Advertisement Upgrade to remove ads

Which of the following would normally be included as revenue for a not-for-profit hospital?
A. Unrestricted interest income from an endowment fund.
B. An unrestricted gift.
C. Tuition received from an educational program.
D. All of the above.

D. All of the above.

An unrestricted gift pledge from an annual contributor to a not-for-profit hospital made in December 20X1 and paid in March 20X2 would generally be credited to:
A. Contribution Revenue in 20X1.
B. Contribution Revenue in 20X2.
C. Other income in 20X1.
D. Other income in 20X2.

A. Contribution revenue in 20X1.

Which of the following would be included in the unrestricted funds of a not-for-profit hospital?
A. Permanent endowments.
B. Term endowments.
C. Board-designated funds originating from previously accumulated income.
D. Funds designated by the donor for plant expansion and replacement funds.

C. Board-designated funds originating from previously accumulated income.

Depreciation should be recognized in the financial statements of:
A. Proprietary (for-profit) hospitals only.
B. Both proprietary and not-for-profit hospitals.
C. Both proprietary and not-for-profit hospitals only when they are affiliated with a college or university.
D. All hospitals, as a memorandum entry not affecting the statement of revenues and expenses.

B. Both proprietary and not-for-profit hospitals.

Which basis of accounting should a voluntary health and welfare organization use?
A. Cash basis for all funds.
B. Modified accrual basis for all funds.
C. Accrual basis for all funds.
D. Accrual basis for some funds and modified accrual basis for other funds.

C. Accrual basis for all funds.

Transaction: Patients billed for services rendered. What are the effects of transactions of statement of changes in net assets?

Increases temporarily restricted net assets

Transaction: Realized a gain from the sale of securities that are permanently invested. What are the effects of transactions of statement of changes in net assets?

Increases permanently restricted net assets.

Transaction: Recorded depreciation expense for the year. What are the effects of transactions of statement of changes in net assets?

Decreases unrestricted net assets.

Transaction: Designated assets for plant expansion. What are the effects of transactions of statement of changes in net assets?

Does not affect the statement of changes in net assets.

Transaction: Contributions restricted for research activities received. What are the effects of transactions of statement of changes in net assets?

Increases temporarily restricted net assets.

Transaction: Contributions restricted for equipment acquisition. What are the effects of transactions of statement of changes in net assets?

Increases temporarily restricted net assets.

Transaction: Acquired equipment with all of the contributions received in previous item. What are the effects of transactions of statement of changes in net assets?

Decreases temporarily restricted net assets.

Transaction: Earned endowment income. The donor placed no restrictions on the investment earnings. What are the effects of transactions of statement of changes in net assets?

Increases unrestricted net assets.

Transaction: Expended 50 percent of the contributions restricted for research in previous item. What are the effects of transactions of statement of changes in net assets?

Decreases temporarily restricted net assets.

Transaction: Received cash contribution from donor who stipulated the contribution be permanently invested. What are the effects of transactions of statement of changes in net assets?

Increases permanently restricted net assets.

Transaction: Acquired investments with cash received in item 10. What are the effects of transactions of statement of changes in net assets?

Does not affect the statement of changes in net assets.

Transaction: Received tuition revenue from hospital nursing program and cash from sales of goods in the hospital gift shop. What are the effects of transactions of statement of changes in net assets?

Increases unrestricted net assets.

Assessed students $2,000,000 for tuition for the winter semester, starting in January 20X8.

Increase, Unrestricted.

Received $1,000,000 from the federal government to be distributed to qualified students as loans and grants.

Increase, Temporarily restricted.

Recognized depreciation expense of $200,000 on university buildings and equipment for the fiscal year.

Decrease, Unrestricted.

Received $1,500,000 in alumni contributions restricted to the construction of a new library
building. Construction of the library is expected to begin in September 20X8.

Increase, Temporarily restricted.

Invested the contributions received in item 4 in equity securities that had a market value of
$1,650,000 on June 30, 20X8.

Increase.

Received $75,000 of investment revenue from investments in a term endowment. The donor
stipulated that the investment revenue be used to fund scholarships for qualified entering freshmen.

Increase, Temporarily restricted.

Used $60,000 of the investment revenue in item 6 to fund scholarships during the year ended June 30, 20X8.

Decrease, Temporary restricted.

