CH 19

Ch19
Student: ___________________________________________________________________________
1. Which rule-making body is currently setting standards of financial reporting for private not-for-profit
universities and for public (governmental) universities?
A.
B.
C.
D.
2. Private, not-for-profit entities should classify their net assets as:
I. permanently restricted as to principal.
II. restricted as to time or purpose by donors.
A. I.
B. II.
C. Both I and II.
D. Neither I nor II.
3. Net assets restricted as to time or purpose should be classified as:
I. temporarily restricted.
II. permanently restricted.
A. I.
B. II.
C. Either I or II.
4. A not-for-profit organization received a donation temporarily restricted as to use. The donated amount
was later spent in accordance with the restriction. In which category(ies) of net assets should the related
revenues and expenses be recognized?
A.
B.
C.
D.
5. According to FASB 93, "Recognition of Depreciation by Not-For-Profit (NFP) Entities," NFP entities
should recognize depreciation
I. as an expenditure of the fund using the depreciable assets.
II. on all long-lived intangible assets.
A. I.
B. II.
C. Either I or II.
6. When the term restricted is used in university accounting, it refers to a constraint on the use of funds which
has been
I. internally imposed.
II. externally imposed.
A. I.
B. II.
C. Either I or II.
7. What method of accounting should be used by colleges and universities?
I. Accrual
II. Modified accrual or accrual, depending on the specific fund
A. I.
B. II.
C. Either I or II.
8. The current funds of a university include which of the following subfunds?
A. Unrestricted current funds and agency funds.

B. Unrestricted and restricted current funds.
C. Restricted current funds and loan funds.
D. Unrestricted and restricted current funds and plant funds.
9. Which of the following recognition and measurement bases best summarizes the usual treatment of
contributions to private not-for-profit entities in accordance with FASB 116?
A.
B.
C.
D.
10. According to Statement of Financial Accounting Standards 117, the statement of financial position of a
private university should report the excess of the university's assets over its liabilities as
A. fund balance.
B. unrestricted and restricted fund balance.
C. net assets.
D. unrestricted, temporarily restricted, and permanently restricted net assets.
11. Which of the following is an example of volunteer services received by a not-for-profit entity that should
be recognized as revenue?
I. Services requiring specialized skills, provided by individuals with those skills, that otherwise would have
to be purchased.
II. Services of lay faculty at a private university operated by a religious order.
III. Services that create or enhance non-financial assets, regardless of whether or not they require
specialized skills.
A. I.
B. II.
C. III.
D. I, II, III.
12. For the year ended June 30, 2009, a university assessed its students a total of $4,000,000 for tuition and
fees. Included in this amount was $300,000 of tuition remissions awarded to graduate teaching assistants,
and $150,000 of scholarships awarded to undergraduate students. Tuition and fees totaling $3,550,000 were
collected during the year ended June 30, 2009. What amount should be reported in the unrestricted current
fund as net revenue from tuition and fees for the year ended June 30, 2009?
A. $4,000,000
B. $3,550,000
C. $3,700,000
D. $3,850,000
13. In a university, class cancellation refunds of tuition and fees should be recorded as
I. a reduction of revenue from tuition and fees.
II. a reduction of accounts receivable.
A. I.
B. II.
C. Either I or II.
14. In a private university, which of the following would be reported as expenditures on the statement of
activities?
I. Student services.
II. Uncollectible accounts.
A. I only
B. II only
C. I and II
D. Neither I nor II
15. According to FASB 124, not-for-profit entities should report investments in the financial statements at
I. fair market value.
II. lower of cost or market.
A. I.
B. II.
C. Both I and II.
16. Investment income for not-for-profit entities may include
I. interest from debt investments.
II. dividends from equity investments.
III. changes in the fair market values of both debt and equity investments.
A. I.
B. II.
C. III.
D. I, II, III.
17. A private university received $280,000 from student tuition and fees for the year 2009 summer session. The
session began on June 20, 2009, and ended on July 30, 2009. The university's fiscal year end is June 30.
How should the university report the $280,000 of receipts in its financial statements for the year ended June
30, 2009?
A. Current revenue of $280,000.

