CH 19 Not For Profit Entities

Chapter 19 - Not-For-Profit Entities
Chapter 19
Not-For-Profit Entities

Multiple Choice Questions

1. Which rule-making body is currently setting standards of financial reporting for priate
not-for-profit uniersities and for public !goernmental" uniersities#

$. %ption $
&. %ption &
C. %ption C
'. %ption '

(. Net assets restricted as to time or purpose should be classified as)
*. temporarily restricted.
**. permanently restricted.
$. * only
&. ** only
C. &oth * and **
'. Neither * nor **

19-1
+. $ not-for-profit organi,ation receied a donation temporarily restricted as to use. -he
donated amount .as later spent in accordance .ith the restriction. *n .hich category!ies" of
net assets should the related reenues and e/penses be recogni,ed#

$. %ption $
&. %ption &
C. %ption C
'. %ption '

0. $ccording to F$1& 9+2 34ecognition of 'epreciation by Not-For-Profit !NFP" Entities23
NFP entities should recogni,e depreciation)
*. on all long-lied tangible assets.
**. on all long-lied intangible assets.
$. * only
&. ** only
C. &oth * and **
'. Neither * nor **

5. -he term 3restricted3 as used in uniersity accounting refers to a constraint on the use of
funds .hich has been)
*. internally imposed.
**. e/ternally imposed.
$. * only
&. ** only
C. Either * or **
'. Neither * nor **

19-(
6. $ccording to 1tatement of Financial $ccounting 1tandards 1172 the statement of financial
position of a priate uniersity should report the e/cess of the uniersity8s assets oer its
liabilities as)
$. fund balance.
&. unrestricted and restricted fund balance.
C. retained earnings.
'. unrestricted2 temporarily restricted2 and permanently restricted net assets.

7. Which of the follo.ing is an e/ample of olunteer serices receied by a not-for-profit
entity that should be recogni,ed as reenue#
*. 1erices re9uiring speciali,ed skills2 proided by indiiduals .ith those skills2 that
other.ise .ould hae to be purchased.
**. 1erices of lay faculty at a priate uniersity operated by a religious order.
***. 1erices that create or enhance non-financial assets2 regardless of .hether or not they
re9uire speciali,ed skills.
$. * only
&. * and *** only
C. ** and *** only
'. *2 **2 and ***

:. *n a uniersity2 class cancellation refunds of tuition and fees should be recorded as)
*. a reduction of reenue from tuition and fees.
**. a reduction of accounts receiable.
$. * only
&. ** only
C. Either * or **
'. Neither * nor **

19-+
9. Which of the follo.ing recognition and measurement bases best summari,es the usual
treatment of current contributions to priate not-for-profit entities in accordance .ith F$1&
116#

$. %ption $
&. %ption &
C. %ption C
'. %ption '

1;. $ccording to F$1& 1(02 not-for-profit entities should report inestments in the financial
statements at)
*. fair market alue.
**. lo.er of cost or market.
$. * only
&. ** only
C. Either * or **
'. Neither * nor **

11. *nestment income for not-for-profit entities may include)
*. interest from debt inestments.
**. diidends from e9uity inestments.
***. changes in the fair alues of both debt and e9uity inestments.
$. * only
&. * and ** only
C. * and *** only
'. *2 **2 and ***

19-0
1(. $ priate uniersity receied <(:;2;;; from student tuition and fees for the year (;;9
summer session. -he session began on =une (;2 (;;92 and ended on =uly +;2 (;;9. -he
uniersity8s fiscal year end is =une +;. $ccording to the $*CP$ College and >niersity $udit
?uide2 ho. should the uniersity report the <(:;2;;; of receipts in its financial statements for
the year ended =une +;2 (;;9#
$. Current reenue of <(:;2;;;.
&. Current reenue of <7;2;;; and deferred reenue of <(1;2;;;.
C. 'eferred reenue of <(:;2;;;.
'. 4estricted current reenue of <(:;2;;;.

1+. $ssume that a priate uniersity collects tuition and fees at the beginning of summer
school2 in .hich t.o .eeks are offered in the first fiscal year and the remaining si/ .eeks are
offered in the second fiscal year. $ccording to the approach recommended by the National
$ssociation of College and >niersity &usiness %fficers !N$C>&%"2 the uniersity .ould)
$. record the collections as a debit to Cash and a credit to 'eferred 4eenue for the entire
amount of the collections.
&. record the collections as a debit to Cash and a credit to 4estricted current reenue for the
entire amount of the collections.
C. account for the entire tuition and fees as reenue in the first fiscal period.
'. recogni,e reenue in the first fiscal period for t.o-eighths of the tuition and fees and
record si/-eighths of the collections as a deferred reenue.

10. $ priate uniersity offers graduate assistantships to 9ualified students each year. *n
e/change for the .aier of tuition2 graduate assistants are re9uired to assist faculty members
.ith research and other actiities. $ssume a graduate assistant receied a <02;;; tuition
.aier for the current academic year. &ased on these facts2 the uniersity should record
$. tuition reenues of <02;;; and e/penditures of <02;;;.
&. tuition reenues of <; and e/penditures of <;.
C. tuition reenues of <02;;; and e/penditures of <;.
'. tuition reenues of <02;;; and a reduction of tuition reenues of <02;;;.

19-5
15. For the year ended =une +;2 (;;92 a uniersity assessed its students a total of <02;;;2;;;
for tuition and fees. *ncluded in this amount .as <+;;2;;; of tuition remissions a.arded to
graduate teaching assistants2 and <15;2;;; of scholarships a.arded to undergraduate students.
-uition and fees totaling <+255;2;;; .ere collected during the year ended =une +;2 (;;9.
What amount should be reported in the unrestricted fund as net reenue from tuition and fees
for the year ended =une +;2 (;;9#
$. <02;;;2;;;
&. <+255;2;;;
C. <+27;;2;;;
'. <+2:5;2;;;

16. $ priate not-for-profit uniersity generally must depreciate all tangible fi/ed assets2
e/cept)
*. .orks of art and other historical treasures.
**. administration buildings.
$. * only
&. ** only
C. &oth * and **
'. Neither * nor **

17. $ priate college receied an offer from a CP$ .ho is an alumnus to teach a one-semester
adanced accounting course at no cost. F$1& 116 prescribes that this contribution of serice)
$. need only be disclosed in the footnotes to the financial statements.
&. be recorded as an asset .ith an e9uialent amount recorded in the unrestricted fund
balance.
C. be recorded as a reenue .ith an e9uialent amount recorded as an e/penditure.
'. need not be recorded if the serice is for a period less than one academic year.

1:. *n accordance .ith F$1& 1172 contributions from donors .hich are to be permanently
inested should be disclosed on the statement of actiities of a priate uniersity as an
increase in)
$. Permanently restricted net assets.
&. Permanently restricted fund balance.
C. Endo.ment fund balance.
'. 'eferred reenues.

19-6
19. For the year ended =une +;2 (;;92 a priate college receied contributions from alumni
.hich .ere restricted for faculty research stipends to be a.arded during the ne/t fiscal year.
For the year ended =une +;2 (;;92 these contributions should be disclosed on the statement of
actiities of the priate college as an increase in)
$. the fund balance of the restricted current fund.
&. temporarily restricted net assets.
C. deferred reenues.
'. temporarily restricted fund balance.

(;. $ priate2 not-for-profit uniersity should prepare .hich of the follo.ing financial
statements#

$. *2 **2 and ***.
&. **2 ***2 and *@.
C. *2 **2 and *@.
'. **2 ***2 and @.

(1. >nrestricted gifts and endo.ment income of a priate uniersity are reported as
$. increases in the unrestricted current fund balance on the statement of changes in fund
balances.
&. unrestricted reenues on the statement of current funds reenues2 e/penditures2 and other
changes.
C. unrestricted reenues on the statement of actiities.
'. increases in the unrestricted current fund balance on the statement of actiities.

19-7
((. %ne of the maAor obAecties of F$1& 117 is to
$. emphasi,e the different fund structures that currently e/ist for all priate2 nonprofit
organi,ations.
&. change the reporting for goernmental organi,ations so that their reporting is comparable
to that of priate2 nonprofit organi,ations.
C. report combined financial statements2 instead of indiidual fund financial statements2 for
all priate2 nonprofit organi,ations.
'. bring about greater uniformity in the financial statements of all priate2 not-for-profit
organi,ations.

(+. $ not-for-profit priate college in @irginia created a separate foundation responsible for
obtaining financial support from alumni and others. Foundation assets are used for the benefit
of the college. 'onations made to the foundation and subse9uently transferred to the college
should be)
$. recogni,ed as reenues by the foundation .hen receied2 and as reenues of the college
.hen transferred.
&. recogni,ed as reenues by the foundation .hen receied and as e/penses by the foundation
.hen transferred.
C. recogni,ed both as a change in its interest in the foundation and as reenues by the college
.hen the donation is receied by the foundation.
'. recogni,ed as an increase in net assets of the foundation and as reenues of the college
.hen the donation is receied by the college.

(0. F$1& 9+)
$. guides depreciation.
&. guides accounting for contributions.
C. establishes financial display re9uirements.
'. establishes the accounting for inestments.

19-:
(5. %n the statement of operations prepared for a priate2 not-for-profit hospital2 patient
serice reenue earned during the year is reported net of amounts for .hich of the follo.ing
items#
*. Contractual adAustments
**. &ad debts e/pense
$. * only
&. ** only
C. * and **
'. Neither * nor **

(6. $ priate2 not-for-profit hospital receied a cash contribution of <1;;2;;; from 1amantha
Bicks on Noember 102 (;;:. Cs. Bicks specified the money be used to ac9uire e9uipment.
%n 'ecember +12 (;;:2 the hospital had not e/pended any of Cs. Bicks8 contribution. %n the
statement of changes in net assets for the year ended 'ecember +12 (;;:2 the hospital should
report the contribution as a <1;;2;;; increase in
$. temporarily restricted net assets.
&. unrestricted net assets.
C. fund balance.
'. deferred reenue.

