Care Foundation is a voluntary health and welfare organization funded by contributions from the general public. In its Statement of Activities, the annual provision for depreciation should

1. Care Foundation is a voluntary health and welfare organization funded by contributions from the general public. Care sold equipment for $30,000 which cost $40,000 and had a book value of $25,000 at the time of sale. In recording the sale, Care should:

A)Record “temporarily restricted revenue” of $ 30,000.

B)Record a gain of $ 5,000.

C)Record a loss of $10,000.

D)None of the above.

2. An unconditional pledge of support is properly recorded as Temporarily Restricted Revenue at the time of the pledge.  Changes in the present value of the receivable resulting from the passage of time is reported as:

A)Interest income.

B)Contribution revenue.

C)Program revenue.

D)None of above is correct.

3. Care Foundation is a voluntary health and welfare organization funded by contributions from the general public. In its Statement of Activities, the annual provision for depreciation should:

A)Not be included.

B)Be included as an element of support.

C)Be included as an element of changes in fund balances.

D)Be included as an element of expense.

4. Uptown Church received a donation of marketable equity securities from a church member. In reviewing the financial press, it is determined that the securities had appreciated during the year. At what amount should Uptown report its marketable equity securities in the year-end balance sheet?

A)Market value at the date of receipt.

B)Donor's cost.

C)Market value at the balance sheet date.

D)The lower of a, b or c.

5. Which of the following factors, if present, would indicate that a transaction is not a contribution?

A)The resource provider received value in exchange.

B)The resource provider entered into the transaction voluntarily.

C)The transfer of assets was unconditional.

D)The organization has discretion in the use of the assets received.

6. A donor made a gift of cash to a private not-for-profit organization in 2015 with an expressed purpose restriction.  All the funds were expended in 2015.  The organization must:

A)Record the gift as a temporarily restricted revenue, reclassify the funds to unrestricted, and then report the expense as unrestricted.

B)Record the gift and expense as unrestricted.

C)Record the gift and expense as temporarily restricted.

D)Use either of the methods described in (a) or (b).

7. Which of the following is a legitimate reason for a private not-for-profit organization to have a surplus (increase in net assets)?

A)To establish working capital.

B)To retire debt.

C)Expand or replace physical facilities.

D)All of the above.

8. What financial ratio is most commonly used to evaluate charitable organizations?

A)Current assets / current liabilities.

B)Program expenses / total expenses.

C)Increase in net assets / total assets.

D)Total expenses / total revenues.

9. A donor gave equipment valued at $60,000 at the beginning of 2015 to a private not-for-profit organization.  The equipment had a 10-year life and depreciation of $6,000 was charged during 2015.  At the end of the year, the net assets to be reported in unrestricted net assets related to this equipment would be:

A)$60,000.

B)$54,000.

C)$  0.

D)Either $54,000 or $0, depending upon the policy of the organization

10. A private not-for-profit organization received a gift of $640,000 with purpose restrictions in 2014.  In 2015 funds were expended for the purpose outlined in the gift, however, it was not possible to determine whether the restricted funds or unrestricted funds were used.  The presumption should be:

A)The restricted funds would have been used first.

B)The unrestricted funds would have been used first.

C)The restricted funds and unrestricted funds would have been used equally.

D)The restricted funds and unrestricted funds would have been used, based on a weighted average of the amounts.