B. Current revenue of $70,000 and deferred revenue of $210,000.
C. Deferred revenue of $280,000.
D. Restricted current revenue of $280,000.
18. A private university offers graduate assistantships to qualified students each year. In exchange for the
waiver of tuition, graduate assistants are required to assist faculty members with research and other
activities. Assume a graduate assistant received a $4,000 tuition waiver for the current academic year.
Based on these facts, the university should record
A. tuition revenues of $4,000 and expenditures of $4,000.

B. tuition revenues of $0 and expenditures of $0.
C. tuition revenues of $4,000 and expenditures of $0.
D. tuition revenues of $4,000 and a reduction of tuition revenues of $4,000.
19. A private not-for-profit university generally must depreciate all tangible fixed assets, except
I. works of art and other historical treasures
II. administration buildings
A. I.
B. II.
C. Both I and II.
20. A private college received an offer from a CPA who is an alumnus to teach a one-semester advanced
accounting course at no cost. FASB 116 prescribes that this contribution of service
A. need only be disclosed in the footnotes to the financial statements.

B. be recorded as an asset with an equivalent amount recorded in the unrestricted fund balance.
C. be recorded as a revenue with an equivalent amount recorded as an expenditure.
D. need not be recorded if the service is for a period less than one academic year.
21. In accordance with FASB 117, contributions from donors which are to be permanently invested should be
disclosed on the statement of activities of a private university as an increase in
A. Permanently restricted net assets.

B. Permanently restricted fund balance.
C. Endowment fund balance.
D. Deferred revenues.
22. For the year ended June 30, 2009, a private college received contributions from alumni which were
restricted for faculty research stipends to be awarded during the next fiscal year. For the year ended June
30, 2009, these contributions should be disclosed on the statement of activities of the private college as an
increase in
A. the fund balance of the restricted current fund.

B. temporarily restricted net assets.
C. deferred revenues.
D. temporarily restricted fund balance.
23. A private university should prepare which financial statements:
I. statement of financial position.
II. statement of activities.
III. statement of changes in fund balances.
IV. statement of cash flows.
V. statement of changes in financial position.
A. I, II, III.
B. II, III, IV.
C. I, II, IV.
D. II, III, V.
24. Unrestricted gifts and endowment income of a private university are reported as
A. increases in the unrestricted current fund balance on the statement of changes in fund balances.
B. unrestricted revenues on the statement of current funds revenues, expenditures, and other changes.
C. unrestricted revenues on the statement of activities.
D. increases in the unrestricted current fund balance on the statement of activities.
25. One of the major objectives of FASB 117 is to
A. emphasize the different fund structures that currently exist for all private, nonprofit organizations.
B.change the reporting for governmental organizations so that their reporting is comparable to that of
private, nonprofit organizations.
C. report combined financial statements, instead of individual fund financial statements, for all private,
nonprofit organizations.
D. bring about greater uniformity in the financial statements of all private, not-for-profit organizations.
26. A not-for-profit private college in Virginia created a separate foundation responsible for obtaining financial
support from alumni and others. Foundation assets are used for the benefit of the college. Donations made
to the foundation and subsequently transferred to the college should be:
A. recognized as revenues by the foundation when received, and as revenues of the college when
transferred.
B. recognized as revenues by the foundation when received, and as expenses by the foundation when
transferred.
C recognized both as a change in its interest in the foundation and as revenues by the college when the
. donation is received by the foundation.
D.recognized as an increase in net assets of the foundation and as revenues of the college when the
donation is received by the college.
27. On the statement of operations prepared for a private, not-for-profit hospital, patient service revenue earned
during the year is reported net of amounts for which of the following items?
I. Contractual adjustments.
II. Bad debts expense.
A. I only
B. II only
C. I and II
D. Neither I nor II
28. A private, not-for-profit hospital received a cash contribution of $100,000 from Samantha Hicks on
November 14, 2008. Ms. Hicks specified the money be used to acquire equipment. On December 31, 2008,
the hospital had not expended any of Ms. Hicks' contribution. On the statement of changes in net assets for
the year ended December 31, 2008, the hospital should report the contribution as a $100,000 increase in
A. temporarily restricted net assets.

B. unrestricted net assets.
C. fund balance.
D. deferred revenue.
29. Unrestricted current funds of a private university designated by the governing board for a specific future
purpose should be reported as part of:
A. unrestricted net assets.