(7. >nrestricted current funds of a priate uniersity designated by the goerning board for a
specific future purpose should be reported as part of)
$. unrestricted net assets.
C. board-restricted net assets.
'. term endo.ments.

(:. $ priate2 not-for-profit geographic society receied cash contributions .hich .ere
restricted by the donors for the ac9uisition of fi/ed assets. *n .hich section of the statement of
cash flo.s .ould these cash contributions be reported#
$. Financing actiities
&. *nesting actiities
C. %perating actiities
'. Capital and related financing actiities

19-9
(9. %n the statement of actiities for a priate2 not-for-profit literary society2 e/penses
decrease .hich of the follo.ing classes of net assets#
*. temporarily restricted net assets
**. unrestricted net assets
$. * only
&. ** only
C. Either * or **
'. Neither * nor **

+;. &ridger Bospital2 .hich is operated by a religious organi,ation2 proides charity care for
the indigent liing in the region sered by the hospital. Bo. should &ridger report the amount
of its charity care on its financial statements#
$. *n the notes to the financial statements only.
&. $s unrestricted reenues on the statement of operations.
C. $s net patient serice reenue and as an e/pense2 e9ual to the net patient serice reenue2
on the statement of operations.
'. $s temporarily restricted reenue on the statement of operations.

+1. -he goerning board of 1amaritan Bospital2 .hich is operated by a religious organi,ation2
designated <5;;2;;; of cash for future e/pansion of the hospital. %n the hospital8s balance
sheet2 the cash designated for future plant e/pansion .ould be disclosed in .hich of the
follo.ing classes of net assets#
$. -emporarily restricted net assets
&. >nrestricted net assets
C. Plant replacement and e/pansion.
'. &oard designated net assets

+(. ?ood Care Bospital2 .hich is operated by a religious organi,ation2 receied contributions
of <12;;;2;;; from donors .ho stipulated that the cash be used to construct an addition to the
hospital. $s of the balance sheet date2 none of the contributions had been e/pended for
construction. %n the hospital8s balance sheet2 the cash contributions .ould be disclosed in
.hich of the follo.ing classes of net assets#
&. 'onor restricted net assets
C. $ssets .hose use is limited
'. Permanently restricted net assets

19-1;
++. $ priate2 not-for-profit hospital receied contributions of <5;2;;; from donors on =une
152 (;;9. -he donors stipulated that their contributions be used to purchase e9uipment for the
hospital. $s of =une +;2 (;;92 the end of the hospital8s fiscal year2 <1(2;;; of the contributions
had been spent on e9uipment ac9uisitions. *n the hospital8s general fund2 .hat account .ould
be credited to recogni,e the release of the restrictions on the temporarily restricted
contributions used to ac9uire e9uipment#
$. 4eenue released from e9uipment ac9uisition restriction
&. %ther financing sources
C. Net assets released from e9uipment ac9uisition restriction
'. >nrestricted net assets released from e9uipment ac9uisition restriction

+0. $ priate2 not-for-profit hospital uses a fund structure .hich includes a general fund and
donor restricted funds. -he hospital8s reenues from nursing programs and gift shops should
be accounted for in the)
$. specific purpose fund.
&. restricted current fund.
C. general fund.
'. time-restricted fund.

donor restricted funds. Contributions receied from donors for research to be conducted by
the hospital should be accounted for in the)
&. time-restricted fund.
C. general fund.
'. restricted current fund.

+6. %n =une +;2 (;;92 a oluntary health and .elfare organi,ation receied pledges from
donors amounting to <5;2;;;. -he donors did not place any time or use restrictions on the
amount pledged. *t .as estimated that 1; percent of the pledges .ould not be collected. Bo.
should the oluntary health and .elfare organi,ation report these pledges on its financial
statements prepared at the end of its fiscal year2 =une +;2 (;;9#
$. $s fund balance for <052;;;.
&. $s contribution reenue-unrestricted for <052;;;.
C. $s contribution reenue-unrestricted for <5;2;;;.
'. $s fund balance-unrestricted for <5;2;;;.

19-11
+7. -he restricted funds of a not-for-profit hospital are often termed 3DDDDDD3 funds because
they must hold the restricted assets and transfer e/pendable resources to the general fund for
e/penditure.
$. specific
&. controlled
C. limited
'. holding

+:. $ll restricted funds of priate2 not-for-profit hospitals account for resources)
$. .hose use is restricted by the donor.
&. receied and e/pended in the hospital8s primary health care mission.
C. that are only temporarily restricted.
'. receied or pledged by donors for use in future periods.

$ donor agrees to contribute <52;;; per year at the end of each of the ne/t fie years to a
oluntary health and .elfare organi,ation. -he donor did not place any use restrictions on the
amount pledged. -he stream of the payments is discounted at 6 percent. -he first payment of
<52;;; is receied at the end of the first year. -he present alue factor for a fie-payment
annuity due on =une +;2 (;;92 at 6 percent is 0.(1(0.

+9. &ased on the preceding information2 the Aournal entry to recogni,e present alue at the
time the pledge is receied includes)
$. a credit to Pledges 4eceiableE-emporarily 4estricted for <(52;;;.
&. a debit to ContributionsE-emporarily 4estricted for <(12;6(.
C. a debit to Pledges 4eceiableE-emporarily 4estricted for <(12;6(.
'. a credit to ContributionsE-emporarily 4estricted for <(52;;;.

0;. &ased on the preceding information2 at the end of the first year2 the pledge increased
unrestricted net assets by)
$. <(52;;;.
&. <(12;6(.
C. <02(1(.
'. <52;;;.

19-1(
01. &ased on the preceding information2 the increase in present alue of the contributions
receiable recogni,ed at the end of the first year e9uals)
$. <52;;;.
&. <12(60.
C. <0(1(.
'. <7:7.

0(. $ priate2 not-for-profit hospital receied a donation of medicine from the FGH
Pharmaceutical Company on Carch 152 (;;9. -he cost of the medicine to the company .as
<662;;;2 and its market alue .as <11;2;;;. -.enty percent of the medicine .as used by the
hospital during the year ended =une +;2 (;;9. %n the hospital8s statement of operations for the
year ended =une +;2 (;;92 the contribution of medicine .ould increase operating reenues by
$. <662;;;.
&. <11;2;;;.
C. <5(2:;;.
'. <::2;;;.

0+. *n accordance .ith F$1& 1162 contributions of serices are recogni,ed as increases in
unrestricted net assets by a priate2 not for profit entity if .hich of the follo.ing criteria are
satisfied#
*. -he serices receied create or enhance nonfinancial assets.
**. -he serices re9uire speciali,ed skills2 are proided by indiiduals possessing those skills2
and .ould typically need to be purchased if not proided by donations.
***. -he serices .ill be performed .ithin the current fiscal year.
$. * or **.
&. * or ***.
C. ** or ***.
'. *2 **2 ***.

19-1+
00. -he disclosure2 3net assets released from restrictions23 is reported on .hich of the
follo.ing financial statements for a oluntary health and .elfare organi,ation#
*. -he statement of cash flo.s.
**. -he statement of actiities.
$. * only
&. ** only
C. &oth * and **.
'. Neither * nor **.

05. ?ood Faith Bospital2 operated by a religious organi,ation2 billed patients <02;;;2;;; for
serices rendered during the year ended =une +;2 (;;9. -he hospital reali,ed cash of
<+25;;2;;; from the patient billings because of the follo.ing reductions)
!1" contractual adAustments of <10;2;;; granted to priate insurance companies and to the
federal goernmentI and
!(" uncollectible accounts receiable of <+6;2;;;.
%n the statement of operations prepared for the year ended =une +;2 (;;92 ?ood Faith
Bospital should report net patient serice reenue of)
$. <+25;;2;;;.
&. <+2:6;2;;;.
C. <02;;;2;;;.
'. <+260;2;;;.

06. 'uring the fiscal year ended =une +;2 (;;92 a priate2 not-for-profit hospital ac9uired
e9uipment costing <752;;;2 .ith cash contributed by donors .ho restricted their contributions
for this purpose. %n the hospital8s statement of cash flo.s for the year ended =une +;2 (;;92
the e9uipment ac9uisition should be reported in .hich of the follo.ing sections#
*. %perating actiities
**. Financing actiities
***. *nesting actiities
$. *
&. **
C. ***
'. *2 **2 ***

19-10
07. 'uring the fiscal year ended =une +;2 (;;92 ?lobal Charities2 a oluntary health and
.elfare organi,ation2 receied unrestricted cash contributions of <5;;2;;; and temporarily
restricted cash contributions of <+;;2;;;. $ll of the temporarily restricted contributions .ere
restricted by the donors for e9uipment ac9uisitions. 'uring the year ended =une +;2 (;;92
e9uipment costing <(5;2;;; .as ac9uired .ith the restricted contributions. $s a result of
these t.o contributions2 ?lobal Charities8 statement of cash flo.s2 prepared for the year ended
=une +;2 (;;92 .ould report an increase in net cash proided by operating actiities of)
$. <5;;2;;;.
&. <:;;2;;;.
C. <75;2;;;.
'. <55;2;;;.