Designated $250,000 of cash to be used for refurbishing the steam tunnels used for heating the university during the winter.

No Effect.

Received from an alumnus a contribution of artwork with a fair value of $3,750,000. The
donor has stipulated that the artwork be preserved, that it not be sold, and that it be on public view in the university museum. The university has a policy of recording donations of works of art and historical treasures.

Permanently Restricted.

Acquired debt securities at a cost of $400,000 during the year. Required by the governing
board to keep these investments intact for the next five years and use interest revenue from the securities for funding summer research grants to faculty of BU.

No Effect.

Received during the year ended June 30, 20X8, interest revenue from the debt securities in item 10, which amounted to $18,000, of which $12,000 was used for research grants.

Increase, Unrestricted.

Alpha's board designates $1,000,000 to purchase investments whose income will be used for capital improvements.

No required reportable event.

Income from investments in item 1, which was not previously accrued, is received.

Increase in unrestricted revenues, gains, and other support.

A benefactor provides funds for a building expansion.

Increase in temporarily restricted net assets.

The funds in item 3 are used to purchase a building in the fiscal period following the period the funds were received.

Increase in unrestricted revenues, gains, and other support.

An accounting firm prepares Alpha's annual
financial statements without charge to Alpha.

Increase in unrestricted revenues, gains, and other support.

Alpha receives investments subject to the donor's requirement that investment income be used to pay for outpatient services.

Increase in permanently restricted
net assets.

A statement of functional expenses is required for a musical arts association that is a not-forprofit organization. TORF

False.

Pledges received by a research organization should result in recording revenue net of estimated uncollectible pledges.

False, Temp Restricted.

A college should account for a donor-restricted contribution to support student scholarships for the next three years as contribution revenue in its unrestricted net assets.

False.

A hospital should record an insurance provider's contractual adjustment on a patient bill as an operating expense for the period in which the services were provided to the patient.

False, Unrestricted.

A university should account for its governing board's designation of resources for the development of a fine arts academic program as a transfer to a temporarily restricted net asset class.

True

An environmental watch organization received a donor-restricted donation for the purchase of equipment. The organization properly accounted for the donation when it was received. When the equipment is acquired, the organization should record "net assets released" from temporarily restricted net assets and an addition to unrestricted net assets.

False

A hospital used donated supplies for its patient services during the year. The hospital should not record the donation because it incurred no cost to obtain the supplies.

False

An organization earned investment income on its endowment fund that is permanently donor
restricted for use in a specific organizational program. The investment income should be
recorded directly into the temporarily restricted net asset class.

False

A hospital has a portfolio of securities that decreased in fair market value during the year. Because the securities were not sold during the year, the change in market value should not be recognized on the hospital's statement of operations.

True

A not-for-profit art museum receives for public display a donation of historical artifacts that the museum will care for and preserve. If any item in the collection is ever sold, the museum has agreed to use the proceeds for additional items for the collection. The museum is not required to record the contribution revenue and increase in collection assets.

False

All of a hospital's building and equipment should be recorded in its restricted building fund.

True

A local accountant donated significant professional services to a local fraternal organization, which should recognize the value of the donated services as both a contribution revenue and an operating expense.

False

A hospital has estimated uncollectibles on patient accounts that should be reported as a reduction of net patient service revenue.

False

A college received a conditional pledge based on the occurrence of a future event. The school should record the contribution at its fair value if it is determined that the future event is possible.

False

A hospital that received a donation restricted for a cancer awareness education program properly recorded the donation as contribution revenue in the temporarily restricted net asset class. The cost of the program that the hospital offered should be recorded as an expense in the temporarily restricted net asset class to offset the contribution revenue for the program.

False

A voluntary health and welfare organization received a contribution that the donor specified could not be spent until the next year. Because the organization had received it in this year, the donation should be recorded as a debit to Cash and a credit to Deferred Revenue in the unrestricted net asset class.

False

A voluntary health and welfare organization conducted a major fund-raising effort that
involved significant expenses. Because the expenses were incurred to obtain contribution
revenue, the fund-raising costs should be accounted for as a direct reduction of contribution revenue to obtain the net contribution revenue reported on the organization's statement of activities.

False.

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions above and try again

Example:

Reload the page to try again!

Reload

Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

Star this term

You can study starred terms together

NEW! Voice Recording

Create Set