chapter 18- Solution
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chapter 18- Solution

Course: ACCT 440, Spring 2011

School: Copenhagen Business School

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1. Reciprocal transfers where both parties give and receive something of value are A. contributed services. B. unconditional promises to give. C. endowment transactions. D. exchange transactions. E. required contributions. 1. Reciprocal transfers where both parties give and receive something of value are A. contributed services. B. unconditional promises to give. C. endowment transactions. D. exchange...

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transfers 1. Reciprocal where both parties give and receive something of value are A. contributed services. B. unconditional promises to give. C. endowment transactions. D. exchange transactions. E. required contributions. 1. Reciprocal transfers where both parties give and receive something of value are A. contributed services. B. unconditional promises to give. C. endowment transactions. D. exchange transactions. E. required contributions 2. Which of the following types of health care organizations follow FASB Accounting Standards Codification for GAAP? A. Entry A. B. Entry B. C. Entry C. D. Entry D. E. Entry E. 2. Which of the following types of health care organizations follow FASB Accounting Standards Codification for GAAP? A. Entry A. B. Entry B. C. Entry C. D. Entry D. E. Entry E. 2. In accruing patient charges for the current month, which one of the following accounts should a hospital credit? A. Accounts Payable. B. Deferred Revenue. C. Unearned Revenue. D. Patient Service Revenues. E. Accounts Receivable. 3. In accruing patient charges for the current month, which one of the following accounts should a hospital credit? A. Accounts Payable. B. Deferred Revenue. C. Unearned Revenue. D. Patient Service Revenues. E. Accounts Receivable. 4. Which account would be credited in recording a gift of medicine to a nursing home from an outside party? A. Nonoperating Gain - Contributions. B. Contractual Adjustments. C. Patient Service Revenues. D. Drugs and Medicines. E. Nonoperating Revenues - Contribution. BB 4. Which account would be credited in recording a gift of medicine to a nursing home from an outside party? A. Nonoperating Gain - Contributions. B. Contractual Adjustments. C. Patient Service Revenues. D. Drugs and Medicines. E. Nonoperating Revenues - Contribution. 5. Which one of the following financial statements is not required by GAAP regarding a voluntary health and welfare organization? A. Statement of Financial Position. B. Statement of Functional Expense. C. Statement of Activities and Changes in Net Assets. D. Statement of Cash Flows. E. Statement of Operations. 5. Which one of the following financial statements is not required by GAAP regarding a voluntary health and welfare organization? A. Statement of Financial Position. B. Statement of Functional Expense. C. Statement of Activities and Changes in Net Assets. D. Statement of Cash Flows. E. Statement of Operations. 6. Unconditional transfers of cash or other resources to an entity in a voluntary nonreciprocal transaction is the GAAP definition for A. miscellaneous revenues. B. contributions. C. unconditional promises to give. D. exchange transactions. E. pledges. 6. Unconditional transfers of cash or other resources to an entity in a voluntary nonreciprocal transaction is the GAAP definition for A. miscellaneous revenues. B. contributions. C. unconditional promises to give. D. exchange transactions. E. pledges. 7. Which one of the following is a voluntary health and welfare organization? A. Charity raising money for underprivileged children. B. Nursing home. C. Clinic. D. Hospital. E. Preschool. 7. Which one of the following is a voluntary health and welfare organization? A. Charity raising money for underprivileged children. B. Nursing home. C. Clinic. D. Hospital. E. Preschool. 8. On a statement of functional expenses for a voluntary health and welfare organization, how are expenses classified? A. Health services expenses and operating expenses. B. Program services expenses and administrative services expenses. C. Program services expenses and supporting services expenses. D. Operating expenses and supporting services expenses. E. Operating expenses and administrative expenses. 8. On a statement of functional expenses for a voluntary health and welfare organization, how are expenses classified? A. Health services expenses and operating expenses. B. Program services expenses and administrative services expenses. C. Program services expenses and supporting services expenses. D. Operating expenses and supporting services expenses. E. Operating expenses and administrative expenses. 9. Which of the following is not a question individuals ask of not-for-profit organizations in considering whether to make a contribution? A. Will donated funds be used effectively by the organization to accomplish its purpose? B. Will the donated funds be wasted? C. How much should this organization receive? D. Is this organization profitable? E. Is contributing to this charity a wise allocation of resources? 9. Which of the following is not a question individuals ask of not-for-profit organizations in considering whether to make a contribution? A. Will donated funds be used effectively by the organization to accomplish its purpose? B. Will the donated funds be wasted? C. How much should this organization receive? D. Is this organization profitable? E. Is contributing to this charity a wise allocation of resources? 