0:. $ oluntary health and .elfare organi,ation receied a <+;;2;;; contribution on $pril 152
(;;92 from a donor .ho stipulated the donation be inested permanently in stocks and bonds.
-he donor further stipulated earnings from the inestments be spent according to the .ishes
of the goerning board of the oluntary health and .elfare organi,ation. Earnings from the
inestments for the year ended =une +;2 (;;92 amounted to <62;;;. Bo. .ould the oluntary
health and .elfare organi,ation report this information for the year ended =une +;2 (;;9#
$. *ncrease in permanently restricted net assets of <+;62;;;.
&. *ncrease in permanently restricted net assets of <+;;2;;;2 and in temporarily restricted net
assets of <62;;;.
C. *ncrease in permanently restricted net assets of <+;;2;;;2 and in unrestricted net assets of
<62;;;.
'. *ncrease in permanently restricted net assets of <+;;2;;;2 and in board-designated net
assets of <62;;;.

09. Which financial statement is !are" re9uired for a oluntary health and .elfare organi,ation
.hich is not re9uired for a priate2 not-for-profit hospital#
*. $ statement of operations.
**. $ statement of functional e/penses.
$. * only
&. ** only
C. &oth * and **
'. Neither * nor **

19-15
5;. $ priate2 not-for-profit hospital e/pended <+52;;; of temporarily restricted assets to
ac9uire e9uipment. What account should be debited in the hospital8s plant replacement and
e/pansion fund as a result of the ac9uisition of the e9uipment#
$. Net $ssets 4eleasedEPlant $c9uisition.
&. Fund balance 4eleasedEPlant $c9uisition.
C. E9uipment.
'. Contribution 4eenue 4eleasedEPlant $c9uisition.

51. *n (;;92 a priate not-for-profit hospital receied a <(;;2;;; cash contribution to its
endo.ment fund. 'uring the year2 hospital administration inested <15;2;;; of the funds.
Which of the follo.ing statements regarding the effect of these transactions on the
preparation of the hospital8s statement of cash flo. is true#
$. -he <(;;2;;; contribution .ill appear in the inesting actiities section of the cash flo.
statement as a cash inflo..
&. -he <(;;2;;; contribution .ill appear in the financing actiities section of the cash flo.
C. -he <15;2;;; inestment .ill appear in the inesting actiities section of the cash flo.
'. -he <15;2;;; contribution .ill appear in the financing actiities section of the cash flo.

$ priate2 not-for-profit hospital receied a contribution of <0;2;;; on =une 152 (;;:. -he
donor restricted the contribution to funding research actiities currently being performed by
the hospital. For the year ended 'ecember +12 (;;:2 the hospital spent <+;2;;; of the
contribution on research actiities. -he hospital e/pended the remaining <1;2;;; on research
actiities in =anuary of (;;9.

5(. 4efer to the aboe information. %n the statement of cash flo.s prepared for the year
ended 'ecember +12 (;;:2 the eents described .ould increase net cash flo.s proided by
$. operating actiities by <0;2;;;.
&. financing actiities by <0;2;;;.
C. financing actiities by <1;2;;;.
'. operating actiities by <1;2;;;.

19-16
5+. 4efer to the aboe information. %n the statement of operations prepared for the year
ended 'ecember +12 (;;:2 the eents described .ould)
$. increase operating income by <+;2;;;.
&. hae no effect on operating income.
C. increase unrestricted net assets by <+;2;;;.
'. decrease unrestricted net assets by <+;2;;;.

50. 4efer to the aboe information. %n the statement of changes in net assets prepared for the
year ended 'ecember +12 (;;:2 the eents described .ould
$. increase temporarily restricted net assets by <1;2;;;.
&. decrease temporarily restricted net assets by <1;2;;;
C. increase unrestricted net assets by <1;2;;;.
'. decrease unrestricted net assets by <1;2;;;.

55. *n a priate2 not-for-profit hospital2 .hich fund .ould record cash and inestments .hich
hae been restricted by the goerning board for ac9uisitions of e9uipment and construction of
a ne. hospital addition#
$. -he plant replacement and e/pansion fund.
&. -he specific purpose fund.
C. -he endo.ment fund.
'. -he general fund.

56. -he goerning board of a hospital operated by a religious organi,ation designated
<+2;;;2;;; of cash to be used for plant e/pansion. -he cash .as inested in stocks and bonds
.hich earned <(5;2;;; of diidend and interest income. -he income from inestments should
be reported on the hospital8s statement of operations as an increase in)
&. operating income.
C. either temporarily restricted net assets or unrestricted net assets2 depending upon the nature
of the goerning board8s restrictions.
'. fund balance in the general fund.

19-17
57. $ oluntary health and .elfare organi,ation receied unrestricted cash donations of
<(;2;;; from donors .ho attended a dinner held for the benefit of the organi,ation. -he costs
of the dinner2 including room rental2 and other e/penses2 amounted to <72;;;. %n the
statement of actiities prepared for the oluntary health and .elfare organi,ation2 the
e/penses of the dinner should be)
$. reported as management and general e/penses.
&. netted against the <(;2;;; of contribution reenue.
C. reported as fund raising costs.
'. reported as programmatic e/penses.

5:. %n the statement of functional e/penses prepared for a oluntary health and .elfare
organi,ation2 depreciation e/pense is allocated to
*. e/penses for program serices.
**. e/penses for supporting serices.
$. * only
&. ** only
C. &oth * and **
'. Neither * nor **

59. $ oluntary health and .elfare organi,ation deeloped and printed informational
materials .hich .ere intended to both educate the public about ho. its resources are used to
help people in need and to also appeal to the public for much needed support. *n this situation2
the cost of the informational materials should be
$. accounted for as fund-raising e/pense.
&. allocated to e/penses for program serices.
C. allocated bet.een e/penses for program serices and fund-raising e/pense.
'. accounted for as management and general e/pense.

6;. F$1& 117 re9uires that an 3other not-for-profit entity3 !%NP%" proide three financial
statements. Which of the follo.ing is N%- one among them#
$. $ statement of functional e/penses
&. $ statement of financial position
C. $ statement of actiities
'. $ statement of cash flo.s

19-1:
61. $ priate2 not-for-profit hospital receied the follo.ing restricted contributions and other
receipts during the year ended 'ecember +12 (;;:)

None of the contributions or other receipts .ere e/pended during the ended 'ecember +12
(;;:. For the year ended 'ecember +12 (;;:2 .hat amount .ould be reported on the
hospital8s statement of changes in net assets as an increase in temporarily restricted net
assets#
$. <125;;2;;;
&. <12(;;2;;;
C. <5;;2;;;
'. <+;;2;;;

6(. *n accordance .ith F$1& 1162 pledges2 .hich are temporarily restricted by donors2 are
reported as increases in temporarily restricted net assets on the statement of actiities of a
oluntary health and .elfare organi,ation .hen the
$. pledges are receied in cash.
&. cash receied from the pledges is e/pended in accordance .ith the donors8 .ishes.
C. pledges are made by the donors.
'. cash is receied from the pledges is transferred to unrestricted net assets.

6+. $ oluntary health and .elfare organi,ation receied <(;;2;;; of pledges from donors on
February 152 (;;9. -he donors did not place either time or use restrictions on the amount
pledged. -he goerning board estimated that 1; percent of the pledges .ould be uncollectible.
'uring the remainder of fiscal (;;92 cash receied from pledges amounted to <1:02;;;. For
the year ended =une +;2 (;;92 .hat amount should the oluntary health and .elfare
organi,ation report as Contributions->nrestricted#
$. <;
&. <(;;2;;;
C. <1:02;;;
'. <1:;2;;;

19-19
60. $ oluntary health and .elfare organi,ation reports pledges receiable on its statement of
financial position at the present alue of the future cash collections. Bo. is the increase in the
present alue of the pledges receiable2 .hich is due to the passage of time2 reported on the
oluntary health and .elfare organi,ation8s statement of actiities#
$. $s interest income-temporarily restricted.
&. $s an increase in pledges receiable-temporarily restricted.
C. $s an increase in contributions-temporarily restricted.
'. $s an increase in deferred reenue-temporarily restricted.

?olden Path2 a labor union2 had the follo.ing receipts and e/penses for the year ended
'ecember +12 (;;:)

-he union8s constitution proides that 1( percent of the per capita dues be designated for the
strike insurance fund to be distributed for strike relief at the discretion of the union8s e/ecutie
board.

65. &ased on the information proided2 in ?olden Path8s statement of actiities for the year
ended 'ecember +12 (;;:2 .hat amount should be reported under the classification of
reenue from unrestricted funds#
$. <9:;2;;;
&. <121;;2;;;
C. <12(1;2;;;
'. <12;(;2;;;

19-(;
program serices#
$. <7(;2;;;
&. <91;2;;;
C. <00;2;;;
'. <76;2;;;

supporting serices#
$. <15;2;;;
&. <7(;2;;;
C. <00;2;;;
'. <(9;2;;;

6:. &ased on the information proided2 in ?olden Path8s statement of actiities for the year
ended 'ecember +12 (;;:2 .hat amounts should be reported under the classifications of
temporarily and permanently restricted net assets#
$. <; and <11;2;;; respectiely.
&. <11;2;;; and <; respectiely.
C. <6;2;;; and <5;2;;; respectiely.
'. <5;2;;; and <6;2;;; respectiely.

19-(1

Jocal 1erices2 a oluntary health and .elfare organi,ation had the follo.ing classes of net
assets on =uly 12 (;;:2 the beginning of its fiscal year)

'uring the year ended =une +;2 (;;92 the follo.ing eents occurred)
!1" *t purchased e9uipment2 costing <1;;2;;;2 .ith contributions restricted for this purpose.
-he contributions had been receied from donors during =une of (;;:.
!(" *t receied <1+;2;;; of cash donations .hich .ere restricted for research actiities.
'uring the year ended =une +;2 (;;92 <9;2;;; of the contributions .ere e/pended on
research.
!+" *t sold inestments classified in the permanently restricted class for a loss of <0;2;;;.
'iidends and interest income earned on the inestments amounted to <7;2;;;. -here .ere
no restrictions on ho. inestment income .as to be used.
!0" *t receied cash contributions of <(;;2;;; from donors .ho did not place either time or
use restrictions upon their donations.
!5" E/penses2 e/cluding depreciation e/pense2 for program serices and supporting serices
incurred during the year ended =une +;2 (;;92 amounted to <(6;2;;;.
!6" 'epreciation e/pense for the year ended =une +;2 (;;92 .as <:;2;;;.