B. temporarily restricted net assets.
C. board-restricted net assets.
D. term endowments.
30. A private, not-for-profit geographic society received cash contributions which were restricted by the
donors for the acquisition of fixed assets. In which section of the statement of cash flows would these cash
contributions be reported?
A. Financing activities
B. Investing activities
C. Operating activities
D. Capital and related financing activities
31. On the statement of activities for a private, not-for-profit literary society, expenses decrease which of the
following classes of net assets?
I temporarily restricted net assets
II. unrestricted net assets
A. I.
B. II.
C. Either I or II.
32. Bridger Hospital, which is operated by a religious organization, provides charity care for the indigent
living in the region served by the hospital. How should Bridger report the amount of its charity care on its
financial statements?
A. In the notes to the financial statements only.

B. As unrestricted revenues on the statement of operations.
C. As net patient service revenue and as an expense, equal to the net patient service revenue, on the
statement of operations.
D. As temporarily restricted revenue on the statement of operations.
33. The governing board of Samaritan Hospital, which is operated by a religious organization, designated
$500,000 of cash for future expansion of the hospital. On the hospital's balance sheet, the cash designated
for future plant expansion would be disclosed in which of the following classes of net assets?
A. Temporarily restricted net assets

B. Unrestricted net assets
C. Plant replacement and expansion
D. Board designated net assets
34. Good Care Hospital, which is operated by a religious organization, received contributions of $1,000,000
from donors who stipulated that the cash be used to construct an addition to the hospital. As of the balance
sheet date, none of the contributions had been expended for construction. On the hospital's balance sheet,
the cash contributions would be disclosed in which of the following classes of net assets?
A. Temporarily restricted net assets

B. Donor restricted net assets
C. Assets whose use is limited
D. Permanently restricted net assets
35. A private, not-for-profit hospital received contributions of $50,000 from donors on June 15, 2009. The
donors stipulated that their contributions be used to purchase equipment for the hospital. As of June 30,
2009, the end of the hospital's fiscal year, $12,000 of the contributions had been spent on equipment
acquisitions. In the hospital's general fund, what account would be credited to recognize the release of the
restrictions on the temporarily restricted contributions used to acquire equipment?
A. Revenue released from equipment acquisition restriction

B. Other financing sources
C. Net assets released from equipment acquisition restriction
D. Unrestricted net assets released from equipment acquisition restriction
36. A private, not-for-profit hospital uses a fund structure which includes a general fund and donor restricted
funds. The hospital's revenues from nursing programs and gift shops should be accounted for in the
A. specific purpose fund.

B. restricted current fund.
C. general fund.
D. time-restricted fund.
37. A private, not-for-profit hospital uses a fund structure which includes a general fund and donor restricted
funds. Contributions received from donors for research to be conducted by the hospital should be accounted
for in the
A. specific purpose fund.

B. time-restricted fund.
C. general fund.
D. restricted current fund.
38. On June 30, 2009, a voluntary health and welfare organization received pledges from donors amounting
to $50,000. The donors did not place any time or use restrictions on the amount pledged. It was estimated
that 10% of the pledges would not be collected. How should the voluntary health and welfare organization
report these pledges on its financial statements prepared at the end of its fiscal year, June 30, 2009?
A. As deferred contribution revenue-unrestricted for $45,000.