10. Historically, what was the pattern of reporting of not-for-profit organizations? (1) Patterned after for-profit accounting (2) Emphasis on separate fund types (3) Disregard for the entire entity A. 1 only. B. 2 only. C. 1 and 2 only. D. 1, 2 and 3. E. 2 and 3 only. 10. Historically, what was the pattern of reporting of not-for-profit organizations? (1) Patterned after for-profit accounting (2) Emphasis on separate fund types (3) Disregard for the entire entity A. 1 only. B. 2 only. C. 1 and 2 only. D. 1, 2 and 3. E. 2 and 3 only. 11. Which of the following statements is required for voluntary health and welfare organizations, but not for other not-for-profit organizations? A. Statement of Activities and Changes in Net Assets. B. Statement of Functional Expenses. C. Statement of Financial Position. D. Statement of Cash Flows. E. Statement of Budget to Actual. 11. Which of the following statements is required for voluntary health and welfare organizations, but not for other not-for-profit organizations? A. Statement of Activities and Changes in Net Assets. B. Statement of Functional Expenses. C. Statement of Financial Position. D. Statement of Cash Flows. E. Statement of Budget to Actual. 12. What are the three categories of net assets required by GAAP in reporting a not-for-profit organization? A. Unrestricted, Temporarily Restricted, and Permanently Restricted. B. Unrestricted, Restricted, and Fund Balance. C. Restricted, Permanently Restricted, and Fund Balance. D. Unrestricted, Temporarily Restricted, and Fund Balance. E. None of the above. 12. What are the three categories of net assets required by GAAP in reporting a not-for-profit organization? A. Unrestricted, Temporarily Restricted, and Permanently Restricted. B. Unrestricted, Restricted, and Fund Balance. C. Restricted, Permanently Restricted, and Fund Balance. D. Unrestricted, Temporarily Restricted, and Fund Balance. E. None of the above. 13. What is the basis of accounting used in reporting the Statement of Activities and Changes in Net Assets? A. Cash basis. B. Modified accrual basis. C. Accrual basis. D. Either cash basis or accrual basis, depending on the type of revenue. E. Either modified accrual basis or accrual basis, depending on the type of revenue. 13. What is the basis of accounting used in reporting the Statement of Activities and Changes in Net Assets? A. Cash basis. B. Modified accrual basis. C. Accrual basis. D. Either cash basis or accrual basis, depending on the type of revenue. E. Either modified accrual basis or accrual basis, depending on the type of revenue. 14. When are unconditional promises to give recognized as revenues? A. In the period the promise is received. B. In the period the promise is collected. C. In the period in which the conditions on which they depend are substantially met. D. In the period in which the conditions on they which depend have begun to be met. E. Unconditional promises from potential donors are not revenues. 14. When are unconditional promises to give recognized as revenues? A. In the period the promise is received. B. In the period the promise is collected. C. In the period in which the conditions on which they depend are substantially met. D. In the period in which the conditions on which they depend have begun to be met. E. Unconditional promises from potential donors are not revenues. The following gifts are received in Year One by a not-for-profit organization: I. $2,000 specified by the donor to be used to pay salaries. II. $10,000 for new conference room furniture. III. $5,000 to be held for one year before being expended. The salaries are paid in Year Two and the conference room furniture is purchased in Year One. 15. How much should be shown as increases as Temporarily Restricted Net Assets in Year One? A. $2,000 B. $7,000 C. $12,000 D. $15,000 E. $17,000 15. How much should be shown as increases as Temporarily Restricted Net Assets in Year One? A. $2,000 B. $7,000 C. $12,000 D. $15,000 E. $17,000 16. How much should be reclassified on the Statement of Activities in Year Two from the Temporarily Restricted column to the Unrestricted column? A. $2,000. B. $5,000. C. $7,000. D. $10,000. E. $12,000. 16. How much should be reclassified on the Statement of Activities in Year Two from the Temporarily Restricted column to the Unrestricted column? A. $2,000. B. $5,000. C. $7,000. D. $10,000. E. $12,000. 17. A gift to a not-for-profit school that is not restricted by the donor is credited to: A. Fund Balance. B. Deferred Revenues. C. Contribution Revenues. D. Nonoperating Revenues. E. Encumbrances. 17. A gift to a not-for-profit school that is not restricted by the donor is credited to: A. Fund Balance. B. Deferred Revenues. C. Contribution Revenues. D. Nonoperating Revenues. E. Encumbrances. 