69. 4efer to the aboe information. $t =une +;2 (;;92 the amount of permanently restricted
net assets reported on the statement of financial position .ould be)
$. <12;7;2;;;.
&. <12;+;2;;;.
C. <12;;;2;;;.
'. <96;2;;;.

7;. 4efer to the aboe information. %n the statement of actiities for the year ended =une +;2
(;;92 temporarily restricted net assets)
$. increased <1+;2;;;.
&. increased <0;2;;;.
C. decreased <1;;2;;;.
'. decreased <6;2;;;.

19-((
71. 4efer to the aboe information. %n the statement of actiities for the year ended =une +;2
(;;92 reclassifications .ould be reported at
$. <19;2;;;.
&. <1;;2;;;.
C. <9;2;;;.
'. <(+;2;;;.

7(. 4efer to the aboe information. Which of the follo.ing statements is !are" correct about
the program and supporting e/penses that .ould be reported on the statement of actiities for
*. Program and supporting e/penses should be reported at <+0;2;;;.
**. $ll of the program and supporting e/penses should be reported as a deduction from
unrestricted reenues and other support.
$. * only
&. ** only
C. * and **
'. Neither * nor **

-he transactions listed in the follo.ing 9uestions occurred in a priate2 not-for-profit hospital
during (;;:. For each transaction2 indicate its effect on the hospital8s statement of operations
for the year ended 'ecember +12 (;;:.

7+. Transaction: &illed patients for serices rendered.
Effect on Statement of Operations:
$. *ncreases operating income.
&. 'ecreases operating income.
C. -he transaction is reported on the statement of operations2 but there is no effect on
operating income.
'. -he transaction is not reported on the statement of operations.

19-(+
70. Transaction: $ gain .as reali,ed from the sale of endo.ment inestments. -he gain is
not e/pendable.
operating income.

75. Transaction: 'epreciation e/pense .as recorded for the year.
operating income.

76. Transaction: -he goerning board designated assets for plant e/pansion.
C. -he eent is reported on the statement of operations2 but there is no effect on operating
income.
'. -he eent is not reported on the statement of operations.

77. Transaction: 4eceied contributions restricted by donors for research actiities.
operating income.

19-(0
7:. Transaction: E/pended 5; percent of the contributions restricted for research in the
preious item.
operating income.

79. Transaction: 4eceied contributions restricted by donors for e9uipment ac9uisition.
operating income.

:;. Transaction: $c9uired e9uipment .ith all of the contributions receied in the preious
item.
operating income.

:1. Transaction: Endo.ment income .as earned. -he donor placed no restrictions on the
inestment earnings.
operating income.

19-(5
:(. Transaction: 4eceied cash contribution from donor .ho stipulated the contribution be
permanently inested.
operating income.

:+. Transaction: $c9uired inestments .ith cash receied in the preious item.
operating income.

:0. Transaction: 4eceied tuition reenue from hospital nursing program and cash from sales
of goods in the hospital gift shop.
operating income.

:5. F$1& 117 re9uires that an %NP% proide three financial statements. Which of the
follo.ing is not one of them#
$. $ statement of financial position
&. $ statement of actiities
C. $ statement of cash flo.s
'. $ statement of functional e/penses

19-(6
:6. 4eporting re9uirements of other not-for-profit entities !%NP%s" are similar to those of
.hich of the follo.ing entities#
$. $ public uniersity
&. $ oluntary health and .elfare organi,ation
C. $n enterprise fund of a state or local goernment
'. $ hospital operated by a county goernment

Essay Questions

19-(7
:7. -he follo.ing information is contained in the funds .hich are used to account for the
transactions of the Bope Bospital2 .hich is operated by a nonprofit2 religious organi,ation.
-he balances in the accounts are as of =une +;2 (;;92 the end of the hospital8s fiscal year.
Credit amounts are in parentheses.

$dditional information)
-he <602;;; in the specific purpose fund is restricted for research actiities to be conducted
by the hospital.
4e9uired)
Prepare a balance sheet for Bope Bospital as of =une +;2 (;;9.

19-(:
Priate Not-For-Profit !NFP" Entities.
1elect from this list of terms to ans.er the follo.ing 9uestions.

*ndicate your choice by entering the letter corresponding to the correct term. $ term may be
used more than once or not at all.

::. 34esponsible for establishing accounting standards for priate NFP entities3 describes
.hich term listed aboe#

19-(9
:9. 3Classification of an endo.ment contribution3 describes .hich term listed aboe#

9;. 34eported as an e/penditure of the fund using plant and e9uipment3 describes .hich term
listed aboe#

91. 3Financial statement of a priate NFP entity3 describes .hich term listed aboe#

9(. 3-angible fi/ed assets not depreciated by a priate college or uniersity3 describes .hich
term listed aboe#

19-+;
9+. 3&asis for measuring inestments in financial statements3 describes .hich term listed
aboe#

90. 3Classification of inestment income from endo.ment inestments if there are no donor
restrictions as to income3 describes .hich term listed aboe#

95. 3Classification of contributions restricted by purpose3 describes .hich term listed aboe#

96. 3&asis for measuring e/penditures for contributed serices re9uiring special skills3
describes .hich term listed aboe#

19-+1
97. 3&asis for measuring contributions3 describes .hich term listed aboe#

9:. 3Net asset classifications per F$C 63 describes .hich term listed aboe#

99. 3&asis of accounting for priate NFPs3 describes .hich term listed aboe#

1;;. -he CF% of a 3Not-for-Profit3 hospital is making a presentation at your college. -he
presentation is for &usiness and Bealth-1cience maAors. 'uring the presentation the CF%
mentions assets being reported 3aboe the line.3 %n the .ay out your roommate a health-
science maAor asks2 you an accounting maAor2 to e/plain .hat the CF% .as referring to. What
do you respond#

19-+(
-he transactions described in the follo.ing 9uestions occurred in a oluntary health and
.elfare organi,ation during the year ended 'ecember +12 (;;:. For each transaction2 indicate
its effect!s" on the organi,ation8s statement of actiities prepared for the year ended 'ecember
+12 (;;:. Jist all effects of transactions affecting more than one class of net assets. *ndicate
your choice!s" by entering the letter corresponding to the effects listed here)

1;1. 4eceied cash contributions restricted by donors for research.

1;(. *ncurred fund-raising costs.

19-++
1;+. 'epreciation e/pense for the year .as recorded.

1;0. -he goerning board designated assets for plant e/pansion.

1;5. $ gain .as reali,ed from the sale of securities .hich .ere permanently inested. -he
gain is restricted as to use.

1;6. Endo.ment income .as earned. -he donor specified that the income be used for
community serice.

19-+0
1;7. 4eceied a multi-year pledge2 .ith cash being receied this year and for the ne/t 0 years.
'onors did not place any use restrictions on ho. the pledges .ere to be spent.

1;:. *ncome .as earned from inestments of assets that the board preiously designated for
plant e/pansion.

1;9. 4eceied pledges from donors .ho placed no time or use restrictions on ho. the pledges
.ere to be spent.

11;. 4eceied cash contributions restricted by donors for e9uipment.

19-+5
111. $c9uired e9uipment .ith all of the contributions preiously receied from donors for
e9uipment purchases.

11(. E/pended 75 percent of the contributions preiously receied from donors for research.

11+. Follo.ing are four independent transactions or eents that relate to a oluntary health
and .elfare organi,ation)
1. Cash disbursement of <052;;; .as made from the general fund8s unrestricted assets for the
purchase of ne. e9uipment for the organi,ation.
(. -he organi,ation receies an unrestricted cash gift of <:;2;;; from a donor.
+. Common stock inestments .ith a total carrying alue of <1;;2;;; .ere sold by a
permanently restricted endo.ment fund for <11(2;;; before any diidends .ere earned on
these stocks. -he gain is donor-restricted to remain in the permanently restricted fund.
0. ?eneral obligation bonds payable .ith a face amount of <75;2;;; .ere sold at par2 .ith the
proceeds re9uired to be used solely for construction of a ne. building. -his building .as
completed at a total cost of <75;2;;;2 and the total amount of bond issue proceeds .as
disbursed to.ard this cost. 'isregard interest capitali,ation.
4e9uired)
For each of these transactions or eents2 prepare Aournal entries specifying the affected funds
and sho.ing ho. these transactions or eents should be recorded by the organi,ation.

19-+6
110. -he F$1& has issued fie standards that hae direct applicability to priate2 not-for-
profit entities. From the list gien belo.2 match each standard to the area it deals .ith.

Chapter 19 Not-For-Profit Entities $ns.er Key

Multiple Choice Questions

19-+7
1. Which rule-making body is currently setting standards of financial reporting for priate
not-for-profit uniersities and for public !goernmental" uniersities#

$. %ption $
&. %ption &
C. %ption C
! %ption '

AACSB: Reflective Thinking
AICPA: Decision Making

(. Net assets restricted as to time or purpose should be classified as)
*. temporarily restricted.
**. permanently restricted.
"! * only
&. ** only
C. &oth * and **
'. Neither * nor **


19-+:
+. $ not-for-profit organi,ation receied a donation temporarily restricted as to use. -he
donated amount .as later spent in accordance .ith the restriction. *n .hich category!ies" of
net assets should the related reenues and e/penses be recogni,ed#

$. %ption $
&. %ption &
C! %ption C
'. %ption '


0. $ccording to F$1& 9+2 34ecognition of 'epreciation by Not-For-Profit !NFP" Entities23
NFP entities should recogni,e depreciation)
*. on all long-lied tangible assets.
**. on all long-lied intangible assets.
"! * only
&. ** only
C. &oth * and **
'. Neither * nor **


19-+9
5. -he term 3restricted3 as used in uniersity accounting refers to a constraint on the use of
funds .hich has been)
*. internally imposed.
**. e/ternally imposed.
$. * only
#! ** only
C. Either * or **
'. Neither * nor **


6. $ccording to 1tatement of Financial $ccounting 1tandards 1172 the statement of financial
position of a priate uniersity should report the e/cess of the uniersity8s assets oer its
liabilities as)
$. fund balance.
&. unrestricted and restricted fund balance.
C. retained earnings.
! unrestricted2 temporarily restricted2 and permanently restricted net assets.