B. As fund balance for $45,000.
C. As contribution revenue-unrestricted for $50,000.
D. As fund balance-unrestricted for $50,000.
39. Financial reports of investor-owned hospitals parallel those for:
I. public-sector hospitals.
II. commercial enterprises.
A. I.
B. II.
C. Both I and II.
On June 30, 2009, a voluntary health and welfare organization received a multi-year pledge from a donor.
The donor pledged to contribute $2,000 on June 30 for each of the next five years, starting on June 30,
2009. The donor did not place any use restrictions on the amount pledged. The present value factor for a
five-payment annuity due on June 30, 2009 at 6% is 4.465.
40. Refer to the above information. For the year ended June 30, 2009, the pledge increased unrestricted net
assets by
A. $10,000.
B. $ 8,930.
C. $ 2,000.
D. $ 1,886.
41. Refer to the above information. For the year ended June 30, 2009, the pledge increased temporarily
restricted net assets by
A. $10,000.
B. $ 2,000.
C. $ 8,930.
D. $ 6,930.
42. A private, not-for-profit hospital received a donation of medicine from the XYZ Pharmaceutical Company
on March 15, 2009. The cost of the medicine to the company was $66,000, and its market value was
$110,000. Twenty percent of the medicine was used by the hospital during the year ended June 30, 2009.
On the hospital's statement of operations for the year ended June 30, 2009, the contribution of medicine
would increase operating revenues by
A. $ 66,000.
B. $110,000.
C. $ 52,800.
D. $ 88,000.
43. In accordance with FASB 116, contributions of services are recognized as increases in unrestricted net
assets by a private, not for profit entity if which of the following criteria are satisfied?
I. The services received create or enhance nonfinancial assets.
II. The services require specialized skills, are provided by individuals possessing those skills, and would
typically need to be purchased if not provided by donations.
III. The services will be performed within the current fiscal year.
A. I or II.
B. I or III.
C. II or III.
D. I, II, III.
44. The disclosure, "net assets released from restrictions," is reported on which of the following financial
statements for a voluntary health and welfare organization?
I. The statement of cash flows.
II. The statement of activities.
A. I.
B. II.
C. Both I and II.
45. Good Faith Hospital, operated by a religious organization, billed patients $4,000,000 for services rendered
during the year ended June 30, 2009. The hospital realized cash of $3,500,000 from the patient billings
because of the following reductions:
(1) contractual adjustments of $140,000 granted to private insurance companies and to the federal
government; and
(2) uncollectible accounts receivable of $360,000.
On the statement of operations prepared for the year ended June 30, 2009, Good Faith Hospital should
report net patient service revenue of
A. $3,500,000.
B. $3,860,000.
C. $4,000,000.
D. $3,640,000
46. On the statement of operations for a private, not-for-profit hospital, depreciation expense is reported as a
subtraction from

B. unrestricted revenue, gains and other support.
C. property, plant, and equipment.
D. unrestricted fund balance.
47. The financial reporting for a voluntary health and welfare organization and a private, not-for-profit health
care entity is similar in that both of these entities
I. report their net assets in three classes, unrestricted, temporarily restricted, and permanently restricted, on
the statement of financial position.
II. report temporarily restricted contributions as additions to fund balance when the contributions are
received.
A. I.
B. II.
C. Both I and II.
48. A voluntary health and welfare organization received a cash donation of $25,000 on June 1, 2009. The
donor did not specify how the donation was to be spent; however, the donor asked the governing board not
to spend the donation until December of 2009. On June 30, 2009, the end of the fiscal year, the voluntary
health and welfare organization should report the cash donation as
A. a deferred revenue on the statement of financial position.

B. temporarily restricted contribution revenue on the statement of activities.
C. an increase in fund balance in the restricted current fund on the statement of changes in fund balances.
D. unrestricted contribution revenue on the statement of activities.
49. During the fiscal year ended June 30, 2009, a private, not-for-profit hospital acquired equipment costing
$75,000, with cash contributed by donors who restricted their contributions for this purpose. On the
hospital's statement of cash flows for the year ended June 30, 2009, the equipment acquisition should be
reported in which of the following sections?
I. Operating activities
II. Financing activities
III. Investing activities
A. I.
B. II.
C. III.
D. I, II, III.
50. During the fiscal year ended June 30, 2009, Global Charities, a voluntary health and welfare organization,
received unrestricted cash contributions of $500,000 and temporarily restricted cash contributions of
$300,000. All of the temporarily restricted contributions were restricted by the donors for equipment
acquisitions. During the year ended June 30, 2009, equipment costing $250,000 was acquired with the
restricted contributions. As a result of these two contributions, Global Charities' statement of cash flows,
prepared for the year ended June 30, 2009, would report an increase in net cash provided by operating
activities of
A. $500,000.
B. $800,000.
C. $750,000.
D. $550,000.
51. A voluntary health and welfare organization received a $300,000 contribution on April 15, 2009 from
a donor who stipulated the donation be invested permanently in stocks and bonds. The donor further
stipulated earnings from the investments be spent according to the wishes of the governing board of the
voluntary health and welfare organization. Earnings from the investments for the year ended June 30, 2009
amounted to $6,000. How would the voluntary health and welfare organization report this information for
the year ended June 30, 2009?
A. Increase in permanently restricted net assets of $306,000.

