Nonprofit Accounting (Practice Quiz)

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Author:
Harold Averkamp, CPA, MBA

For multiple-choice and true/false questions, simply press or click on what you think is the correct answer. For fill-in-the-blank questions, press or click on the blank space provided.

If you have difficulty answering the following questions, learn more about this topic by reading our Nonprofit Accounting (Explanation).

A nonprofit's revenues and expenses are reported on its statement of __________.

The accounting equation of a nonprofit is Assets = Liabilities + __________.

A nonprofit's assets and liabilities are reported on its statement of __________.

The statement of __________ may be prepared using the direct or indirect method.

The nonprofit's financial statement that reports amounts as of a particular date (or moment in time) is the __________.

Since 2018, the net asset classifications temporarily restricted and permanently restricted have been combined into a single classification: net assets with donor __________.

Classifying expenses into program activities and supporting activities is known as the _______________ basis.

Functional

Natural

Reporting expenses by categories such as salaries, rent, utilities, etc. is known as the _______________ basis.

Functional

Natural

Depreciation expense is reported for a not-for-profit organization's equipment and furniture.

True

False

10.

Assets released from donor restrictions will involve two classes of net assets.

False

True

11.

An accounting year ending on a date other than December 31 is referred to as a __________ year.

12.

The FASB Accounting Standards Update to Not-for-Profit Entities requires additional information to be disclosed. This includes the organization's ability to meet its financial __________.

13.

A nonprofit's expenses are reported as part of the changes in net assets __________ donor restrictions.

With

Without

14.

Normally the principal portion of an endowment will be classified as net assets __________ donor restrictions.

With

Without

15.

A nonprofit organization's assets that have been designated by its board of directors for a specific project should be reported on the external financial statements as net assets __________ donor restrictions.

With

Without

16.

Contributions received from donors are reported on the statement of activities under the caption __________.

17.

The Internal Revenue Service Form __________ must be filed annually by nonprofits that have been approved as tax-exempt from federal income taxes.

18.

Which form of financing is allowed for a nonprofit organization?

Debt

Issuing Equity Securities

Both Are Allowed

19.

A nonprofit organization has two major classifications of expenses: supporting services expenses and __________ expenses.

20.

US GAAP requires that the external financial statements of a nonprofit report information by funds.

True

False

21.

Supporting services expenses consist of two broad categories: 1) management and general, and 2) __________.

22.

Nonprofits are automatically exempt from federal income taxes.

True

False

23.

It is permissible for a nonprofit to earn a profit.

True

False

24.

Contributions and net assets are restricted by the nonprofit organization's __________.

Board Of Directors

Executive Director

Donors

25.

The __________ to the financial statements are an integral part of the financial statements and provide important information on the nonprofit's financial restrictions.

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Nonprofit Accounting Outline

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Debits and Credits
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Financial Statements
Balance Sheet
Income Statement
Cash Flow Statement
Working Capital and Liquidity
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Bank Reconciliation
Accounts Receivable and Bad Debts Expense
Accounts Payable
Inventory and Cost of Goods Sold
Depreciation
Payroll Accounting

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