JOSE RIZAL UNIVERSITY

ACCOUNTING 61
(GOVERNMENT ACCOUNTING & NPNGO)

SET - A

I. Multiple Choice (THEORIES AND PROBLEMS)

Instruction: Identify the letter that best completes the statement or answers the question.
Shade the box letter of your choice. ERASURES NOT ALLOWED.
FOR ITEMS 1 TO 5

Indicate in which fund of a voluntary health and welfare organization the following events normally would be recorded
in:
A. UNRESTRICTED FUND
B. TERMPORARILY RETRICTED FUND
C. PERMANENTLY RESTRICTED FUND
D. OTHER NET ASSETS

1. Receipt of donated securities NOT TO BE Sold, and revenue from which is to be used for specified current
activities.

2. Receipt of revenue from donated securities in transaction 1.

3. Receipt of donated fixed assets, whichare to be sold, with no restrictions on proceeds.

4. Appropriation of the unrestricted net assets by the board of directors.

5. Contribution received to be used in the regular community services.

6. In accounting for private, not-for-profit organizations, revenues and expenses are reported at
_________ amounts and most gains and losses are reported at ___________ amounts.

a. net, gross
b. gross, net
c. gross, gross
d. net, net

7. When the temporary-use restriction on a charitable donation is satisfied, which of the following is
not reported?

a. net assets released from restrictions in changes in temporarily restricted net assets
b. net assets released from restrictions on the statement of cash flows
c. expenses as changes in unrestricted net assets
d. net assets released from restrictions in changes in unrestricted net assets

8. Which one of the following statements is not required for voluntary health and welfare
organizations?
a. statement of financial position
b. statement of activities
c. statement of functional expenses
d. statement of changes in net assets

9. Donor-imposed restricted cash contributions received by a not-for-profit hospital are reported as

restricted:
a. deferred cash contributions on the statement of cash flows
b. deferred contribution revenue on the statement of activities
c. contribution revenue on the statement of activities
d. cash on the statement of changes in net assets
 10. A donation of professional services to a voluntary health and welfare organization is recorded
as:

a. a memorandum entry for the free services

b. an unrestricted revenue
c. a restricted revenue
d. both an unrestricted revenue and as an expense

11. A donation of supplies to a voluntary health and welfare organization is recorded as:

a. a memorandum entry for the free supplies

b. an unrestricted revenue
c. a restricted revenue
d. both an unrestricted revenue and as an expense

12. The cash receipt of a government grant that will require performance from the not-for-profit
organization is recorded as:

a. an unrestricted revenue
b. a restricted revenue
c. a deferred revenue
d. a refundable deposit

13. Under FASB not-for-profit accounting guidance, an unconditional transfer of cash or other assets
to an entity, or a settlement or cancellation of its liabilities in a voluntary, non-reciprocal
transfer, is called a(n):
a. unconditional promise to give
b. contribution
c. conditional promise to give
d. residual equity transfer

14. Unconditional promises to give that include promises of payments due in future periods (next year
or later) are reported as:

a. unrestricted revenues
b. a memorandum, until the year of the promised payment
c. deferred revenues until payment is received
d. restricted revenues

15. If the resource provider limits the use of resources received in an exchange transaction, the
revenue should be classified as:
a. unrestricted revenues and unrestricted net assets
b. restricted revenues and restricted net assets
c. unrestricted revenues and restricted net assets
d. restricted revenues and unrestricted net assets

16. A voluntary welfare organization is permitted to use building facilities rent free. This should be recorded as:
a. a footnote in the financial statements disclosing the rent-free arrangement.
b. a contribution.
c. rent expense at the fair market value.
d. both b and c are correct.

17. Which of the following items are considered special event support for a voluntary health and welfare organization?
a. bingo games and bake sales
b. a donated painting
c. donated stock in a publicly traded company
d. bequest of a building

18. A contribution made in 2009 to a voluntary health and welfare organization, which is restricted to usage to celebrate
the anniversary in the year 2015, is recorded as a credit to:
a. Contributions.
b. Revenue--unrestricted.
c. Revenue--temporarily restricted.
d. Revenue--permanently restricted.

19. What is the proper method of carrying investments by a voluntary health and welfare organization?
a. Cost
b. lower of cost or market
c. either cost or market if applied consistently
d. market value measured at year end
20. Which of the following financial statements is not required when reporting for a voluntary health and welfare
organization?
a. Statement of Financial Position
b. Statement of Support, Revenue, Expenses and Changes in Fund Balances
c. Statement of Functional Expenses
d. Statement of Cash Flows

21.A pledge is unconditional if it

a. depends only on the passage of time.
b. depends on the demand by the university to be paid.
c. can be spent on any purpose.
d. a and b are correct.

22. A contribution is a(n)

a. conditional transfer of cash.
b. unconditional transfer of cash.
c. donation of services which would not be purchased otherwise.
d. donation of unskilled services which you might purchase.

23. Contribution of a work of art to a museum for public exhibit would be

a. recognized as a contribution at fair market value.
b. recognized as operating revenue based upon admission fees.
c. recognized as an asset subject to depreciation.
d. not be recognized as a contribution.

24. A life income fund is used when:

a. resources are accepted with a stipulation that periodic payments will be made to the donor for a
specified number of years
b. endowments are made to the college or university
c. resources are accepted with a stipulation that periodic payments will be made to the donor for the
lifetime of the donor
d. All income earned on donated assets is to be paid to the donor over their lifetime.

25. Endowment income was restricted to student aid activities. Cash is paid for all activities. Which is the credit
necessary for classification?
a. Reclassification In--unrestricted, satisfaction of program restrictions
b. Reclassification Out--unrestricted, satisfaction of program restrictions
c. Reclassification In--temporarily restricted, satisfaction of program restrictions
d. Reclassification Out--temporarily restricted, satisfaction of program restrictions.

26. Gains and losses, in other than the first year, from pooled investments are distributed to participating
funds based on:
a. cost of contributed assets at the time of original pooling.
b. market value of contributed assets at the time of original pooling.
c. market value at the time of any additions or withdrawals.
d. market value at the previous valuation date.

27. Which of the following expenses would be considered a program service expense for the local cancer
society?
a. salary of a home care nurse
b. salary of the local director
c. rent for the local office
d. printing costs for a fund-raising brochure

28. A CPA donates her services to prepare the annual financial report for a voluntary health and welfare
organization. The services should be recorded as:
a. revenues-unrestricted.
b. accounting expenses.
c. a footnote disclosure in the financial report.
d. both a and b are correct.

29. Voluntary health and welfare organizations prepare a Statement of Activities which displays program and
supporting services costs. Program expenses for a cancer society would include:
a. fund-raising costs
b. chief executive officer salary
c. program costs of cancer research
d. Brochures for prospective members

30. Donated services are recognized as a contribution if:

a. they create or enhance nonfinancial assets.
b. they require specialized skills and the individuals performing the donated service possess
those skills.
c. the organization would otherwise purchase the service.
d. All of the above are correct.
 JOURNAL ENTRIES 10 POINTS

. The following events are for BAHAY BUHAY FOUNDATION, a voluntary health and welfare organization
that provides emergency shelter and health care for the homeless, as well as educational programs:

a. A fund-raising program for a portable medical clinic yielded cash contributions of

P50,000 and pledges of P100,000. In the past, 5% of pledges have been shown to
be uncollectible.

b. A note for P100,000 was signed to finance the remaining cost of the clinic.

c. The mobile clinic and support materials were purchased for P240,000.

d. A note payment of P5,000 and P1,500 in interest was paid for the note in part (c).

Required:

Record the necessary journal entries.

END OF EXAMINATION