B. Increase in permanently restricted net assets of $300,000, and in temporarily restricted net assets of
$6,000.
C. Increase in permanently restricted net assets of $300,000, and in unrestricted net assets of $6,000.
D. Increase in permanently restricted net assets of $300,000, and in board-designated net assets of $6,000.
52. Which financial statement(s) is (are) required for a voluntary health and welfare organization which is not
required for a private, not-for-profit hospital?
I. A statement of operations.
II. A statement of functional expenses.
A. I.
B. II.
C. Both I and II.
53. A private, not-for-profit hospital expended $35,000 of temporarily restricted assets to acquire equipment.
What account should be debited in the hospital's plant replacement and expansion fund as a result of the
acquisition of the equipment?
A. Net Assets Released—Plant Acquisition.

B. Fund balance Released—Plant Acquisition.
C. Equipment.
D. Contribution Revenue Released—Plant Acquisition.
54. In 2009, a private not-for-profit hospital received a $200,000 cash contribution to its endowment fund.
During the year, hospital administration invested $150,000 of the funds. Which of the following statements
regarding the effect of these transactions on the preparation of the hospital's statement of cash flow is true?
A. The $200,000 contribution will appear in the investing activities section of the cash flow statement as a
cash inflow.
B. The $200,000 contribution will appear in the financing activities section of the cash flow statement as a
cash inflow.
C. The $150,000 investment will appear in the investing activities section of the cash flow statement as a
cash inflow.
D. The $150,000 contribution will appear in the financing activities section of the cash flow statement as a
cash inflow.
A private, not-for-profit hospital received a contribution of $40,000 on June 15, 2008. The donor restricted
the contribution to funding research activities currently being performed by the hospital. For the year ended
December 31, 2008, the hospital spent $30,000 of the contribution on research activities. The hospital
expended the remaining $10,000 on research activities in January of 2009.
55. Refer to the above information. On the statement of cash flows prepared for the year ended December 31,
2008, the events described would increase net cash flows provided by
A. operating activities by $40,000.

B. financing activities by $40,000.
C. financing activities by $10,000.
D. operating activities by $10,000.
56. Refer to the above information. On the statement of operations prepared for the year ended December 31,
2008, the events described would
A. increase operating income by $30,000.

B. have no effect on operating income.
C. increase unrestricted net assets by $30,000.
D. decrease unrestricted net assets by $30,000.
57. Refer to the above information. On the statement of changes in net assets prepared for the year ended
December 31, 2008, the events described would
A. increase temporarily restricted net assets by $10,000.

B. decrease temporarily restricted net assets by $10,000
C. increase unrestricted net assets by $10,000.
D. decrease unrestricted net assets by $10,000.
58. In a private, not-for-profit hospital, which fund would record cash and investments which have been
restricted by the governing board for acquisitions of equipment and construction of a new hospital
addition?
A. The plant replacement and expansion fund.

B. The specific purpose fund.
C. The endowment fund.
D. The general fund.
59. The governing board of a hospital operated by a religious organization designated $3,000,000 of cash to be
used for plant expansion. The cash was invested in stocks and bonds which earned $250,000 of dividend
and interest income. The income from investments should be reported on the hospital's statement of
operations as an increase in

B. operating income.
C. either temporarily restricted net assets or unrestricted net assets, depending upon the nature of the
governing board's restrictions.
D. fund balance in the general fund.
60. A voluntary health and welfare organization received unrestricted cash donations of $20,000 from donors
who attended a dinner held for the benefit of the organization. The costs of the dinner, including room
rental, and other expenses, amounted to $7,000. On the statement of activities prepared for the voluntary
health and welfare organization, the expenses of the dinner should be
A. reported as management and general expenses.

B. netted against the $20,000 of contribution revenue.
C. reported as fund raising costs.
D. reported as programmatic expenses.
61. On the statement of functional expenses prepared for a voluntary health and welfare organization,
depreciation expense is allocated to
I. expenses for program services.
II. expenses for supporting services.
A. I.
B. II.
C. Both I and II.
62. A voluntary health and welfare organization developed and printed informational materials which were
intended to both educate the public about how its resources are used to help people in need and to also
appeal to the public for much needed support. In this situation, the cost of the informational materials
should be
A. accounted for as fund-raising expense.

