1.            Nonprofit Y sends a mailing to 10,000 people. The mailing contains information about cancer, and also asks the people to make donations. Under GAAP, what are the rules about how the costs of this mailing should be classified?

a.            The organization must always consider all the costs to be fundraising, since there was a fundraising message

b.            The organization may allocate some of the costs to program expense if all three of the following tests are met: the purpose test; the content test; and the audience/recipient test.

c.             The organization may allocate some of the costs to program expense if any one of the following tests are met: the purpose test; the content test; and the audience/recipient test.

d.            As long as the mailing has some program purpose, the organization is free to allocate costs between programs and fundraising – there are no special tests to be considered

2.            A hospital has a set fee for an emergency room visit of $400. However, the hospital has agreed to treat patients covered by Medicaid for $50. If patients come in who are covered by Medicaid, the financial statements, under both old rules and the FASB’s revenue recognition rules, would show revenues of:

a.            $50

b.            $400, with an expense of $350 under program expenses

c.             $400, with a bad debt expense of $350

3.            Nonprofit B, a hospital, has 100 nurses, and 6 nurse supervisors. The nurse supervisors make sure the nurses are doing their jobs, help with complicated cases, and also sign the timesheets for the nurses. The nurse supervisors’ salary should be classified as

a.            Program expense

b.            Administrative and general expense

c.             Fundraising Expense

d.            Part program expense and part administrative and general expense