Chap014a - Chapter 14 - Accounting for Not-for-Profit...

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Chapter 14 - Accounting for Not-for-Profit Organizations Chapter 14 Accounting for Not-for-Profit Organizations Answer Key 1. Under current accounting and reporting standards nongovernmental, not-for-profit organizations (NPOs) must utilize the fund accounting structure set forth in the AICPA Audit and Accounting Guide Not-for-Profit Organizations . FALSE 2. A voluntary health and welfare organization (VHWO) is a type of NPO that depends primarily on charges for services as a source of revenue, rather than on contributions from the public at large and provides health and welfare services to the public for a nominal or no fee. FALSE 3. Not-for-profit organizations should be conservative and record pledges as support (contributions) only when received in cash. FALSE 4. Cash received by a nongovernmental NPO in year 1 that the donor stipulates is to cover operating expenses of the following year should be recognized as an "increase in temporarily restricted net assets" in year 1 and as "net assets released from restrictions" in year 2. TRUE 5. Donated services should be recorded as contributions by a nongovernmental, not-for-profit organization if material, and if they meet the criteria set out in SFAS No. 116 . TRUE 6. SFAS No. 117 requires that support from special events, if related to the central ongoing and major activities of the organization, and related direct costs, be reported at their gross amounts in the statement of activities rather than reporting the special events support net of direct costs. TRUE 7. Depreciation expense is reported in the statement of activities prepared by nongovernmental, not-for-profit organizations. TRUE 8. Supporting services expenses include fund-raising and management and general expenses that are not directly attributable to specific programs. TRUE 9. Contributions received in a prior period and restricted by the donor for construction of a building were reported as increases to "temporarily restricted net assets" in the period 14-1
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Chapter 14 - Accounting for Not-for-Profit Organizations received. When the building is constructed in a subsequent period an NPO would report "contributions" for the amount released from restrictions. FALSE 10. The statement of activities for an NPO must be prepared exactly as prescribed by the Financial Accounting Standards Board in SFAS No. 117 . FALSE
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Chap014a - Chapter 14 - Accounting for Not-for-Profit...

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