18. Which entry would be the correct entry on the donor's books when the donor relinquishes control of an asset that it contributes to a not-for-profit organization? A. Option A B. Option B C. Option C D. Option D E. Option E 18. Which entry would be the correct entry on the donor's books when the donor relinquishes control of an asset that it contributes to a not-for-profit organization? A. Option A B. Option B C. Option C D. Option D E. Option E 19. Which entry would be the correct entry to record pledges of $100,000 to a public television fundraiser? The public television organization estimates that 5% of the funds will be uncollectible. A. Option A B. Option B C. Option C D. Option D E. Option E 19. Which entry would be the correct entry to record pledges of $100,000 to a public television fundraiser? The public television organization estimates that 5% of the funds will be uncollectible. A. Option A B. Option B C. Option C D. Option D E. Option E 20. In not-for-profit accounting, an acquisition occurs when one not-for-profit organization obtains: A. Significant influence over another not-for-profit organization. B. The direct ability to determine the direction of management of another not-for-profit organization. C. The indirect ability to direct the policies of management of another not-for-profit organization. D. Control over another not-for-profit organization. E. None of the above. An acquisition can only occur for profit-oriented organizations. 20. In not-for-profit accounting, an acquisition occurs when one not-for-profit organization obtains: A. Significant influence over another not-for-profit organization. B. The direct ability to determine the direction of management of another not-for-profit organization. C. The indirect ability to direct the policies of management of another not-for-profit organization. D. Control over another not-for-profit organization. E. None of the above. An acquisition can only occur for profit-oriented organizations. 21. Which of the following is not true about a merger of two not-for-profit organizations? A. The two organizations will continue to legally exist but there will be a new governing board. B. Neither organization is considered to be acquired. C. Identifiable assets and liabilities are not adjusted to their fair values at the date of the merger. D. The two entities will together form an entirely new organization with a new governing board. E. There will be no acquisition value or goodwill determination. 21. Which of the following is not true about a merger of two not-for-profit organizations? A. The two organizations will continue to legally exist but there will be a new governing board. B. Neither organization is considered to be acquired. C. Identifiable assets and liabilities are not adjusted to their fair values at the date of the merger. D. The two entities will together form an entirely new organization with a new governing board. E. There will be no acquisition value or goodwill determination. 22. What is the appropriate account to credit when estimating a portion of health care organization receivables that will prove to be uncollectible? A. Bad Debt Expense. B. Allowance for Uncollectible Accounts. C. Patient Service Revenues. D. Accounts Receivable. E. Contractual Adjustments. 22. What is the appropriate account to credit when estimating a portion of health care organization receivables that will prove to be uncollectible? A. Bad Debt Expense. B. Allowance for Uncollectible Accounts. C. Patient Service Revenues. D. Accounts Receivable. E. Contractual Adjustments. Essay Questions 23. Give several examples of voluntary health and welfare organizations. 23 Examples of voluntary health and welfare organizations include: (1) Save the Children, (2) United Way, (3) March of Dimes, (4) Boy Scouts, (5) Girl Scouts, (6) YMCA, (7) YWCA, and (8) Greenpeace. 24. What are the objectives of accounting for a not-for-profit organization? 24 The objectives of accounting for a not-for-profit organization are: (1) to provide contributors and potential contributors with a means of evaluating the use of resources by the organization and (2) to disclose how resources were acquired and used to accomplish the objectives of the organization. 25. What term is used by voluntary health and welfare organizations for contributions 25The term used by voluntary health and welfare organizations for contributions is public support (a nonrevenue source of assets). 26. What financial statements would normally be prepared by a voluntary health and welfare organization? 26 A voluntary health and welfare organization would prepare the following financial statements: (A.) Statement of Financial Position (B.) Statement of Activities and Changes in Net Assets (C.) Statement of Cash Flows (D.) Statement of Functional Expenses 27. For a not-for-profit organization, when is recognition of contributions of artworks and historical treasures not required? 27GAAP exempts the recording of gifts of artworks and historical treasures if: (1) they are added to a collection for public exhibition, education, or research; (2) they are protected and preserved; and (3) if they are ever sold, any receipts will be used to acquire other collection items. 28. The Home incurred the following liabilities: $110,000 salaries, $30,000 medical equipment, $10,000 utilities expense. Prepare the journal entries for these transactions. 28. The Home incurred the following liabilities: $110,000 salaries, $30,000 medical equipment, $10,000 utilities expense. Prepare the journal entries for these transactions. 29. A not-for-profit organization provides the following information for the year: Required: Prepare the journal entries for these transactions. 29. A not-for-profit organization provides the following information for the year: Required: Prepare the journal entries for these transactions.

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