B. allocated to expenses for program services.
C. allocated between expenses for program services and fund-raising expense.
D. accounted for as management and general expense.
63. The financial statements of other not-for-profit entities (ONPOs) are similar to the financial statements of
which of the following entities?
A. A public university
B. A hospital operated by a county government
C. An enterprise fund of a state or local government
D. A voluntary health and welfare organization
64. A private, not-for-profit hospital received the following restricted contributions and other receipts during
the year ended December 31, 2008:
None of the contributions or other receipts were expended during the ended December 31, 2008. For the
year ended December 31, 2008, what amount would be reported on the hospital's statement of changes in
net assets as an increase in temporarily restricted net assets?
A. $1,500,000
B. $1,200,000
C. $ 500,000
D. $ 300,000
65. In accordance with FASB 116, pledges, which are temporarily restricted by donors, are reported as
increases in temporarily restricted net assets on the statement of activities of a voluntary health and welfare
organization when the
A. pledges are received in cash.

B. cash received from the pledges is expended in accordance with the donors' wishes.
C. pledges are made by the donors.
D. cash is received from the pledges is transferred to unrestricted net assets.
66. A voluntary health and welfare organization received $200,000 of pledges from donors on February 15,
2009. The donors did not place either time or use restrictions on the amount pledged. The governing
board estimated that 10% of the pledges would be uncollectible. During the remainder of fiscal 2009, cash
received from pledges amounted to $184,000. For the year ended June 30, 2009, what amount should the
voluntary health and welfare organization report as Contributions-Unrestricted?
A. $0
B. $200,000
C. $184,000
D. $180,000
67. A voluntary health and welfare organization reports pledges receivable on its statement of financial
position at the present value of the future cash collections. How is the increase in the present value of
the pledges receivable, which is due to the passage of time, reported on the voluntary health and welfare
organization's statement of activities?
A. As interest income-temporarily restricted.

B. As an increase in pledges receivable-temporarily restricted.
C. As an increase in contributions-temporarily restricted.
D. As an increase in deferred revenue-temporarily restricted.
Local Services, a voluntary health and welfare organization had the following classes of net assets on July
1, 2008, the beginning of its fiscal year:
During the year ended June 30, 2009, the following events occurred:
(1) It purchased equipment, costing $100,000, with contributions restricted for this purpose. The
contributions had been received from donors during June of 2008.
(2) It received $130,000 of cash donations which were restricted for research activities. During the year
ended June 30, 2009, $90,000 of the contributions were expended on research.
(3) It sold investments classified in the permanently restricted class for a loss of $40,000. Dividends
and interest income earned on the investments amounted to $70,000. There were no restrictions on how
investment income was to be used.
(4) It received cash contributions of $200,000 from donors who did not place either time or use restrictions
upon their donations.
(5) Expenses, excluding depreciation expense, for program services and supporting services incurred during
the year ended June 30, 2009, amounted to $260,000.
(6) Depreciation expense for the year ended June 30, 2009, was $80,000.
68. Refer to the above information. At June 30, 2009, the amount of permanently restricted net assets reported
on the statement of financial position would be
A. $1,070,000.
B. $1,030,000.
C. $1,000,000.
D. $ 960,000.
69. Refer to the above information. On the statement of activities for the year ended June 30, 2009, temporarily
restricted net assets
A. increased $130,000.
B. increased $40,000.
C. decreased $100,000.
D. decreased $60,000.
70. Refer to the above information. On the statement of activities for the year ended June 30, 2009, total
revenues and other support-unrestricted would be reported at
A. $270,000.
B. $200,000.
C. $370,000.
D. $460,000.
71. Refer to the above information. On the statement of activities for the year ended June 30, 2009,
reclassifications would be reported at
A. $190,000.
B. $100,000.
C. $ 90,000.
D. $230,000.
72. Refer to the above information. Which of the following statements is (are) correct about the program and
supporting expenses that would be reported on the statement of activities for the year ended June 30, 2009?
I. Program and supporting expenses should be reported at $340,000.
II. All of the program and supporting expenses should be reported as a deduction from unrestricted
revenues and other support.
A. I only
B. II only
C. I and II
D. Neither I nor II
The transactions listed in the following questions occurred in a private, not-for-profit hospital during
2008. For each transaction, indicate its effect on the hospital's statement of operations for the year ended
December 31, 2008.
73. Transaction: Billed patients for services rendered.
Effect on Statement of Operations:
A. Increases operating income.