7. Which of the follo.ing is an e/ample of olunteer serices receied by a not-for-profit
entity that should be recogni,ed as reenue#
*. 1erices re9uiring speciali,ed skills2 proided by indiiduals .ith those skills2 that
other.ise .ould hae to be purchased.
**. 1erices of lay faculty at a priate uniersity operated by a religious order.
***. 1erices that create or enhance non-financial assets2 regardless of .hether or not they
re9uire speciali,ed skills.
$. * only
&. * and *** only
C. ** and *** only
! *2 **2 and ***


19-0;
:. *n a uniersity2 class cancellation refunds of tuition and fees should be recorded as)
*. a reduction of reenue from tuition and fees.
**. a reduction of accounts receiable.
"! * only
&. ** only
C. Either * or **
'. Neither * nor **


9. Which of the follo.ing recognition and measurement bases best summari,es the usual
treatment of current contributions to priate not-for-profit entities in accordance .ith F$1&
116#

$. %ption $
&. %ption &
C. %ption C
! %ption '


1;. $ccording to F$1& 1(02 not-for-profit entities should report inestments in the financial
statements at)
*. fair market alue.
**. lo.er of cost or market.
"! * only
&. ** only
C. Either * or **
'. Neither * nor **


19-01
11. *nestment income for not-for-profit entities may include)
*. interest from debt inestments.
**. diidends from e9uity inestments.
***. changes in the fair alues of both debt and e9uity inestments.
$. * only
&. * and ** only
C. * and *** only
! *2 **2 and ***


1(. $ priate uniersity receied <(:;2;;; from student tuition and fees for the year (;;9
summer session. -he session began on =une (;2 (;;92 and ended on =uly +;2 (;;9. -he
uniersity8s fiscal year end is =une +;. $ccording to the $*CP$ College and >niersity $udit
?uide2 ho. should the uniersity report the <(:;2;;; of receipts in its financial statements for
$. Current reenue of <(:;2;;;.
&. Current reenue of <7;2;;; and deferred reenue of <(1;2;;;.
C! 'eferred reenue of <(:;2;;;.
'. 4estricted current reenue of <(:;2;;;.

AACSB: Analytic

1+. $ssume that a priate uniersity collects tuition and fees at the beginning of summer
school2 in .hich t.o .eeks are offered in the first fiscal year and the remaining si/ .eeks are
offered in the second fiscal year. $ccording to the approach recommended by the National
$ssociation of College and >niersity &usiness %fficers !N$C>&%"2 the uniersity .ould)
$. record the collections as a debit to Cash and a credit to 'eferred 4eenue for the entire
amount of the collections.
&. record the collections as a debit to Cash and a credit to 4estricted current reenue for the
entire amount of the collections.
C. account for the entire tuition and fees as reenue in the first fiscal period.
! recogni,e reenue in the first fiscal period for t.o-eighths of the tuition and fees and
record si/-eighths of the collections as a deferred reenue.

AACSB: Analytic

19-0(
10. $ priate uniersity offers graduate assistantships to 9ualified students each year. *n
e/change for the .aier of tuition2 graduate assistants are re9uired to assist faculty members
.ith research and other actiities. $ssume a graduate assistant receied a <02;;; tuition
.aier for the current academic year. &ased on these facts2 the uniersity should record
"! tuition reenues of <02;;; and e/penditures of <02;;;.
&. tuition reenues of <; and e/penditures of <;.
C. tuition reenues of <02;;; and e/penditures of <;.
'. tuition reenues of <02;;; and a reduction of tuition reenues of <02;;;.

AACSB: Analytic

15. For the year ended =une +;2 (;;92 a uniersity assessed its students a total of <02;;;2;;;
for tuition and fees. *ncluded in this amount .as <+;;2;;; of tuition remissions a.arded to
graduate teaching assistants2 and <15;2;;; of scholarships a.arded to undergraduate students.
-uition and fees totaling <+255;2;;; .ere collected during the year ended =une +;2 (;;9.
What amount should be reported in the unrestricted fund as net reenue from tuition and fees
for the year ended =une +;2 (;;9#
$. <02;;;2;;;
&. <+255;2;;;
C. <+27;;2;;;
! <+2:5;2;;;

AACSB: Analytic
AICPA: Measurement

16. $ priate not-for-profit uniersity generally must depreciate all tangible fi/ed assets2
e/cept)
*. .orks of art and other historical treasures.
**. administration buildings.
"! * only
&. ** only
C. &oth * and **
'. Neither * nor **


19-0+
17. $ priate college receied an offer from a CP$ .ho is an alumnus to teach a one-semester
adanced accounting course at no cost. F$1& 116 prescribes that this contribution of serice)
$. need only be disclosed in the footnotes to the financial statements.
&. be recorded as an asset .ith an e9uialent amount recorded in the unrestricted fund
balance.
C! be recorded as a reenue .ith an e9uialent amount recorded as an e/penditure.
'. need not be recorded if the serice is for a period less than one academic year.


1:. *n accordance .ith F$1& 1172 contributions from donors .hich are to be permanently
inested should be disclosed on the statement of actiities of a priate uniersity as an
increase in)
"! Permanently restricted net assets.
&. Permanently restricted fund balance.
C. Endo.ment fund balance.
'. 'eferred reenues.


19. For the year ended =une +;2 (;;92 a priate college receied contributions from alumni
.hich .ere restricted for faculty research stipends to be a.arded during the ne/t fiscal year.
For the year ended =une +;2 (;;92 these contributions should be disclosed on the statement of
actiities of the priate college as an increase in)
$. the fund balance of the restricted current fund.
#! temporarily restricted net assets.
C. deferred reenues.
'. temporarily restricted fund balance.


19-00
(;. $ priate2 not-for-profit uniersity should prepare .hich of the follo.ing financial
statements#

$. *2 **2 and ***.
&. **2 ***2 and *@.
C! *2 **2 and *@.
'. **2 ***2 and @.


(1. >nrestricted gifts and endo.ment income of a priate uniersity are reported as
$. increases in the unrestricted current fund balance on the statement of changes in fund
balances.
&. unrestricted reenues on the statement of current funds reenues2 e/penditures2 and other
changes.
C! unrestricted reenues on the statement of actiities.
'. increases in the unrestricted current fund balance on the statement of actiities.


((. %ne of the maAor obAecties of F$1& 117 is to
$. emphasi,e the different fund structures that currently e/ist for all priate2 nonprofit
organi,ations.
&. change the reporting for goernmental organi,ations so that their reporting is comparable
to that of priate2 nonprofit organi,ations.
C. report combined financial statements2 instead of indiidual fund financial statements2 for
all priate2 nonprofit organi,ations.
! bring about greater uniformity in the financial statements of all priate2 not-for-profit
organi,ations.


19-05
(+. $ not-for-profit priate college in @irginia created a separate foundation responsible for
obtaining financial support from alumni and others. Foundation assets are used for the benefit
of the college. 'onations made to the foundation and subse9uently transferred to the college
should be)
$. recogni,ed as reenues by the foundation .hen receied2 and as reenues of the college
.hen transferred.
#! recogni,ed as reenues by the foundation .hen receied and as e/penses by the foundation
.hen transferred.
C. recogni,ed both as a change in its interest in the foundation and as reenues by the college
.hen the donation is receied by the foundation.
'. recogni,ed as an increase in net assets of the foundation and as reenues of the college
.hen the donation is receied by the college.


(0. F$1& 9+)
"! guides depreciation.
&. guides accounting for contributions.
C. establishes financial display re9uirements.
'. establishes the accounting for inestments.


(5. %n the statement of operations prepared for a priate2 not-for-profit hospital2 patient
serice reenue earned during the year is reported net of amounts for .hich of the follo.ing
items#
*. Contractual adAustments
**. &ad debts e/pense
"! * only
&. ** only
C. * and **
'. Neither * nor **


19-06
(6. $ priate2 not-for-profit hospital receied a cash contribution of <1;;2;;; from 1amantha
Bicks on Noember 102 (;;:. Cs. Bicks specified the money be used to ac9uire e9uipment.
%n 'ecember +12 (;;:2 the hospital had not e/pended any of Cs. Bicks8 contribution. %n the
statement of changes in net assets for the year ended 'ecember +12 (;;:2 the hospital should
report the contribution as a <1;;2;;; increase in
"! temporarily restricted net assets.
&. unrestricted net assets.
C. fund balance.
'. deferred reenue.


(7. >nrestricted current funds of a priate uniersity designated by the goerning board for a
specific future purpose should be reported as part of)
"! unrestricted net assets.
C. board-restricted net assets.
'. term endo.ments.


