1 A private not for profit health care organization has the

following
1. A private not-for-profit health care organization has the following account balances:Revenue
from newsstand . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000Amounts charged to patients . . . . . . . .
. . . . . . . . . . . . . . 800,000Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,000Salary expense—nurses . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000Bad debts . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000Undesignated gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 80,000Contractual adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000What is reported as
the hospital’s net patient service revenue?a. $880,000.b. $800,000.c. $690,000.d. $680,000.2.
A large not-for-profit organization’s statement of activities should report the net change for net
assets that are3. Which of the following statements is true?I. Private not-for-profit universities
must report depreciation expense.II. Public universities must report depreciation expense.a.
Neither I nor II is true.b. Both I and II are true.c. Only I is true.d. Only II is true.4. A private not-
for-profit organization receives three donations:One gift of $70,000 is unrestricted.One gift of
$90,000 is restricted to pay the salary of the organization’s workers.One gift of $120,000 is
restricted forever with the income to be used to provide food for needy families.Which of the
following statements is not true?a. Temporarily restricted net assets have increased by
$90,000.b. Permanently restricted net assets have increased by $210,000.c. When the donated
money is spent for salaries, unrestricted net assets increase and decrease by the same
amount.d. When the donated money is spent for salaries, temporarily restricted net assets
decrease.5. A donor gives Charity 1 $50,000 in cash that it must convey to Charity 2. However,
the donor can revoke the gift at any time prior to its conveyance to Charity 2. Which of the
following statements is true?a. Charity 1 should report a contribution revenue.b. The donor
continues to report an asset even after it is given to Charity 1.c. As soon as the gift is made to
Charity 1, Charity 2 should recognize a contribution revenue.d. As soon as the gift is made to
Charity 1, Charity 2 should recognize an asset.6. A private not-for-profit university charges its
students tuition of $1 million. However, financial aid grants total $220,000. In addition, the
school receives a $100,000 grant restricted for faculty salaries. Of this amount, it spent $30,000
appropriately this year. On the statement of activities, the school reports three categories: (1)
revenues and support, (2) net assets reclassified, and (3) expenses. Which of the following is
not true?a. Unrestricted net assets should show an increase of $30,000 for net assets
reclassified.b. In the unrestricted net assets, the revenues and support should total $1 million.c.
Unrestricted net assets should recognize expenses of $30,000.d. Unrestricted net assets shows
the $220,000 as a direct reduction to the tuition revenue balance.7. A private not-for-profit
organization has the following activities performed by volunteers who work at no charge. In
which case should it report no amount of contribution?a. A carpenter builds a porch on the back
of one building so that patients can sit outside.b. An accountant does the organization’s
financial reporting.c. A local librarian comes each day to read to the patients.d. A computer
expert repairs the organization’s computer.8. To send a mailing, a private not-for-profit charity
spends $100,000. The mailing solicits donations and provides educational and other information
about the charity. Which of the following is true?a. No part of the $100,000 can be reported as a
program service expense.b. Some part of the $100,000 must be reported as a program service
expense.c. No authoritative guidance exists, so the organization can allocate the cost as it
believes best.d. Under certain specified circumstances, the organization should allocate a

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