B. Decreases operating income.
C. The transaction is reported on the statement of operations, but there is no effect on operating income.
D. The transaction is not reported on the statement of operations.
74. Transaction: A gain was realized from the sale of endowment investments. The gain is not expendable.

75. Transaction: Depreciation expense was recorded for the year.

76. Transaction: The governing board designated assets for plant expansion.

77. Transaction: Received contributions restricted by donors for research activities.

78. Transaction: Expended 50% of the contributions restricted for research in the previous item.

79. Transaction: Received contributions restricted by donors for equipment acquisition.

80. Transaction: Acquired equipment with all of the contributions received in the previous item.

81. Transaction: Endowment income was earned. The donor placed no restrictions on the investment earnings.

82. Transaction: Received cash contribution from donor who stipulated the contribution be permanently
invested.

83. Transaction: Acquired investments with cash received in the previous item.

84. Transaction: Received tuition revenue from hospital nursing program and cash from sales of goods in the
hospital gift shop.

Private Not-For-Profit (NFP) Entities.
Select from this list of terms to answer the following questions.
A. fair market value
B. unrestricted net assets
C. GASB
D. FASB
E. Statement of Revenues, Expenditures, and Changes in Fund Balance
F. lower of cost or market
G. accrual method
H. Statement of Activities
I. general fund, restricted fund, endowment fund
J. modified accrual method
K. permanently restricted net assets
L. temporarily restricted net assets
M. endowment fund
N. unrestricted, temporarily restricted, permanently restricted
O. depreciation
P. works of art and other historical treasures
Q. general fund
R. Cost
Indicate your choice by entering the letter corresponding to the correct term. A term may be used more than
once or not at all.
85. "Responsible for establishing accounting standards for private NFP entities" describes which term listed
above?
86. " Classification of an endowment contribution" describes which term listed above?
87. "Reported as an expenditure of the fund using plant and equipment" describes which term listed above?
88. "Financial statement of a private NFP entity" describes which term listed above?
89. "Tangible fixed assets not depreciated by a private college or university" describes which term listed
above?
90. "Basis for measuring investments in financial statements" describes which term listed above?
91. "Classification of investment income from endowment investments if there are no donor restrictions as to
income" describes which term listed above?
92. "Classification of contributions restricted by purpose" describes which term listed above?
93. "Basis for measuring expenditures for contributed services requiring special skills" describes which term
listed above?
94. "Basis for measuring contributions" describes which term listed above?
95. "Net asset classifications per SFAC 6" describes which term listed above?
96. "Basis of accounting for private NFPs" describes which term listed above?
97. The following information is contained in the funds which are used to account for the transactions of the
Hope Hospital, which is operated by a nonprofit, religious organization. The balances in the accounts are as
of June 30, 2009, the end of the hospital's fiscal year. Credit amounts are in parentheses.
Additional information:
The $64,000 in the specific purpose fund is restricted for research activities to be conducted by the hospital.
Required: Prepare a statement of financial position for Hope Hospital as of June 30, 2009.
98. The CFO of a "Not-for-Profit" hospital is making a presentation at your college. The presentation
is for Business and Health-Science majors. During the presentation the CFO mentions assets being
reported "above the line". On the way out your roommate a health-science major asks, you an accounting
major, to explain what the CFO was referring to. What do you respond?
The transactions described in the following questions occurred in a voluntary health and welfare
organization during the year ended December 31, 2008. For each transaction, indicate its effect(s) on the
organization's statement of activities prepared for the year ended December 31, 2008. List all effects
of transactions affecting more than one class of net assets. Indicate your choice(s) by entering the letter
corresponding to the effects listed here:
Effects of Transactions on Statement of Activities
A. Increases unrestricted net assets.
B. Decreases unrestricted net assets.
C. Increases temporarily restricted net assets.
D. Decreases temporarily restricted net assets.
E. Increases permanently restricted net assets.
F. Decreases permanently restricted net assets.
G. Transaction is not reported on the statement of activities.
99. Received cash contributions restricted by donors for research.
100.Incurred fund-raising costs.