(:. $ priate2 not-for-profit geographic society receied cash contributions .hich .ere
restricted by the donors for the ac9uisition of fi/ed assets. *n .hich section of the statement of
cash flo.s .ould these cash contributions be reported#
"! Financing actiities
&. *nesting actiities
C. %perating actiities
'. Capital and related financing actiities


19-07
(9. %n the statement of actiities for a priate2 not-for-profit literary society2 e/penses
decrease .hich of the follo.ing classes of net assets#
*. temporarily restricted net assets
**. unrestricted net assets
$. * only
#! ** only
C. Either * or **
'. Neither * nor **


+;. &ridger Bospital2 .hich is operated by a religious organi,ation2 proides charity care for
the indigent liing in the region sered by the hospital. Bo. should &ridger report the amount
of its charity care on its financial statements#
"! *n the notes to the financial statements only.
&. $s unrestricted reenues on the statement of operations.
C. $s net patient serice reenue and as an e/pense2 e9ual to the net patient serice reenue2
on the statement of operations.
'. $s temporarily restricted reenue on the statement of operations.


+1. -he goerning board of 1amaritan Bospital2 .hich is operated by a religious organi,ation2
designated <5;;2;;; of cash for future e/pansion of the hospital. %n the hospital8s balance
sheet2 the cash designated for future plant e/pansion .ould be disclosed in .hich of the
follo.ing classes of net assets#
#! >nrestricted net assets
C. Plant replacement and e/pansion.
'. &oard designated net assets


19-0:
+(. ?ood Care Bospital2 .hich is operated by a religious organi,ation2 receied contributions
of <12;;;2;;; from donors .ho stipulated that the cash be used to construct an addition to the
hospital. $s of the balance sheet date2 none of the contributions had been e/pended for
construction. %n the hospital8s balance sheet2 the cash contributions .ould be disclosed in
.hich of the follo.ing classes of net assets#
"! -emporarily restricted net assets
&. 'onor restricted net assets
C. $ssets .hose use is limited
'. Permanently restricted net assets


++. $ priate2 not-for-profit hospital receied contributions of <5;2;;; from donors on =une
152 (;;9. -he donors stipulated that their contributions be used to purchase e9uipment for the
hospital. $s of =une +;2 (;;92 the end of the hospital8s fiscal year2 <1(2;;; of the contributions
had been spent on e9uipment ac9uisitions. *n the hospital8s general fund2 .hat account .ould
be credited to recogni,e the release of the restrictions on the temporarily restricted
contributions used to ac9uire e9uipment#
$. 4eenue released from e9uipment ac9uisition restriction
&. %ther financing sources
C! Net assets released from e9uipment ac9uisition restriction
'. >nrestricted net assets released from e9uipment ac9uisition restriction


donor restricted funds. -he hospital8s reenues from nursing programs and gift shops should
be accounted for in the)
&. restricted current fund.
C! general fund.
'. time-restricted fund.


19-09
donor restricted funds. Contributions receied from donors for research to be conducted by
the hospital should be accounted for in the)
"! specific purpose fund.
&. time-restricted fund.
C. general fund.
'. restricted current fund.


+6. %n =une +;2 (;;92 a oluntary health and .elfare organi,ation receied pledges from
donors amounting to <5;2;;;. -he donors did not place any time or use restrictions on the
amount pledged. *t .as estimated that 1; percent of the pledges .ould not be collected. Bo.
should the oluntary health and .elfare organi,ation report these pledges on its financial
statements prepared at the end of its fiscal year2 =une +;2 (;;9#
$. $s fund balance for <052;;;.
#! $s contribution reenue-unrestricted for <052;;;.
C. $s contribution reenue-unrestricted for <5;2;;;.
'. $s fund balance-unrestricted for <5;2;;;.


+7. -he restricted funds of a not-for-profit hospital are often termed 3DDDDDD3 funds because
they must hold the restricted assets and transfer e/pendable resources to the general fund for
e/penditure.
$. specific
&. controlled
C. limited
! holding


19-5;
+:. $ll restricted funds of priate2 not-for-profit hospitals account for resources)
"! .hose use is restricted by the donor.
&. receied and e/pended in the hospital8s primary health care mission.
C. that are only temporarily restricted.
'. receied or pledged by donors for use in future periods.


$ donor agrees to contribute <52;;; per year at the end of each of the ne/t fie years to a
oluntary health and .elfare organi,ation. -he donor did not place any use restrictions on the
amount pledged. -he stream of the payments is discounted at 6 percent. -he first payment of
<52;;; is receied at the end of the first year. -he present alue factor for a fie-payment
annuity due on =une +;2 (;;92 at 6 percent is 0.(1(0.

+9. &ased on the preceding information2 the Aournal entry to recogni,e present alue at the
time the pledge is receied includes)
$. a credit to Pledges 4eceiableE-emporarily 4estricted for <(52;;;.
&. a debit to ContributionsE-emporarily 4estricted for <(12;6(.
C! a debit to Pledges 4eceiableE-emporarily 4estricted for <(12;6(.
'. a credit to ContributionsE-emporarily 4estricted for <(52;;;.

AACSB: Analytic
AICPA: Measurement

0;. &ased on the preceding information2 at the end of the first year2 the pledge increased
unrestricted net assets by)
$. <(52;;;.
&. <(12;6(.
C. <02(1(.
! <52;;;.

AACSB: Analytic
AICPA: Measurement

19-51
01. &ased on the preceding information2 the increase in present alue of the contributions
receiable recogni,ed at the end of the first year e9uals)
$. <52;;;.
#! <12(60.
C. <0(1(.
'. <7:7.

AACSB: Analytic
AICPA: Measurement

0(. $ priate2 not-for-profit hospital receied a donation of medicine from the FGH
Pharmaceutical Company on Carch 152 (;;9. -he cost of the medicine to the company .as
<662;;;2 and its market alue .as <11;2;;;. -.enty percent of the medicine .as used by the
hospital during the year ended =une +;2 (;;9. %n the hospital8s statement of operations for the
year ended =une +;2 (;;92 the contribution of medicine .ould increase operating reenues by
$. <662;;;.
#! <11;2;;;.
C. <5(2:;;.
'. <::2;;;.

AACSB: Analytic
AICPA: Measurement

0+. *n accordance .ith F$1& 1162 contributions of serices are recogni,ed as increases in
unrestricted net assets by a priate2 not for profit entity if .hich of the follo.ing criteria are
satisfied#
*. -he serices receied create or enhance nonfinancial assets.
**. -he serices re9uire speciali,ed skills2 are proided by indiiduals possessing those skills2
and .ould typically need to be purchased if not proided by donations.
***. -he serices .ill be performed .ithin the current fiscal year.
"! * or **.
&. * or ***.
C. ** or ***.
'. *2 **2 ***.


19-5(
00. -he disclosure2 3net assets released from restrictions23 is reported on .hich of the
follo.ing financial statements for a oluntary health and .elfare organi,ation#
*. -he statement of cash flo.s.
**. -he statement of actiities.
$. * only
#! ** only
C. &oth * and **.
'. Neither * nor **.


05. ?ood Faith Bospital2 operated by a religious organi,ation2 billed patients <02;;;2;;; for
serices rendered during the year ended =une +;2 (;;9. -he hospital reali,ed cash of
<+25;;2;;; from the patient billings because of the follo.ing reductions)
!1" contractual adAustments of <10;2;;; granted to priate insurance companies and to the
federal goernmentI and
!(" uncollectible accounts receiable of <+6;2;;;.
%n the statement of operations prepared for the year ended =une +;2 (;;92 ?ood Faith
Bospital should report net patient serice reenue of)
$. <+25;;2;;;.
#! <+2:6;2;;;.
C. <02;;;2;;;.
'. <+260;2;;;.

AACSB: Analytic
AICPA: Measurement

19-5+
06. 'uring the fiscal year ended =une +;2 (;;92 a priate2 not-for-profit hospital ac9uired
e9uipment costing <752;;;2 .ith cash contributed by donors .ho restricted their contributions
for this purpose. %n the hospital8s statement of cash flo.s for the year ended =une +;2 (;;92
the e9uipment ac9uisition should be reported in .hich of the follo.ing sections#
*. %perating actiities
**. Financing actiities
***. *nesting actiities
$. *
&. **
C! ***
'. *2 **2 ***


07. 'uring the fiscal year ended =une +;2 (;;92 ?lobal Charities2 a oluntary health and
.elfare organi,ation2 receied unrestricted cash contributions of <5;;2;;; and temporarily
restricted cash contributions of <+;;2;;;. $ll of the temporarily restricted contributions .ere
restricted by the donors for e9uipment ac9uisitions. 'uring the year ended =une +;2 (;;92
e9uipment costing <(5;2;;; .as ac9uired .ith the restricted contributions. $s a result of
these t.o contributions2 ?lobal Charities8 statement of cash flo.s2 prepared for the year ended
=une +;2 (;;92 .ould report an increase in net cash proided by operating actiities of)
"! <5;;2;;;.
&. <:;;2;;;.
C. <75;2;;;.
'. <55;2;;;.

AACSB: Analytic
AICPA: Measurement

19-50
0:. $ oluntary health and .elfare organi,ation receied a <+;;2;;; contribution on $pril 152
(;;92 from a donor .ho stipulated the donation be inested permanently in stocks and bonds.
-he donor further stipulated earnings from the inestments be spent according to the .ishes
of the goerning board of the oluntary health and .elfare organi,ation. Earnings from the
inestments for the year ended =une +;2 (;;92 amounted to <62;;;. Bo. .ould the oluntary
health and .elfare organi,ation report this information for the year ended =une +;2 (;;9#
$. *ncrease in permanently restricted net assets of <+;62;;;.
&. *ncrease in permanently restricted net assets of <+;;2;;;2 and in temporarily restricted net
assets of <62;;;.
C! *ncrease in permanently restricted net assets of <+;;2;;;2 and in unrestricted net assets of
<62;;;.
'. *ncrease in permanently restricted net assets of <+;;2;;;2 and in board-designated net
assets of <62;;;.

