Nonprofit Accounting (Practice Quiz)

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


  1. 1. A nonprofit's revenues and expenses are reported on its statement of
    __________
    activities
    .
  2. 2. The accounting equation of a nonprofit is Assets = Liabilities +
    __________
    Net Assets
    .
  3. 3. A nonprofit's assets and liabilities are reported on its statement of
    __________
    financial position
    .
  4. 4. The statement of
    __________
    cash flows
    may be prepared using the direct or indirect method.
  5. 5. The nonprofit's financial statement that reports amounts as of a particular date (or moment in time) is the
    __________
    statement of financial position
    .
  6. 6. Beginning in the year 2018, the net asset classifications temporarily restricted and permanently restricted have been combined into the following classification: net assets with donor
    __________
    restrictions
    .
  7. 7.

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

    Functional
    Right!
    Natural
    Wrong.
  8. 8.

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

    Functional
    Wrong.
    Natural
    Right!
  9. 9.

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

    True
    Right!
    False
    Wrong.
  10. 10.

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

    True
    Right!
    False
    Wrong.
  11. 11. An accounting year ending on a date other than December 31 is referred to as a
    __________
    fiscal
    year.
  12. 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 it's financial
    __________
    obligations
    .
  13. 13.

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

    With
    Wrong.
    Without
    Right!
  14. 14.

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

    With
    Right!
    Without
    Wrong.
  15. 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
    Wrong.
    Without
    Right!
  16. 16. Contributions received from donors are reported on the statement of activities under the caption
    __________
    revenues
    .
  17. 17. The Internal Revenue Service Form
    __________
    990
    must be filed annually by nonprofits that have been approved as tax-exempt from federal income taxes.
  18. 18.

    Which form of financing is allowed for a nonprofit organization?

    Debt
    Right!
    Issuing Equity Securities
    Wrong.
    Both Are Allowed
    Wrong.
  19. 19. A nonprofit organization has two major classifications of expenses: supporting services expenses and
    __________
    program
    expenses.
  20. 20.

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

    True
    Wrong.
    False
    Right!
  21. 21. Supporting services expenses consist of two broad categories: 1) management and general, and 2)
    __________
    fundraising
    .
  22. 22.

    Nonprofits are automatically exempt from federal income taxes.

    True
    Wrong.
    False
    Right!
  23. 23.

    It is permissible for a nonprofit to earn a profit.

    True
    Right!
    False
    Wrong.
  24. 24.

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

    Board Of Directors
    Wrong.
    Donors
    Right!
    Executive Director
    Wrong.
  25. 25. The
    __________
    notes
    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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