101.Depreciation expense for the year was recorded.
102.The governing board designated assets for plant expansion.
103.A gain was realized from the sale of securities which were permanently invested. The gain is restricted as
to use.
104.Endowment income was earned. The donor specified that the income be used for community service.
105.Received a multi-year pledge, with cash being received this year and for the next 4 years. Donors did not
place any use restrictions on how the pledges were to be spent.
106.Income was earned from investments of assets that the board designated in item (4).
107.Received pledges from donors who placed no time or use restrictions on how the pledges were to be spent.
108.Received cash contributions restricted by donors for equipment.
109.Acquired equipment will all of the contributions received in item (10).
110.Expended 75% of the contributions received in item (1) for research.

Ch19 Key
1. D
2. C
3. A
4. C
5. A
6. B
7. A
8. C
9. D
10. D
11. D
12. D
13. A
14. C
15. A
16. D
17. C
18. A
19. A
20. C
21. A
22. B
23. C
24. C
25. D
26. B
27. A
28. A
29. A
30. A
31. B
32. A
33. B
34. A
35. C
36. C
37. A
38. A
39. B
40. C
41. D
42. B
43. A
44. B
45. B
46. B
47. A
48. B
49. C
50. A
51. C
52. B
53. A
54. B
55. D
56. B
57. B
58. D
59. B
60. C
61. C
62. C
63. D
64. A
65. C
66. C
67. C
68. D
69. D
70. D
71. A
72. C
73. A
74. D
75. B
76. D
77. D
78. C
79. D
80. A
81. A
82. D
83. D
84. A
85. D
86. K
87. O
88. H
89. P
90. A
91. B
92. L
93. A
94. A
95. N
96. G
97.
98. Not-for-Profit hospitals report an operating performance indicator in their statement of operations. This item reports the hospital's operating
activities for the period and should include both operating income (loss) for the period and other income available for current operations. FASB 117
requires that net assets released from restrictions that are used in operations to be included in the performance indicator, thus, "above the line". This
allows the reader of the financial statements to be able to identify assets that were previously restricted, held for specified purposes by the donor, that
are now available for use in operations. Therefore, expenses incurred to achieve the entity's operations can be matched with the resources.
99. C
100. B
101. B
102. G
103. C
104. C
105. A and C
106. A
107. A
108. C
109. A and D
110. D
Ch19 Summary
Category # of
Questions
AACSB: Analytic 18
AACSB: Communication 1
AACSB: Reflective Thinking 91
AICPA: Critical Thinking 1
AICPA: Decision Making 97
AICPA: Measurement 11
AICPA: Reporting 1
Baker - Chapter 019 116

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Ch19

A. Unrestricted current funds and agency funds.

A. Current revenue of $280,000.

A. tuition revenues of $4,000 and expenditures of $4,000.

A. need only be disclosed in the footnotes to the financial statements.

A. Permanently restricted net assets.

A. the fund balance of the restricted current fund.

A. temporarily restricted net assets.

A. unrestricted net assets.

A. In the notes to the financial statements only.

A. Temporarily restricted net assets

A. Temporarily restricted net assets

A. Revenue released from equipment acquisition restriction

A. specific purpose fund.

A. specific purpose fund.

A. As deferred contribution revenue-unrestricted for $45,000.

A. temporarily restricted net assets.

A. a deferred revenue on the statement of financial position.

A. Increase in permanently restricted net assets of $306,000.

A. Net Assets Released—Plant Acquisition.

A. operating activities by $40,000.

A. increase operating income by $30,000.

A. increase temporarily restricted net assets by $10,000.

A. The plant replacement and expansion fund.

A. temporarily restricted net assets.

A. reported as management and general expenses.

A. accounted for as fund-raising expense.

A. pledges are received in cash.

A. As interest income-temporarily restricted.

A. Increases operating income.

A. Increases operating income.

A. Increases operating income.

A. Increases operating income.

A. Increases operating income.

A. Increases operating income.

A. Increases operating income.

A. Increases operating income.

A. Increases operating income.

A. Increases operating income.

A. Increases operating income.

A. Increases operating income.

100.Incurred fund-raising costs.

102.The governing board designated assets for plant expansion.

108.Received cash contributions restricted by donors for equipment.

109.Acquired equipment will all of the contributions received in item (10).

110.Expended 75% of the contributions received in item (1) for research.

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