AACSB: Analytic

09. Which financial statement is !are" re9uired for a oluntary health and .elfare organi,ation
.hich is not re9uired for a priate2 not-for-profit hospital#
*. $ statement of operations.
**. $ statement of functional e/penses.
$. * only
#! ** only
C. &oth * and **
'. Neither * nor **


5;. $ priate2 not-for-profit hospital e/pended <+52;;; of temporarily restricted assets to
ac9uire e9uipment. What account should be debited in the hospital8s plant replacement and
e/pansion fund as a result of the ac9uisition of the e9uipment#
"! Net $ssets 4eleasedEPlant $c9uisition.
&. Fund balance 4eleasedEPlant $c9uisition.
C. E9uipment.
'. Contribution 4eenue 4eleasedEPlant $c9uisition.


19-55
51. *n (;;92 a priate not-for-profit hospital receied a <(;;2;;; cash contribution to its
endo.ment fund. 'uring the year2 hospital administration inested <15;2;;; of the funds.
Which of the follo.ing statements regarding the effect of these transactions on the
preparation of the hospital8s statement of cash flo. is true#
$. -he <(;;2;;; contribution .ill appear in the inesting actiities section of the cash flo.
#! -he <(;;2;;; contribution .ill appear in the financing actiities section of the cash flo.
C. -he <15;2;;; inestment .ill appear in the inesting actiities section of the cash flo.
'. -he <15;2;;; contribution .ill appear in the financing actiities section of the cash flo.


$ priate2 not-for-profit hospital receied a contribution of <0;2;;; on =une 152 (;;:. -he
donor restricted the contribution to funding research actiities currently being performed by
the hospital. For the year ended 'ecember +12 (;;:2 the hospital spent <+;2;;; of the
contribution on research actiities. -he hospital e/pended the remaining <1;2;;; on research
actiities in =anuary of (;;9.

5(. 4efer to the aboe information. %n the statement of cash flo.s prepared for the year
ended 'ecember +12 (;;:2 the eents described .ould increase net cash flo.s proided by
$. operating actiities by <0;2;;;.
&. financing actiities by <0;2;;;.
C. financing actiities by <1;2;;;.
! operating actiities by <1;2;;;.

AACSB: Analytic

19-56
5+. 4efer to the aboe information. %n the statement of operations prepared for the year
ended 'ecember +12 (;;:2 the eents described .ould)
$. increase operating income by <+;2;;;.
#! hae no effect on operating income.
C. increase unrestricted net assets by <+;2;;;.
'. decrease unrestricted net assets by <+;2;;;.

AACSB: Analytic

50. 4efer to the aboe information. %n the statement of changes in net assets prepared for the
year ended 'ecember +12 (;;:2 the eents described .ould
"! increase temporarily restricted net assets by <1;2;;;.
&. decrease temporarily restricted net assets by <1;2;;;
C. increase unrestricted net assets by <1;2;;;.
'. decrease unrestricted net assets by <1;2;;;.

AACSB: Analytic

55. *n a priate2 not-for-profit hospital2 .hich fund .ould record cash and inestments .hich
hae been restricted by the goerning board for ac9uisitions of e9uipment and construction of
a ne. hospital addition#
$. -he plant replacement and e/pansion fund.
&. -he specific purpose fund.
C. -he endo.ment fund.
! -he general fund.


19-57
56. -he goerning board of a hospital operated by a religious organi,ation designated
<+2;;;2;;; of cash to be used for plant e/pansion. -he cash .as inested in stocks and bonds
.hich earned <(5;2;;; of diidend and interest income. -he income from inestments should
be reported on the hospital8s statement of operations as an increase in)
#! operating income.
C. either temporarily restricted net assets or unrestricted net assets2 depending upon the nature
of the goerning board8s restrictions.
'. fund balance in the general fund.


57. $ oluntary health and .elfare organi,ation receied unrestricted cash donations of
<(;2;;; from donors .ho attended a dinner held for the benefit of the organi,ation. -he costs
of the dinner2 including room rental2 and other e/penses2 amounted to <72;;;. %n the
statement of actiities prepared for the oluntary health and .elfare organi,ation2 the
e/penses of the dinner should be)
$. reported as management and general e/penses.
&. netted against the <(;2;;; of contribution reenue.
C! reported as fund raising costs.
'. reported as programmatic e/penses.


5:. %n the statement of functional e/penses prepared for a oluntary health and .elfare
organi,ation2 depreciation e/pense is allocated to
*. e/penses for program serices.
**. e/penses for supporting serices.
$. * only
&. ** only
C! &oth * and **
'. Neither * nor **


19-5:
59. $ oluntary health and .elfare organi,ation deeloped and printed informational
materials .hich .ere intended to both educate the public about ho. its resources are used to
help people in need and to also appeal to the public for much needed support. *n this situation2
the cost of the informational materials should be
$. accounted for as fund-raising e/pense.
&. allocated to e/penses for program serices.
C! allocated bet.een e/penses for program serices and fund-raising e/pense.
'. accounted for as management and general e/pense.


6;. F$1& 117 re9uires that an 3other not-for-profit entity3 !%NP%" proide three financial
statements. Which of the follo.ing is N%- one among them#
"! $ statement of functional e/penses
&. $ statement of financial position
C. $ statement of actiities
'. $ statement of cash flo.s


61. $ priate2 not-for-profit hospital receied the follo.ing restricted contributions and other
receipts during the year ended 'ecember +12 (;;:)

None of the contributions or other receipts .ere e/pended during the ended 'ecember +12
(;;:. For the year ended 'ecember +12 (;;:2 .hat amount .ould be reported on the
hospital8s statement of changes in net assets as an increase in temporarily restricted net
assets#
"! <125;;2;;;
&. <12(;;2;;;
C. <5;;2;;;
'. <+;;2;;;

AACSB: Analytic
AICPA: Measurement

19-59
6(. *n accordance .ith F$1& 1162 pledges2 .hich are temporarily restricted by donors2 are
reported as increases in temporarily restricted net assets on the statement of actiities of a
oluntary health and .elfare organi,ation .hen the
$. pledges are receied in cash.
&. cash receied from the pledges is e/pended in accordance .ith the donors8 .ishes.
C! pledges are made by the donors.
'. cash is receied from the pledges is transferred to unrestricted net assets.


6+. $ oluntary health and .elfare organi,ation receied <(;;2;;; of pledges from donors on
February 152 (;;9. -he donors did not place either time or use restrictions on the amount
pledged. -he goerning board estimated that 1; percent of the pledges .ould be uncollectible.
'uring the remainder of fiscal (;;92 cash receied from pledges amounted to <1:02;;;. For
the year ended =une +;2 (;;92 .hat amount should the oluntary health and .elfare
organi,ation report as Contributions->nrestricted#
$. <;
&. <(;;2;;;
C! <1:02;;;
'. <1:;2;;;


60. $ oluntary health and .elfare organi,ation reports pledges receiable on its statement of
financial position at the present alue of the future cash collections. Bo. is the increase in the
present alue of the pledges receiable2 .hich is due to the passage of time2 reported on the
oluntary health and .elfare organi,ation8s statement of actiities#
$. $s interest income-temporarily restricted.
&. $s an increase in pledges receiable-temporarily restricted.
C! $s an increase in contributions-temporarily restricted.
'. $s an increase in deferred reenue-temporarily restricted.


19-6;
?olden Path2 a labor union2 had the follo.ing receipts and e/penses for the year ended
'ecember +12 (;;:)

-he union8s constitution proides that 1( percent of the per capita dues be designated for the
strike insurance fund to be distributed for strike relief at the discretion of the union8s e/ecutie
board.

reenue from unrestricted funds#
$. <9:;2;;;
#! <121;;2;;;
C. <12(1;2;;;
'. <12;(;2;;;

AACSB: Analytic
AICPA: Measurement

19-61
program serices#
"! <7(;2;;;
&. <91;2;;;
C. <00;2;;;
'. <76;2;;;

AACSB: Analytic
AICPA: Measurement

supporting serices#
$. <15;2;;;
&. <7(;2;;;
C! <00;2;;;
'. <(9;2;;;

AACSB: Analytic
AICPA: Measurement

6:. &ased on the information proided2 in ?olden Path8s statement of actiities for the year
ended 'ecember +12 (;;:2 .hat amounts should be reported under the classifications of
temporarily and permanently restricted net assets#
$. <; and <11;2;;; respectiely.
&. <11;2;;; and <; respectiely.
C. <6;2;;; and <5;2;;; respectiely.
! <5;2;;; and <6;2;;; respectiely.

AACSB: Analytic
AICPA: Measurement

19-6(

Jocal 1erices2 a oluntary health and .elfare organi,ation had the follo.ing classes of net
assets on =uly 12 (;;:2 the beginning of its fiscal year)

'uring the year ended =une +;2 (;;92 the follo.ing eents occurred)
!1" *t purchased e9uipment2 costing <1;;2;;;2 .ith contributions restricted for this purpose.
-he contributions had been receied from donors during =une of (;;:.
!(" *t receied <1+;2;;; of cash donations .hich .ere restricted for research actiities.
'uring the year ended =une +;2 (;;92 <9;2;;; of the contributions .ere e/pended on
research.
!+" *t sold inestments classified in the permanently restricted class for a loss of <0;2;;;.
'iidends and interest income earned on the inestments amounted to <7;2;;;. -here .ere
no restrictions on ho. inestment income .as to be used.
!0" *t receied cash contributions of <(;;2;;; from donors .ho did not place either time or
use restrictions upon their donations.
!5" E/penses2 e/cluding depreciation e/pense2 for program serices and supporting serices
incurred during the year ended =une +;2 (;;92 amounted to <(6;2;;;.
!6" 'epreciation e/pense for the year ended =une +;2 (;;92 .as <:;2;;;.

