should not be included in the determination of a performance indicator for a health care organization?
A) Transfers among affiliated organizations.
B) Receipt of temporarily or permanently restricted contributions.
C) Transactions with the owners, other than in exchange for services.
D) All of the above should be excluded.

89. An unrestricted balance sheet category used in health care reporting to show limitations on the use of assets due to bond covenant restrictions and governing board plans for future use is called:
A) Permanently restricted net assets.
B) Temporarily restricted net assets.
C) Assets whose use is limited.
D) Unrestricted net assets.

90. Investor owned health care organizations have the following equity section accounts:
A) Paid in capital and retained earnings.
B) Restricted and unrestricted net assets.
C) Unrestricted, temporarily restricted, and permanently restricted net assets.
D) Net Investment in Capital Assets, Restricted, and Unrestricted Net Position.

91. During the month of December, Godiva Hospital billed patients $55,000, billed 3rd parties $65,000, and provided $10,000 of charity care. How much should Godiva report as Accounts Receivable?
A) $130,000.
B) $120,000.
C) $ 65,000.
D) $ 55,000.