1 A local citizen gives a not for profit organization a cash

1. A local citizen gives a not-for-profit organization a cash donation that is restricted for research
activities. The money should be recorded ina. Unrestricted Net Assets.b. Temporarily Restricted
Net Assets.c. Permanently Restricted Net Assets.d. Deferred Revenue.2. Theresa Johnson
does volunteer work for a local not-for-profit organization as a community service.She replaces
without charge an administrator who would have otherwise been paid $31,000. Which of the
following statements is true?a. The organization should recognize a restricted gain of
$31,000.b. The organization should recognize a contribution of $31,000 as an increase in
unrestricted net assets as well as salary expense of $31,000.c. The organization should
recognize a reduction in expenses of $31,000.d. The organization should make no entry.3.
Which of these forms must most not-for-profit organizations file annually with the Internal
Revenue Service?a. 990.b. 1203.c. 501.d. 501(c)(3).4. Belwood University is a private not-for-
profit school that has tax-exempt status. Which of the following is most likely to be the type of
tax-exempt status that Belwood holds?a. 501(c)(3)b. 501(c)(4)c. 501(c)(5)d. 501(c)(6)5. An
organization of high school seniors performs volunteer services for patients at a nearby nursing
home. The nursing home would not otherwise provide these services, such as wheeling patients
in the park and reading to them. At the minimum wage rate, these services would amount to
$21,320, but their actual value is estimated to be $27,400. In the nursing home’s statement of
revenues and expenses, what amount should be reported as public support?a. $27,400.b.
$21,320.c. $6,080.d. $–0–.6. A voluntary health and welfare organization receives a gift of new
furniture having a fair value of $2,100. The group then gives the furniture to needy families
following a flood. How should the organization record receipt and distribution of this donation?a.
Make no entry.b. Record a contribution of $2,100 and community assistance expense of
$2,100.c. Recognize revenue of $2,100.d. Recognize revenue of $2,100 and community
expenditures of $2,100.7. George H. Ruth takes a leave of absence from his job to work full-
time for a voluntary health and welfare organization for six months. Ruth fills the position of
finance director, a position that normally pays $88,000 per year. Ruth accepts no remuneration
for his work. How should these donated services be recorded?a. As contribution revenue of
$44,000 and an expense of $44,000.b. As earned revenue of $44,000.c. As an expense of
$44,000.d. They should not be recorded.8. A voluntary health and welfare organization
produces a statement of functional expenses. What is the purpose of this statement?a.
Separates current unrestricted and current restricted funds.b. Separates program service
expenses from supporting service expenses.c. Separates cash expenses from noncash
expenses.d. Separates fixed expenses from variable expenses.9. A voluntary health and
welfare organization has the following expenditures:Research to cure disease . . . . . . . . . . . . . .
. . . . . . . $60,000Fund-raising costs . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000Work to help
disabled . . . . . . . . . . . . . . . . . . . . . . . 40,000Administrative salaries . . . . . . . . . . . . . . . . . . . . . .
. 90,000How should the organization report these items?a. Program service expenses of
$100,000 and supporting service expenses of $160,000.b. Program service expenses of
$160,000 and supporting service expenses of $100,000.c. Program service expenses of
$170,000 and supporting service expenses of $90,000.d. Program service expenses of
$190,000 and supporting service expenses of $70,000.10. A voluntary health and welfare
organization sends a mailing to all of its members including those who have donated in the past
and others who have not donated. The mailing, which cost $22,000, asks for monetary

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