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AICPA Final Exam – Questions & Verified Answers
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AICPA Final Exam – Questions & Verified AnswersWhen should a conditional pledge to a nongovernmental not-for-profit
organization be recognized as revenue?
A. Immediately.
B. When the cash is received.
C. When the pledge conditions are met.
D. At the beginning of the next fiscal period. Correct Ans - C. When
the pledge conditions are met.
What is the appropriate characterization of the net assets of a
nongovernmental not-for-profit organization?
A. Residual interest.
B. Ownership interest.
C. Donor's interest.
D. Equity interest. Correct Ans - A. Residual interest.
A nongovernmental, not-for-profit organization had the following
investments:
Investment
Bonds
Stock A (100 shares) Stock B (200 shares)
Cost
$9,900
$50 per share $40 per share
Fair Value (Beginning of Year)
$10,000 $45 $41
Fair Value (End of Year)
$9,950 $51 $49
What amount should be the total value of investments reported in the year-
end statement of financial position?
A. $24,850
B. $24,800
C. $23,800
D. $22,900 Correct Ans - A. $24,850
The purpose of a statement of financial position for a nongovernmental
not-for-profit entity is to provide relevant information about
,A. The cash receipts and cash payments during a period in time.
B. The effects of transactions and other events and circumstances that
change the amount and nature of net assets.
C. The assets, liabilities, and net assets, and about their relationships to one
another at a moment in time.
D. The changes in permanently restricted net assets, temporarily restricted
net assets, and unrestricted net assets for a period of time. Correct Ans
- C. The assets, liabilities, and net assets, and about their relationships
to one another at a moment in time.
The net asset reclassifications of a nongovernmental not-for-profit
organization would be reported on which of the following?
A. Statement of financial position.
B. Statement of activities.
C. Statement of cash flows.
D. Statement of functional expenses. Correct Ans - B. Statement of
activities.
The Cats and Dogs League was organized as a nongovernmental not-for-
profit organization. The League received a pledge of $10,000 to be used to
build an addition to the kennel. This donation will not be received for three
years. How should this pledge be recorded?
A. As temporarily restricted support of the present value of $10,000.
B. As temporarily restricted support of $10,000.
C. As a conditional promise to give of $10,000.
D. It should not be accounted for until it is received Correct Ans - A.
As temporarily restricted support of the present value of $10,000.
A donor provided a $10 million gift for a specific program to a
nongovernmental, not-for-profit organization. The organization cannot
spend the $10 million, but it may use the income on the gift for the donor-
specified program. In the organization's statement of activities, the gift
should be reported as part of the change in
A. Temporarily restricted net assets.
B. Permanently restricted net assets.
C. Restricted - nonspendable.
D. Unrestricted net assets. Correct Ans - B. Permanently restricted
net assets.
, During the current year, a nongovernmental, not-for-profit hospital
received a gift of $10 million to be used for an addition to the physical
therapy unit. In addition, the hospital also received an investment valued at
$3 million with a donor-imposed restriction allowing only the use of the
investment earnings for paying the salary of an additional physical
therapist. As of the end of the current year, a physical therapist had not
been hired, and earnings on the investment for the year were $150,000.
What amount should be reported as temporarily restricted net assets in the
year-end statement of financial position?
A. $150,000
B. $10,000,000
C. $10,150,000
D. $13,150,000 Correct Ans - C. $10,150,000
A statement of financial position for a nongovernmental not-for-profit
organization reports amounts for which of the following classes of net
assets?
A. Current.
B. Long-term.
C. Permanently restricted.
D. Temporarily unrestricted. Correct Ans - C. Permanently
restricted.
A nongovernmental not-for-profit college has a portfolio of bond
investments that had an original cost of $2,000,000. The college's board of
trustees voted to hold the principal of this fund intact in perpetuity and
designated the earnings to reimburse faculty for travel to academic
conferences. During the year, interest of $50,000 was earned in cash. The
fair value of the bonds was $1,980,000. What amount should the college
report as permanently restricted net assets at year end?
A. $0
B. $1,980,000
C. $2,000,000
D. $2,030,000 Correct Ans - A. $0
A storm damaged the roof of a nongovernmental, not-for-profit
organization's building. A professional roofer repaired the roof at no
charge. How should the roof repairs be recognized in the statement of
activities?
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