12. A not-for-profit agency has elected not to capitalize its contributed collections (has not elected to list the value of the collections in the Statement of Financial Position). A new collection valued at $10,000 was received this year. How will this affect the financial statements?

a. a revenue entry of $10,000 will be included in this years statements

b. a revenue entry of $5,000 will be included because the agency wishes to be conservative, in this years statements

c. no revenue will be included in this years statements

13. A donor had previously donated $2,000 to a not-for-profit entity, stipulating that the gift must be used to finance the annual Fall Harvest Festival, thus the funds were placed in temporarily held assets at the time of receipt. The Festival is held and the gift is used for the stipulated purpose. How will the expenses be recorded and what is the effect on net assets?

a. The expense is reported in the temporarily restricted column of the statement of activities. Temporarily restricted net assets are increased, and unrestricted net assets are decreased by the amount of the donation.

b. The expense is reported in the unrestricted column of the statement of activities.

c. The expense is reported in the unrestricted column of the statement of activities. Unrestricted net assets are increased, and temporarily restricted net assets are decreased by the amount of the donation.

14. A not-for-profit museums governing board decides to set aside $50,000 in a separate fund called the Visitor Study Fund which will be used to finance a study on the exhibit viewing interests of the museums patrons. In which net asset classification of the museum's Statement of Financial Position should this fund be reported?

a. Unrestricted

b. Temporarily restricted

c. Permanently restricted

d. Endowment funds

15. A not-for-profit maintains a Shelter Fund to account for its extensive program of financial assistance to individuals needing to pay for temporary housing. The Shelter Funds are derived from many sources, including both donations and amounts set aside by the agencys governing board. When it prepares its statement of financial position, how should the agency classify the net assets of the Shelter Fund?

a. All net assets should be classified as temporarily restricted.

b. All net assets should be classified as permanently restricted.

c. Net assets should be classified as either temporarily or permanently restricted, depending on the restrictions imposed by the governing board and the donors.

d. Net assets set aside by the governing board should be classified as unrestricted, and net assets from donations should be classified as temporarily or permanently restricted, depending on the nature of the donor-imposed restrictions.

16. A not-for-profit entity that conducts numerous programs receives investments as a donation. The donor, in a letter accompanying the donation, states that the principal of the donation must be maintained intact permanently, and that the income from the investment must be used to finance research in developing a onetime flu shot vaccination. If the entity receives income of $8,000 from these investments, how should be income be reported?

a. as an increase in unrestricted net assets

b. as an increase in temporarily restricted net assets

c. as an increase in permanently restricted net assets

d. as an increase in any of the net asset classifications directed by the entity's trustees

17. A not-for-profit entity receives equipment having a fair value of $50,000 as a gift. How should the gift be reported in the entity's financial statements?

a. as an asset and as an increase in permanently restricted net assets

b. as an asset and as an increase in unrestricted net assets

c. as a footnote only, because gifts of equipment are not be reported on the face of financial statements

d. as an asset and as an increase in temporarily restricted net assets