69. 4efer to the aboe information. $t =une +;2 (;;92 the amount of permanently restricted
net assets reported on the statement of financial position .ould be)
$. <12;7;2;;;.
&. <12;+;2;;;.
C. <12;;;2;;;.
! <96;2;;;.

AACSB: Analytic
AICPA: Measurement

19-6+
7;. 4efer to the aboe information. %n the statement of actiities for the year ended =une +;2
(;;92 temporarily restricted net assets)
$. increased <1+;2;;;.
&. increased <0;2;;;.
C. decreased <1;;2;;;.
! decreased <6;2;;;.

AACSB: Analytic
AICPA: Measurement

71. 4efer to the aboe information. %n the statement of actiities for the year ended =une +;2
(;;92 reclassifications .ould be reported at
"! <19;2;;;.
&. <1;;2;;;.
C. <9;2;;;.
'. <(+;2;;;.

AACSB: Analytic
AICPA: Measurement

7(. 4efer to the aboe information. Which of the follo.ing statements is !are" correct about
the program and supporting e/penses that .ould be reported on the statement of actiities for
*. Program and supporting e/penses should be reported at <+0;2;;;.
**. $ll of the program and supporting e/penses should be reported as a deduction from
unrestricted reenues and other support.
$. * only
&. ** only
C! * and **
'. Neither * nor **


-he transactions listed in the follo.ing 9uestions occurred in a priate2 not-for-profit hospital
during (;;:. For each transaction2 indicate its effect on the hospital8s statement of operations
for the year ended 'ecember +12 (;;:.

19-60
7+. Transaction: &illed patients for serices rendered.
"! *ncreases operating income.
operating income.


70. Transaction: $ gain .as reali,ed from the sale of endo.ment inestments. -he gain is
not e/pendable.
operating income.
! -he transaction is not reported on the statement of operations.


75. Transaction: 'epreciation e/pense .as recorded for the year.
#! 'ecreases operating income.
operating income.


19-65
76. Transaction: -he goerning board designated assets for plant e/pansion.
C. -he eent is reported on the statement of operations2 but there is no effect on operating
income.
! -he eent is not reported on the statement of operations.


77. Transaction: 4eceied contributions restricted by donors for research actiities.
operating income.


7:. Transaction: E/pended 5; percent of the contributions restricted for research in the
preious item.
C! -he transaction is reported on the statement of operations2 but there is no effect on
operating income.


19-66
79. Transaction: 4eceied contributions restricted by donors for e9uipment ac9uisition.
operating income.


:;. Transaction: $c9uired e9uipment .ith all of the contributions receied in the preious
item.
C! -he transaction is reported on the statement of operations2 but there is no effect on
operating income.


:1. Transaction: Endo.ment income .as earned. -he donor placed no restrictions on the
inestment earnings.
operating income.


19-67
-:(. Transaction: 4eceied cash contribution from donor .ho stipulated the contribution be
permanently inested.
operating income.


:+. Transaction: $c9uired inestments .ith cash receied in the preious item.
operating income.


:0. Transaction: 4eceied tuition reenue from hospital nursing program and cash from sales
of goods in the hospital gift shop.
operating income.


19-6:
:5. F$1& 117 re9uires that an %NP% proide three financial statements. Which of the
follo.ing is not one of them#
$. $ statement of financial position
&. $ statement of actiities
C. $ statement of cash flo.s
! $ statement of functional e/penses


:6. 4eporting re9uirements of other not-for-profit entities !%NP%s" are similar to those of
.hich of the follo.ing entities#
$. $ public uniersity
#! $ oluntary health and .elfare organi,ation
C. $n enterprise fund of a state or local goernment
'. $ hospital operated by a county goernment


Essay Questions

19-69
:7. -he follo.ing information is contained in the funds .hich are used to account for the
transactions of the Bope Bospital2 .hich is operated by a nonprofit2 religious organi,ation.
-he balances in the accounts are as of =une +;2 (;;92 the end of the hospital8s fiscal year.
Credit amounts are in parentheses.

$dditional information)
-he <602;;; in the specific purpose fund is restricted for research actiities to be conducted
by the hospital.
4e9uired)
Prepare a balance sheet for Bope Bospital as of =une +;2 (;;9.
19-7;

19-71

AACSB: Analytic
AICPA: Reporting

19-7(
Priate Not-For-Profit !NFP" Entities.
1elect from this list of terms to ans.er the follo.ing 9uestions.

*ndicate your choice by entering the letter corresponding to the correct term. $ term may be
used more than once or not at all.

::. 34esponsible for establishing accounting standards for priate NFP entities3 describes
.hich term listed aboe#
'


19-7+
:9. 3Classification of an endo.ment contribution3 describes .hich term listed aboe#
K


9;. 34eported as an e/penditure of the fund using plant and e9uipment3 describes .hich term
listed aboe#
%


91. 3Financial statement of a priate NFP entity3 describes .hich term listed aboe#
B


9(. 3-angible fi/ed assets not depreciated by a priate college or uniersity3 describes .hich
term listed aboe#
P


19-70
9+. 3&asis for measuring inestments in financial statements3 describes .hich term listed
aboe#
$


90. 3Classification of inestment income from endo.ment inestments if there are no donor
restrictions as to income3 describes .hich term listed aboe#
&


95. 3Classification of contributions restricted by purpose3 describes .hich term listed aboe#
J


96. 3&asis for measuring e/penditures for contributed serices re9uiring special skills3
describes .hich term listed aboe#
$


19-75
97. 3&asis for measuring contributions3 describes .hich term listed aboe#
$


9:. 3Net asset classifications per F$C 63 describes .hich term listed aboe#
N


99. 3&asis of accounting for priate NFPs3 describes .hich term listed aboe#
?


19-76
1;;. -he CF% of a 3Not-for-Profit3 hospital is making a presentation at your college. -he
presentation is for &usiness and Bealth-1cience maAors. 'uring the presentation the CF%
mentions assets being reported 3aboe the line.3 %n the .ay out your roommate a health-
science maAor asks2 you an accounting maAor2 to e/plain .hat the CF% .as referring to. What
do you respond#
Not-for-Profit hospitals report an operating performance indicator in their statement of
operations. -his item reports the hospital8s operating actiities for the period and should
include both operating income !loss" for the period and other income aailable for current
operations. F$1& 117 re9uires that net assets released from restrictions that are used in
operations to be included in the performance indicator2 thus2 3aboe the line3. -his allo.s the
reader of the financial statements to be able to identify assets that .ere preiously restricted2
held for specified purposes by the donor2 that are no. aailable for use in operations.
-herefore2 e/penses incurred to achiee the entity8s operations can be matched .ith the
resources.

AACSB: Communication
AICPA: Critical Thinking

-he transactions described in the follo.ing 9uestions occurred in a oluntary health and
.elfare organi,ation during the year ended 'ecember +12 (;;:. For each transaction2 indicate
its effect!s" on the organi,ation8s statement of actiities prepared for the year ended 'ecember
+12 (;;:. Jist all effects of transactions affecting more than one class of net assets. *ndicate
your choice!s" by entering the letter corresponding to the effects listed here)

19-77
1;1. 4eceied cash contributions restricted by donors for research.
C


1;(. *ncurred fund-raising costs.
&


1;+. 'epreciation e/pense for the year .as recorded.
&


1;0. -he goerning board designated assets for plant e/pansion.
?


1;5. $ gain .as reali,ed from the sale of securities .hich .ere permanently inested. -he
gain is restricted as to use.
C


19-7:
1;6. Endo.ment income .as earned. -he donor specified that the income be used for
community serice.
C


1;7. 4eceied a multi-year pledge2 .ith cash being receied this year and for the ne/t 0 years.
'onors did not place any use restrictions on ho. the pledges .ere to be spent.
$ and C


1;:. *ncome .as earned from inestments of assets that the board preiously designated for
plant e/pansion.
$


1;9. 4eceied pledges from donors .ho placed no time or use restrictions on ho. the pledges
.ere to be spent.
$


19-79
11;. 4eceied cash contributions restricted by donors for e9uipment.
C


111. $c9uired e9uipment .ith all of the contributions preiously receied from donors for
e9uipment purchases.
$ and '


11(. E/pended 75 percent of the contributions preiously receied from donors for research.
'


19-:;
11+. Follo.ing are four independent transactions or eents that relate to a oluntary health
and .elfare organi,ation)
1. Cash disbursement of <052;;; .as made from the general fund8s unrestricted assets for the
purchase of ne. e9uipment for the organi,ation.
(. -he organi,ation receies an unrestricted cash gift of <:;2;;; from a donor.
+. Common stock inestments .ith a total carrying alue of <1;;2;;; .ere sold by a
permanently restricted endo.ment fund for <11(2;;; before any diidends .ere earned on
these stocks. -he gain is donor-restricted to remain in the permanently restricted fund.
0. ?eneral obligation bonds payable .ith a face amount of <75;2;;; .ere sold at par2 .ith the
proceeds re9uired to be used solely for construction of a ne. building. -his building .as
completed at a total cost of <75;2;;;2 and the total amount of bond issue proceeds .as
disbursed to.ard this cost. 'isregard interest capitali,ation.
4e9uired)
For each of these transactions or eents2 prepare Aournal entries specifying the affected funds
and sho.ing ho. these transactions or eents should be recorded by the organi,ation.

19-:1

AACSB: Analytic
AICPA: Reporting

110. -he F$1& has issued fie standards that hae direct applicability to priate2 not-for-
profit entities. From the list gien belo.2 match each standard to the area it deals .ith.

AICPA: Reporting

19-:(

CH 19 Not For Profit Entities

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CH 19 Not For Profit Entities

Uploaded by

Copyright:

Available Formats

Chapter 19 - Not-For-Profit Entities

You might also like